All You Need To Know Going Into Trade On July 25

Asian stocks opened higher after another bout of strong earnings results buoyed U.S. equities. Treasuries were steady, as was the dollar and the offshore yuan, while the yen slipped.

Shares were up in Japan, while stocks slipped in South Korea and Australia, with gains indicated for equity markets in China and Hong Kong. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.1 percent higher at 11,148 as of 7:10 a.m.

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Here’s a quick look at all that could influence equities today.

U.S. Market Check

• U.S. equity benchmarks finished Tuesday mostly higher, led by technology and health-care companies, while China’s efforts to support its economy spurred interest in higher-risk assets across Asia.
• The dollar slipped and 10-year Treasuries gained.

Europe Check

• European shares climbed, ending a three-day streak of losses, with most sectors rising, led by mining, automobile and banking stocks.

Asian Cues

• Japan’s Topix index rose 0.3 percent as of 9:03 a.m. in Tokyo.
• Futures on Hong Kong’s Hang Seng gained 0.9 percent.
• Australia’s S&P/ASX 200 Index climbed 0.2 percent.
• South Korea’s Kospi index rose 0.2 percent.
• Futures on the S&P 500 Index slipped 0.1 percent. The underlying gauge rose 0.5 percent Tuesday.

Commodity Cues

• West Texas Intermediate crude rose 0.3 percent to $68.73 a barrel.
• Gold was flat at $1,224.70 an ounce.
• The Bloomberg Commodity Index increased 0.5 percent on Tuesday.

Stories You Might Have Missed

• NSE asks clients to get ready for derivative trading till 11:55 P.M.
• Bond-market veteran braces for rising emerging-market defaults
• Government rebuffs RBI’s claim it needs more powers to regulate banks
• Mehul Choksi moves to Antigua, gets local passport
• Trump’s wild tweets gives Raamdeo Agrawal sleepless nights
• Housing downturn puts $20 billion in Indian bank loans at risk
• Vijay Mallya eyeing India return?

Here are some key events coming up this week:

• India June Eight Infrastructure Index, prior 3.6 percent
• Earnings season continues in the U.S. with the following tech companies among those reporting: Facebook, Amazon.com, Twitter, Advanced Micro Devices, Qualcomm and Intel. They are joined by global financial giants Deutsche Bank, Nomura and Visa. Others include Nissan and Shell.
• Pakistan holds national elections Wednesday.
• The European Central Bank’s policy decision is Thursday.
• U.S. gross domestic product probably increased by about 4.2 percent at an annualized rate in the second quarter, the most since 2014, economists forecast ahead of Friday’s data.

Stocks To Watch

• Music Broadcast announces Rs 57 crore buyback of 14.8 lakh shares or 2.59 percent equity at Rs 385 each.
• Punj Lloyd files plea challenging maintainability of ICICI Bank’s application before NCLT.
• Gujarat Sidhee Cements’ kiln operations resume after a suspension due to rains.
• Andhra Bank gets capital infusion of Rs 2,019 crore from the central government.
• Oil India signs joint venture pact for construction of grid pipelines in eight North-East states.
• HDFC to consider raising up to $1.5 billion via foreign currency loan. (Bloomberg)

IPO Watch

• HDFC Asset Management Co. IPO at Rs 1095-1100 a share opens; closes on July 27. Allots 66.5 lakh shares at Rs 1,100 each to 61 anchor investors, to raise Rs 732 crore.

Nifty Earnings To Watch

• Bharti Infratel
• Hero MotoCorp
• Larsen & Toubro

Other Earnings To Watch

• Ambuja Cements
• BHEL
• Canara Bank
• Crompton Greaves Consumer Electricals
• GRUH Finance
• IRB Infra
• JSW Steel
• Jubilant Foodworks
• Jyothy Laboratories
• Karur Vysya Bank
• KPIT Technologies
• Karur Vysya
• Oriental Bank Of Commerce
• PVR
• Shriram City Union Finance
• Syngene International
• SKF India
• Tata Elxsi

Earnings Reaction To Watch

Asian Paints (Q1, YoY)

• Revenue up 15.1 percent at Rs 4,390.28 crore.
• Net profit up 30.6 percent at Rs 558 crore.
• Ebitda up 31.4 percent at Rs 874.5 crore.
• Margin at 19.9 percent versus 17.4 percent.

Team Lease Services (Q1, YoY)

• Revenue up 19.7 percent at Rs 1,021.3 crore.
• Net profit up 32.9 percent at Rs 21.8 crore.
• Ebitda at Rs 20.2 crore versus Rs 13 crore.
• Margin at 2 percent versus 1.5 percent.

Borosil Glassworks (Q1, YoY)

• Revenue up 44.1 percent at Rs 72.2 crore.
• Net profit up 109.4 percent at Rs 11.1 crore.
• Ebitda at Rs 6.9 crore versus Rs 3.06 crore.
• Margin at 9.5 percent versus 6.1 percent.

Music Broadcast (Q1, YoY)

• Revenue up 7.7 percent at Rs 75.7 crore.
• Net profit up 25 percent at Rs 13.5 crore.
• Ebitda up 17.6 percent at Rs 26.1 crore.
• Margin at 34.5 percent versus 31.6 percent.

KSB Pumps (Q2, YoY)

• Revenue up 20.6 percent at Rs 253.6 crore.
• Net profit up 39.9 percent at Rs 21.4 crore.
• Ebitda up 20.2 percent at Rs 28.6 crore.
• Margin at 11.3 percent versus 11.3 percent.

NR Agarwal Industries (Q1, YoY)

• Revenue up 20.3 percent at Rs 332.5 crore.
• Net profit up 35.5 percent at Rs 29 crore.
• Ebitda at Rs 51.6 crore versus Rs 32.9 crore.
• Margin at 15.5 percent versus 11.9 percent.

Hexaware Technologies Q2 QoQ

• Revenue up 9.2 percent at Rs 1,137 crore.
• Net profit up 14 percent at Rs 153 crore.
• EBIT up 8.2 percent at Rs 159 crore.
• Margin flat at 14 percent.

Rane Brake Lining (Q1, YoY)

• Revenue up 21.7 percent at Rs 122.3 crore.
• Net profit down 9.6 percent at Rs 6.6 crore.
• Ebitda down 5.5 percent at Rs 14.7 crore.
• Margin at 12 percent versus 15.4 percent.

Symphony (Q1, YoY)

• Revenue down 23.2 percent at Rs 146 crore.
• Net profit down 48.7 percent at Rs 20 crore.
• Ebitda down 39.3 percent at Rs 17 crore.
• Margin at 11.6 percent versus 14.7 percent.

ICICI Prudential Life Insurance (Q1, YoY)

• Net premium income up 12.8 percent at Rs 5,437.8 crore.
• Profit down 30.6 percent at Rs 281.6 crore.
• Solvency Ratio at 2.35 versus 2.89.

Bulk Deals

• Adani Enterprises: Asia Investment Corporation sold 80 lakh shares or 0.73 percent equity at Rs 173.25 each.
• Kwality Ltd: Promoter Sanjay Dhingra sold 31.5 lakh shares or 1.31 percent equity at Rs 12.63 each.
• Sri Adhikari Brothers Television: Union Bank of India Tresury Branch sold 2.6 lakh shares or 0.73 percent equity at Rs 5.7 each.

Who’s Meeting Whom

• Rallis India to meet Franklin Templeton Investments on July 27.

Insider Trades

• Anuh Pharma promoter and director Bharat Nemchand Shah acquired 13,700 shares from July 19-23.
• Leel Electricals promoter acquired 26,500 shares on July 23.
• Wonderla Holidays promoter acquired 20,000 shares on July 23.
• Sadbhav Infra Project promoter Sadbhav Engineering acquired 19,600 shares on July 19.
• GTPL Hathway promoter acquired 52,000 shares on July 23.

(As reported on July 24)

Trading Tweaks

• 8K Miles Software placed under additional surveillance measures (ASM) framework.
• Polaris Consulting to be delisted from today.

Rupee

• Rupee closed at 68.95/$ on Tuesday from 68.86/$ on Monday

F&O Cues

• Nifty July futures closed trading at 11,142 premium of 8 points versus 14.7 points.
• Nifty August futures closed trading at 11,167.4 premium of 33.4 points.
• Across series: Nifty open interest up 2 percent and Bank Nifty open interest up 3 percent.
• Rollover: Nifty at 36 percent, Bank Nifty at 31 percent
• India VIX ended at 12.4, down 4 percent.
• Max open interest for July series at 11,200 Call (open interest at 32.2 lakh, up 5 percent)
• Max open interest for July series at 11,000 Put (open interest at 55.2 lakh, down 4 percent)

F&O Ban

In ban: Adani Entertainment

Only intraday positions can be taken in stocks which are in F&O ban. There is a penalty incase of a rollover of these intraday positions

Put Call Ratio

• Nifty PCR at 1.89 versus 1.80
• Nifty Bank PCR at 0.95 versus 1.15

Fund Flows

Brokerage Radar

ICICI Securities on Alkem Labs

• Maintained ‘Buy’; target price raised to Rs 2,428 from Rs 2,262.
• Company resolved observations within four months, which is encouraging.
• Expect the approvals pace to pick up, as more than 25 ANDAs are pending.
• Ramp up in U.S. sales to improve margins with operating leverage kicking in.
• Remain positive considering strong positioning in Indian market.

Brokerages On Asian Paints

Bank of America Merrill Lynch

• Maintained ‘Buy’ with target price of Rs 1,650.
• Solid first quarter earnings with double-digit domestic volume growth.
• GST rate cut to give fresh impetus to growth.
• Price hikes to cover any input cost inflation to be taken over time.
• Premium valuation to sustain on strong growth.

CLSA

• Downgraded to ‘Outperform’ from ‘Buy’; target price raised to Rs 1,600 from Rs 1,460.
• Good growth with strong margin expansion.
• Benefitted from low GST base and 12 percent plus volume growth in India.
• Raise EPS estimates by 3-4 percent to factor in better margins.
• Stock is up 25 percent in three months, forcing us to downgrade the rating.

Macquarie

• Maintained ‘Neutral’; target price raised to Rs 1,300 from Rs 1,220.
• First quarter results were in line with estimates, but second quarter may be challenging.
• Benefits of GST tax rate cut to emerge in medium term on premiumisation side.
• Volume growth trend continued from fourth quarter to first quarter.
• Price hikes help maintain gross margins.

JPMorgan

• Maintained ‘Neutral’; target price raised to Rs 1,400 from Rs 1,300.
• Good Q1 led by margin beat.
• Raw material inflation continues; Management expects 10 percent increase.
• Price hikes deferred due to GST rate cut and it may weigh on near-term margins.
• Demanding valuations keep us on the sidelines.

Brokerages On ICICI Prudential Life

Investec

• Maintained ‘Buy’; target price cut to Rs 550 from Rs 580.
• ULIP longevity improving; margins driven by credit life.
• Material improvement on surrenders and persistency.
• Growth recovery is key for re-rating.

CLSA

• Maintained ‘Buy’ with target price of Rs 560.
• Premium growth lagged on high base, margins expand.
• Margins expanded due to rise in share of protection premium, better persistency and change in tax assumptions.
• Expect margins to trend towards 20 percent over the next three years.
• Valuations are at a 50 percent discount to HDFC Life and remains top pick in the sector.

JPMorgan

• Maintained ‘Overweight’ with target price of Rs 520.
• Strong first quarter new business value growth could serve as a near-term catalyst.
• Earnings decline due largely to rising bond yield and higher acquisition cost.
• Positives: product mix enhancement, strong distribution channel and solid balance sheet.
• Believe the key investment case for India’s life insurers is get growth exposure.

CLSA on Info Edge

• Maintained ‘Buy’ with target price of Rs 1,700.
• Naukri revenue as well as billing growth recover.
• 99acres growth momentum maintained.
• Monthly order run rate surge for Zomato and Zomato Gold have been a stellar success.
• PolicyBazaar is likely the next leg of value creation.

Brokerages On Hexaware

Macquarie

• Downgraded to ‘Neutral’ from ‘Buy’; target price raised to Rs 500 from Rs 476.
• Second quarter revenue broadly in line; margins lower than estimates.
• Guidance raised to 12-13 percent from 10-12 percent for CY18.
• Raise calendar year 2018-20 EPS estimates by 2-5 percent largely led by currency movement.
• Downgraded the stock to ‘neutral’ on valuations.

Credit Suisse

• Maintained ‘Underperform’; target price raised to Rs 380 from Rs 360.
• Revenue growth remains solid and ahead of estimates.
• Margins disappointed for second consecutive quarter.
• Negatives: High client concentration, lop-sided nature of growth and margin concerns.
• Current valuations are very high.

Investec on Inox Leisure

• Maintained ‘Buy’; target price cut to Rs 260 from Rs 350.
• Q1 EBITDA marginally below expectations.
• Digital media key overhang on multiplexes.
• Maharashtra government’s irrational take on food and beverages (F&B) to hurt operations.
• Target price cut to factor in 4-7 percent cut in F&B revenues.