A man looks at his mobile phone while laying on top of a scooter in front of stacks of wood at a lumber trading yard in Anqing, Anhui Province, China. (Photographer: Qilai Shen/Bloomberg)

All You Need To Know Going Into Trade On July 26

Asian stocks climbed, tracking gains in U.S. shares, after U.S. President Donald Trump reached an agreement with European Commission President Jean-Claude Juncker aimed at averting a transatlantic trade war. The yen climbed and the dollar retreated.

Equities in Tokyo and Seoul advanced after the S&P 500 Index hit an all-time high, with the two sides agreeing to suspend new tariffs while negotiating over trade.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.3 percent higher at 11,167 as of 7:50 a.m.

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BQ Live

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

U.S. Market Check

  • U.S. equities jumped Wednesday, after Donald Trump reached an agreement with European Commission President Jean-Claude Juncker aimed at averting a trade war.
  • The yield on 10-year Treasuries held at 2.97 percent.

Also read: Facebook’s Record Selloff Drags Down Other Tech Stocks

Europe Check

  • European stocks and bonds fell ahead of the European Central Bank meeting today.
All You Need To Know Going Into Trade On July 26

Also read: Trump, Juncker Tout Deal Pulling Back From U.S.-EU Trade War

Asian Cues

  • Japan’s Topix index rose 0.7 percent.
  • Australia’s S&P/ASX 200 Index fell 0.6 percent.
  • South Korea’s Kospi index rose 0.5 percent.
  • Futures on Hong Kong’s Hang Seng Index gained 0.3 percent.
  • Futures of the S&P 500 Index slipped 0.2 percent.

Also read: Xi Calls for Rejection of Trade Wars Because They Have ‘No Winner’

Commodity Cues

  • The Bloomberg Commodity Index increased 1 percent Wednesday to its highest in over two weeks.
  • West Texas Intermediate crude rose 0.4 percent to $69.56 a barrel.
  • Brent crude traded higher for the third day, up $74.55 a barrel.

Here are some key events coming up this week:

  • Earnings season continues with the following tech companies among those reporting: Amazon.com, Twitter, Advanced Micro Devices, Qualcomm and Intel. Others include Nissan and Shell.
  • 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.
  • 07/25-07-31: India June Eight Infrastructure Industries Index, prior 3.6 percent.

Stocks To Watch

  • Infosys arm to provide core banking solution to Myanmar based Farmers Development Bank.
  • JSW steel completes 100 percent acquisition of Aferpi and 69.27 percent acquisition in Piobino Logistics. Board approves raising up to Rs 10,000 crore via debt issue
  • PNB invites bids for sale of stake in PNB Housing Finance.
  • Aurobindo Pharma: FDA approves ANDA for ophthalmic drops.
  • Glenmark says GBR 310 shows biosimilarity to Omalizumab.
  • ICICI Bank says not received any communication from SFIO.
  • L&T maintains FY19 order inflow and revenue guidance.

Indian ADRs

All You Need To Know Going Into Trade On July 26

Offerings

  • HDFC Asset Management IPO continues on Day 2. The issue is subscribed 1.03 times so far.

Also read: HDFC AMC’s Initial Public Offering: Here’s All You Need To Know

Nifty Earnings To Watch

  • Bharti Airtel
  • Dr. Reddy's Laboratories
  • ITC
  • Maruti Suzuki India
  • Yes Bank

Earnings To Watch

  • Bharat Financial Inclusion
  • Biocon
  • CESC
  • Colgate
  • Petronet LNG
  • SBI Life
  • Shriram Transport
  • Tata Power

Earnings Reaction To Watch

L&T (Q1, YoY)

  • Revenue up 19 percent at Rs 28,283 crore.
  • Net profit up 36 percent at Rs 1,215 crore.
  • Ebitda up 40 percent at Rs 2,913 crore.
  • Margin at 10.3 percent versus 8.7 percent.

Hero MotoCorp (Q1, YoY)

  • Revenue up 10.4 percent at Rs 8,809.8 crore.
  • Net profit at Rs 909.2 crore versus Rs 914 crore.
  • Ebitda up 6.3 percent at Rs 1,377.3 crore.
  • Margin at 15.6 percent versus 16.2 percent.

Ambuja Cements (Q1, YoY)

  • Revenue up 5.7 percent at Rs 3,016.9 crore.
  • Net profit up 27.2 percent at Rs 499 crore.
  • Ebitda down 4.4 percent at Rs 622.3 crore.
  • Margin at 20.6 percent versus 22.8 percent.

Canara Bank (Q1, YoY)

  • Net income up 43.1 percent at Rs 3,882.9 crore.
  • Net profit up 12 percent at Rs 281 crore.
  • Provisions up 72 percent at Rs 2,466.2 crore.
  • NNPA at 6.91 percent versus 7.48 percent.
  • GNPA at 11.05 percent versus 11.84 percent.

IFB Agro Industries (Q1, YoY)

  • Revenue up 24.3 percent at Rs 284.2 crore.
  • Net profit at Rs 11.8 crore versus Rs 7.3 crore.
  • Ebitda at Rs 18.5 crore versus Rs 12.9 crore.
  • Margin at 6.5 percent versus 5.6 percent.

Reliance Nippon Asset Management (Q1, YoY)

  • Revenue up 7.1 percent at Rs 394 crore.
  • Net profit up 1.8 percent at Rs 111 crore.
  • Ebitda up 24.8 percent at Rs 141 crore.
  • Margin at 35.8 percent versus 30.7 percent.

ADF Foods (Q1, YoY)

  • Revenue up 4.7 percent at Rs 51.4 crore.
  • Net profit at Rs 6 crore versus Rs 4.9 crore.
  • Ebitda at Rs 8.5 crore versus Rs 4.1 crore.
  • Margin at 16.5 percent versus 8.4 percent.

Syngene International (Q1, YoY)

  • Revenue up 39.5 percent at Rs 406 crore.
  • Net profit up 6.5 percent at Rs 66 crore.
  • Ebitda up 23.4 percent at Rs 98.6 crore.
  • Margin at 24.3 percent versus 27.4 percent.

Sanofi India (Q1, YoY)

  • Revenue up 15.1 percent at Rs 639.5 crore.
  • Net profit up 35.1 percent at Rs 99.6 crore.
  • Ebitda up 70.5 percent at Rs 120.4 crore.
  • Margin at 18.8 percent versus 12.7 percent.

Shriram City Union Finance

  • Net Interest Income up 13.8 percent at Rs 937.7 crore.
  • Net profit up 14.72 percent at Rs 229.6 crore.

Bharti Infratel (Q1, QoQ)

  • Revenue up 0.3 percent to Rs 3,674 crore.
  • Net profit up 5 percent to Rs 638 crore.
  • Ebitda down 5 percent to Rs 1521 crore.
  • Margin at 41.4 percent versus 43.9 percent.

GE T&D India Ltd (Q1, YoY)

  • Revenue down 3.9 percent at Rs 1,162.4 crore.
  • Net profit up 33.1 percent at Rs 82.1 crore.
  • Ebitda up 36.7 percent at Rs 144.2 crore.
  • Margin at 12.4 percent versus 8.7 percent.

Rane Madras (Q1, YoY)

  • Revenue up 34.1 percent at Rs 394.2 crore.
  • Net profit at Rs 4.1 crore.
  • Ebitda up 19.3 percent at Rs 27.8 crore.
  • Margin at 7.1 percent versus 7.9 percent.

Security and Intelligence Services (India) (Q1, YoY)

  • Revenue up 29.6 percent at Rs 1,611.4 crore.
  • Net profit at Rs 39.5 crore versus Rs 21.5 crore.
  • Ebitda up 11 percent at Rs 74.4 crore versus Rs 67 crore.
  • Margin at 4.6 percent versus 5.4 percent.

KPIT Technologies (Q1, QoQ)

  • Revenue up 5 percent at Rs 1013.8 crore.
  • Net profit up 2 percent at Rs 77.4 crore.
  • EBIT up 11.2 percent at Rs 90.4 crore.
  • Margin at 8.9 percent versus 8.4 percent.

IRB Infra Developers (Q1, YoY)

  • Revenue down 15.4 percent at Rs 1,538 crore.
  • Net profit up 5.1 percent at Rs 250.1 crore.
  • Ebitda down 8.7 percent at Rs 746.7 crore.
  • Margin at 48.6 percent versus 45 percent.

Intellect Design Arena (Q1, QoQ)

  • Profit up 58 percent at Rs 43.5 crore on higher other income
  • Revenue down 2.6 percent at Rs 299 crore
  • EBIT down 78 percent at Rs 3.8 crore
  • EBIT margin at 1.3 percent versus 5.6 percent
  • Other income includes gain of Rs 37.7 crore on sale of land held by company

Bulk Deals

Navin Fluorine International

  • New World Fund acquired 3.87 lakh shares or 0.79 percent equity at Rs 604.06 each.
  • Grantham, Mayo, Van Otterloo & Co. LLC sold 3.87 lakh shares or 0.79 percent equity at Rs 604.07 each.

Who’s Meeting Whom

  • Inox Leisure to meet DSP Blackrock on July 26.
  • ACC to meet Ashmore Investments on July 26.
  • Jain Irrigation System to meet Kopernik Global Investors on July 26.

Trading Tweaks

  • Petron Engineering Construction Ltd. and Nagreeka Capital & Infrastructure Ltd. placed under ASM framework.

Rupee

  • Rupee closed at 68.79/$ on Wednesday from 68.95/$ on Tuesday

F&O Cues

  • Nifty July futures closed trading at 11,136.4 premium of 4.4 points versus 8 points.
  • Nifty August futures closed trading at 11,162.9 premium of 31 points versus 33 points.
  • Across series: Nifty open interest down 1 percent; Bank Nifty open interest up 2 percent.
  • Rollover: Nifty at 51 percent, Bank Nifty at 51 percent.
  • India VIX ended at 12.2, down 2 percent.
  • Max open interest for July series at 11,200 Call (open interest unchanged at 32.1 lakh).
  • Max open interest for July series at 11,000 Put (open interest at 49.7 lakh, down 10 percent).

F&O Ban

In ban: Adani Enterprises.

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

Put Call Ratio

  • Nifty PCR unchanged at 1.89
  • Nifty Bank PCR at 1.11 versus 0.95

Fund Flows

All You Need To Know Going Into Trade On July 26

Brokerage Radar

CLSA on Bharti Infratel

  • Maintained ‘Outperform’; cut price target to Rs 320 from Rs 364.
  • June quarter results were above estimates.
  • Tenancy exits continue; Additions remain muted.
  • Near-term pressures remain, but long-term growth will revive.

Macquarie on Crompton Consumer

  • Maintained ‘Outperform’ with a price target of Rs 292.
  • Crompton reported strongest top line growth aided by low base.
  • Margin expansion continues on reduced ESOP costs and better product mix.
  • Revenue growth recovering indicating effects of GTM strategy waning.
  • H2 to witness commercial launch of two key products.
  • Impressive margin performance to sustain.

IDFC Securities on PVR

  • Maintained ‘Outperform’ with a price target of Rs 1,568.
  • Good start to the year; Content pipeline looking strong.
  • Strong exhibition segment metrics.
  • Stock is more looking at the outcome of the F&B issue going on.

Brokerages On L&T

Investec

  • Maintained ‘Buy’ with a price target of Rs 1,620.
  • In-line performance by Core; Stellar show by Services.
  • Strong orderflow momentum is likely to continue.
  • Management maintained its guidance on all parameters.
  • Continue to see L&T as a beneficiary of government capex.

BofAML

  • Maintained ‘Buy’; cut price target to Rs 1,522 from Rs 1,541.
  • June quarter’s beat on strong services income; Core business a marginal miss on weak infra margins.
  • Order flows miss estimates; Trend encouraging.
  • Seek more clarity on realty, other segments.
  • Valuations attractive vs. its peers & its growth/RoE.

JPMorgan

  • Maintained ‘Overweight’ with a price target of Rs 1,600.
  • June Quarter Review: Big picture looks good, but Realty hit a dampener.
  • Consolidated top-line beat, led by service businesses.
  • Core EBITDA bogged down by large provisions and impairment.
  • The Realty business drag on June quarter results.

Brokerages On Hero MotoCorp

CLSA

  • Maintained ‘Sell’; cut price target to Rs 3,000 from Rs 3,115.
  • Weak June quarter results with net profit below estimates.
  • Hero to focus on brand over pricing.
  • Remain concerned on margins as Co.’s will find it difficult hike prices.
  • Stock is not cheap despite a recent correction.

Macquarie

  • Maintained ‘Outperform’; cut price target to Rs 4,300 from Rs 4,400.
  • Margin declined as tax incentives at Haridwar ended.
  • Rural demand growing faster than urban.
  • Expect Hero to consolidate its dominant leadership.
  • Like Hero for its strong franchise, robust FCF, high dividend yield and healthy return ratios.

Brokerages On Jubilant Foodworks

Macquarie

  • Maintained ‘Outperform’; raised price target to Rs 1,600 from Rs 1,551.
  • June Quarter Review: Net profit ahead of estimates driven by higher same-store-sales growth (SSSG).
  • SSSG continues to surprise on the positive side.
  • Steady gross margin allays concerns on margin dilution from new EDV offer.
  • Jubilant Foodworks is top pick in the India consumer space.

CLSA

  • Maintained ‘Buy’; raised price target to Rs 1,900 from Rs 1,575.
  • Big beat, once again; Strong SSSG despite a decent base.
  • Gross margin steady despite extension of the Every Day Value.
  • Retain our faith despite 115 percent return in the past 12 months.

Brokerages On JSW Steel

IDFC Securities

  • Maintained ‘Underperform’ with a price target of Rs 312.
  • June Quarter Review: Higher steel prices boost profitability.
  • Marginal beat due to higher volume, realisation and higher incentive income.
  • Key Positives: Higher steel realisation improving spreads; EBITDA/t of Rs 12,590.
  • Expect steel profitability to taper off in subsequent quarters.

B&K Securities

  • Maintained ‘Outperform’ with a price target of Rs 340.
  • Better than expected EBITDA on account of higher blended realisations.
  • Higher than expected other income and lower tax rate further boost net profit.
  • Expect steel spreads to witness marginal decline.

Brokerages On Ambuja Cements

Nomura

  • Maintained ‘Neutral’ with a price target of Rs 300.
  • Strong June quarter similar to subsidiary ACC.
  • Strong result driven by beats on all key parameters.
  • Volume growth to get better ahead of 2019 elections.
  • Believe that cement sector on the cusp of an upturn.
  • Prefer UltraTech and Shree Cement.

CLSA

  • Maintained ‘Buy’; cut price target to Rs 300 from Rs 325.
  • June quarter was well ahead of estimates.
  • Unit EBITDA got a boost from realisations and costs.
  • Factor in lower spot cement prices which leads to 8-13 percent cut in consolidated EPS estimates.

Brokerages On BHEL

Daiwa Capital

  • Maintained ‘Buy’; cut price target to Rs 100 from Rs 110.
  • June quarter review: still awaiting pick-up in execution.
  • Order backlog rose 15 percent YoY with 85 percent backlog executable.
  • Execution pick-up still awaited, although better likelihood now.
  • See better visibility in order execution and improved operational performance over FY19-20.

Deutsche Bank

  • Maintained ‘Buy’; cut price target to Rs 120 from Rs 130.
  • June quarternet profit and EBITDA ahead of estimates.
  • Orders are more diversified now - none from power in June quarter.
  • Re-rating will depend on recovery of receivables.
  • BHEL is preferred midcap industrials stock.

Brokerages On Canara Bank

Macquarie

  • Maintained ‘Underperform’ with a price target of Rs 200.
  • Net profit beats estimates on lumpy recoveries in June quarter.
  • Believe that making quarterly forecasts may be difficult in light of the lumpiness of resolutions.
  • Asset quality improves; Ambitious targets set for 2018-19.
  • Management expects SME stress to ease in second and third quarter.

Kotak Securities

  • Maintained ‘Add’ with a price target of Rs 300.
  • Gross NPLs shows the final sign of reversals; Possibility of further improvement.
  • Gradual shift in focus from slippages to aid valuation expansion.
  • Expect stock price to show a positive momentum as these events unfold.