All You Need To Know Going Into Trade On August 2

Asian stocks were broadly mixed at the open. Equity benchmarks South Korea and Australia slipped while Japanese shares posted modest gains. Hong Kong futures fell.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.1 percent higher at 11,374.50 as of 6:55 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. stocks were mixed as worsening trade tensions between the world’s two largest economies stung manufacturers while tech shares rallied on the back of a positive earnings report for Apple Inc.
• The yield on 10-year Treasuries touched 3 percent for the first time since June and stayed at that level after the Federal Reserve held borrowing costs steady while signaling its intention to raise rates amid robust economic growth, as analysts had predicted.

European Market Check

European shares fell as trade tensions between the world’s two superpowers escalated again, renewing concerns that rising protectionism will hit economic growth.

Asian Cues

• Topix index was little changed.
• Australia’s S&P/ASX 200 Index ticked lower.
• South Korea’s Kospi index fell 0.2 percent.
• Futures on Hong Kong’s Hang Seng Index slid 0.5 percent.
• The S&P 500 Index futures rose less than 0.1 percent.

Here are the key events to watch out for this week:

• Earnings season continues with Berkshire Hathaway, Barclays, Toyota and BMW among companies reporting results.
• The U.S. jobs report is on Friday, and is predicted to show a healthy labor market, with 190,000 new jobs.

Commodity Cues

• West Texas Intermediate crude added 0.3 percent to $67.86 a barrel after sliding 1.6 percent.
• Brent crude snapped two-day decline and traded 0.2 percent higher at $72.56 a barrel.
• Gold was up 0.1 percent to $1,217.48 an ounce.
• Copper fell 0.6 percent to $6,138 a ton, adding to a 2 percent tumble Wednesday.
• The Bloomberg Commodity Index fell 1.3 percent Wednesday.

Shanghai Exchange

• Steel snaps four-day winning streak; down 1.5 percent
• Aluminium traded lower after rising for last four sessions; down 1 percent.
• Zinc traded lower; down 1.2 percent.
• Copper traded lower; down 1.5 percent.
• Rubber traded lower for third day; down 0.9 percent.

Nifty Earnings To Watch

• Indiabulls Housing Finance
• ONGC

Other Earnings To Watch

• Akzo Nobel India
• Capital First
• Deepak Nitrite
• GE Power India
• Godrej Properties
• JK Lakshmi Cement
• Mahindra Logistics
• Manpasand Beverages
• Marico
• MOIL
• Narayana Hrudayalaya
• Pfizer
• Ramco Cements
• Time Technoplast
• Torrent Pharmaceuticals

Earnings Reaction To Watch

HEG (Q1, YoY)

• Revenue up 7.7 times at Rs 1587.4 crore.
• Net profit at Rs 770.3 crore versus net loss at Rs 8.4 crore.
• Ebitda at Rs 1188 crore versus Rs 23.4 crore.
• Margin at 74.8 percent versus 11.4 percent.

Elecon Engineering & Industries (Q1, YoY)

• Revenue up 29.5 percent at Rs 303.5 crore.
• Net profit at Rs 7.5 crore versus net loss at Rs 36.2 crore.
• Ebitda at Rs 33.8 crore versus Ebitda loss at Rs 9.4 crore.

Jindal Saw (Q1, YoY)

• Revenue up 63.5 percent at Rs 2284.3 crore.
• Net profit up 49.5 percent at Rs 95.1 crore.
• Ebitda up 70 percent at Rs 288.7 crore.
• Margin at 12.6 percent versus 12.2 percent.

V2 Retail (Q1, YoY)

• Revenue up 32 percent at Rs 187.8 crore.
• Net profit UP 29 percent at Rs 11.2 crore.
• Ebitda up 29 percent at Rs 20 crore.
• Margin at 10.6 percent versus 10.9 percent.

Ballarpur Industries (Q1, YoY)

• Revenue up 76.5 percent at Rs 824.4 crore.
• Net loss at Rs 150.2 crore versus net loss at Rs 269.3 crore.
• Ebitda up 48 percent at Rs 112 crore.
• Margin at 13.6 percent versus 16.2 percent.

Pidilite Industries (Q1, YoY)

• Revenue up 20 percent at Rs 1834 crore.
• Net profit up 5.5 percent at Rs 239 crore.
• Ebitda up 19 percent at Rs 381 crore.
• Margin at 20.8 percent versus 21 percent.

Torrent Power (Q1, YoY)

• Revenue up 15.9 percent at Rs 3528.1 crore.
• Net profit up 11.4 percent at Rs 225.9 crore.
• Ebitda down 3.6 percent at Rs 766.4 crore.
• Margin at 21.7 percent versus 26.1 percent.

Triveni Engineering & Industries (Q1, YoY)

• Revenue down 12 percent at Rs 706.6 crore.
• Net profit down 38.7 percent at Rs 37.1 crore.
• Ebitda down 43.4 percent at Rs 73.3 crore.
• Margin at 10.4 percent versus 16.1 percent.

Reliance Infrastructure (Q1, YoY)

• Revenue down 0.5 percent at Rs 7616.6 crore.
• Net profit down 18.7 percent at Rs 271.7 crore.
• Ebitda down 13.2 percent at Rs 1812.3 crore.
• Margin at 23.8 percent versus 27.3 percent.

Stocks To Watch

• Hindustan Copper: Government to cut stake to 66.13 percent from 76.05 percent.
• IDBI Bank: Cabinet approves takeover by LIC
• Hero MotoCorp July two wheeler sales up 9 percent at 6.79 lakh units.
• Eicher Motors: Royal Enfield’s July motorcycles sales up 7 percent at 69,063 units.
• Tata Motors July sales up 21 percent at 51,896 units..
• L&T offered to sell L&T Technology Services’ 41 lakh shares or 4 percent equity at Rs 1,400 per share.
• Punjab National Bank to consider capital infusion of Rs 2,816 crore by Government of India on Aug. 6.
• Shivam Autotech reported 20 percent increase in sales in July.
• Tata Power’s June quarter’s generation increased to 13,113 MU versus 12,429 MU.
• Gujarat Alkalies and Chemicals PAC plant in Vadodara commences commercial production.
• GPT Infraprojects won railways construction order worth Rs 362.2crore in Uttar Pradesh.
• Mangalore Chemicals & Fertilizers’ board approved re-classification of three UB Group companies from promoter to public category.
• Excel Crop Care to merge business with Sumitomo Chemicals.

Indian ADRs

Bulk Deals

• Talwalkars Lifestyles Ltd: American Funds Insurance Series sold 7.98 lakh shares or 2.6 percent equity at Rs 153.22 each.

Talwalkar Fitness Ltd

• Capital World Growth and Income Fund sold 9.60 lakh shares (3.1 percent) at Rs 30.12 each.
• Smallcap World Fund Inc. sold 6.12 lakh shares (2 percent) at Rs 27.7 each.

Who’s Meeting Whom

• Shriram Transport Finance to meet Indus Capital Partner and Legatum Capital on Aug. 2.
• Kiri Industries to meet Brairwood Capital and Centrum Broking on Aug. 2.

Insider Trades

• Maharashtra Seamless promoter acquired 55,000 shares on July 26.
• Grauer & Weil (India) promoteracquired 21,880 shares from July 30 – 31.

Rupee

• Rupee closed at 68.43/$ on Wednesday from 68.55/$ on Tuesday.

F&O Cues

• Nifty August futures closed trading at 11,374.3 premium of 28 points versus 15 points.
• August series: Nifty open interest up 3 percent; Bank Nifty open interest down 11 percent.
• India VIX ended at 12.5, up 0.4 percent.
• Max open interest for Aug series at 11,500 Call (open interest at 29.9 lakh, up 7 percent)
• Max open interest for Aug series at 11,000 Put (open interest at 51 lakh, up 8 percent)

Put Call Ratio

• Nifty PCR at 1.71 versus 1.73
• Nifty Bank PCR at 0.96 versus 1.56

Fund Flows

Brokerage Radar

Kotak on Apollo Tyres

• Maintained ‘Buy’ with a price target of Rs 292.
• June quarter’s operating income was in line with estimates; Net profit surpassed forecasts due to lower tax rate.
• Decline in gross margin could be due to weaker product mix and higher commodity costs.
• Strong growth in India driven by robust demand traction in truck bus radial segment.
• Apollo Tyres is top pick in the tyre sector.

Edelweiss on Spectrum Auction

• 700MHz spectrum is still expensive.
• 3.3-3.6GHz: Environment not yet ready for 5G.
• Given strained balance sheets, operators are unlikely to buy more spectrum.
• Lack of participation to keep spectrum prices in check.

Brokerages On Exide Industries

Nomura

• Maintained ‘Neutral’; raised price target to Rs 276 from Rs 268.
• June quarter’s operating income was ahead of estimates; Margins lower due higher lead prices.
• Expect steady revenue growth and margin expansion.
• Recent drop in lead prices should support margins levels.

UBS

• Maintained ‘Buy’ with a price target of Rs 335.
• June quarter’s big sales surpassed estimates but net profit came inline.
• Lower other income and higher tax rate pull down net profit.
• Surprised by sharp correction in stock prices even after sales and operating income beat estimates.
• Expect earnings growth to accelerate in 2018-19.

Kotak

• Maintained ‘Sell’ with a price target of Rs 265.
• June quarter’s operating income was above estimates on stronger revenue growth.
• Revenue growth led by from auto industry, replacement segment and price hikes.
• Expensive valuations don’t factor in structural issues.

Brokerages On RBI Policy

Kotak Securities

• Neutral stance being retained indicates the rate hike cycle will be a shallow one.
• Base case: expect RBI to pause in the near term
• Probability of further rate hikes remain over the next 12 months.

Nomura

• Having frontloaded hikes, we now expect rates to be left unchanged for the time being.
• Expect any positive reaction in rupee to be limited, as this decision was widely anticipated.
• Maintain cautious view on rupee, in line with the region.

UBS

• Headline CPI inflation has peaked in June and will likely head lower over the next 6-months.
• If CPI inflation sustains higher on a sustained basis, it would call for more policy tightening.
• Base case: expect MPC to go in for an extended pause over the next six months.
• If financial stability concerns worsen from here, the risk of a 100 basis points tightening cycle (of which 50 basis points are already done) appears very much alive.

Citi

• Hiking cycle not yet over
• There is still no visibility of RBI meeting its inflation target of 4 percent in its forecast horizon.
• Pencil in another 25-50 basis points hike for 2018-19.
• But expect RBI to skip Oct policy as it awaits the lagged transmission of the 50bps rate hike.

Morgan Stanley

• With growth recovery on track and inflation forecast to rise, expect one more rate hike in the October meeting.
• Further rate hikes contingent on the inflation outlook.