All You Need To Know Going Into Trade On August 6
Asian stocks open modestly higher Monday as earnings seasons rolls on. The yuan held on to its gains after a surprise move by the central bank to make it more expensive to bet against the currency triggered a rally in China’s currency.
Equity benchmarks edged higher in Japan, Australia and South Korea, while futures signaled a higher open for Hong Kong ahead of results from regional heavyweights HSBC Holdings Plc and Softbank Group Corp.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.3 percent higher at 11,427.50 as of 7:15 am.
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Here’s a quick look at all that could influence equities today.
U.S. Market Check
- U.S. stocks closed higher Friday as positive earnings surprises lifted shares, with three-fourth of the S&P 500 companies that reported results on Friday morning beating analysts’ estimates.
- The yield on 10-year Treasuries declined three basis points to 2.95 percent.
Europe Market Check
- European equities inched higher following sharp losses in the week, aided by a rally in banking shares after Royal Bank of Scotland Group announced plans to resume payouts.
- The Topix index rose 0.1 percent.
- Australia’s S&P/ASX 200 advanced 0.5 percent.
- South Korea’s Kospi index added 0.3 percent.
- Futures on Hong Kong’s Hang Seng Index rose 0.7 percent.
- FTSE China A50 futures climbed 0.8 percent.
- S&P 500 Index futures were little changed.
Also read: Jamie Dimon Warns of 5% Treasury Yields
- West Texas Intermediate crude was at $68.58 a barrel, up 0.1 percent.
- Brent crude traded 0.1 percent higher at $73.26 a barrel.
- Gold traded at $1,214.15 an ounce.
- LME copper futures fell 0.7 percent to $6,163.50 a metric ton.
- Steel traded higher for second day; up 0.5 percent.
- Aluminium traded higher for second day; up 0.1 percent.
- Zinc traded higher for two days in a row; up 0.8 percent.
- Copper traded higher; up 0.6 percent.
- Rubber snapped four-day losing streak; up 0.8 percent.
Stories You Might’ve Missed
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- Foreign investors poured in over Rs 2,300 crore in the Indian capital markets in July.
- Virat Kohli tops the ICC test ranking for batsmen.
- Senior executive of a Nirav Modi-owned firm gets bail.
- The genesis of a perpetual crisis in the film industry.
- WeWork wants to double locations as it completes one year in India.
- Is it time for Facebook to consider hard limits to Zuckerberg’s power?
- Many questions and few answers on the UIDAI helpline mystery.
Here are the key events to watch out for this week:
- Earnings season includes results from: HSBC, SoftBank, Japan Post Bank, Disney, 21st Century Fox, Deutsche Telekom, China Mobile, Glencore and Adidas.
- Tuesday brings the latest Reserve Bank of Australia meeting that is likely to produce no change in either the record-low cash rate or the long-term guidance.
- The Bank of Japan releases a summary of opinions Wednesday from its July 30-31 meeting, at which it tweaked elements of its stimulus policy to make it more sustainable.
- Samsung Electronics unveils its next Galaxy Note smartphone.
- Japan announces a preliminary reading of second-quarter gross domestic product. Economists expect a solid rebound from a first-quarter contraction.
- U.S. consumer prices probably rose in July, consistent with a pickup in inflation that’s projected to keep the Federal Reserve on a path of gradual interest-rate increases, economists forecast before Friday’s release.
Nifty Earnings To Watch
- Adani Ports and Special Economic Zone
Other Earnings To Watch
- Adani Power
- Avanti Feeds
- Britannia Industries
- Caplin Point Laboratories
- Firstsource Solutions
- Graphite India
- Max Financial Services
- Parag Milk Foods
- Ujjivan Financial Services
Earnings Reaction To Watch
Relaxo Footwear (Q1, YoY)
- Revenue up 17.3 percent to Rs 566.5 crore.
- Net profit up 23 percent to Rs 46 crore.
- Ebitda up 17 percent to Rs 83 crore.
- Margins at 14.6 percent versus 14.7 percent.
Suzlon Energy (Q1, YoY)
- Revenue down 50.5 percent to Rs 1,277.5 crore.
- Ebitda down 83.8 percent to Rs 77 crore.
- Net Loss of Rs 572.8 crore versus Rs 49 crore profit.
- Forex gain of Rs 253.6 crore versus Rs 42.4 crore.
Wockhardt (Q1, YoY)
- Revenue up 13.1 percent to Rs 1,007.7 crore.
- Ebitda at Rs 28.8 crore versus Ebitda loss of Rs 79.3 crore.
- Margin at 2.8 percent versus -8.9 percent.
- Net loss narrows to Rs 86.2 crore versus Rs 409.7 crore.
KEC International (Q1, YoY)
- Revenue up 13.4 percent to Rs 2,104.7 crore.
- Net profit up 37.8 percent to Rs 86.8 crore.
- Ebitda up 22.6 percent to Rs 216 crore.
- Margin at 10.3 percent versus 9.5 percent.
Sical Logistics (Q1, YoY)
- Revenue up 32.1 percent to Rs 323.5 crore.
- Net profit down 64 percent to Rs 4 crore.
- Ebitda down 13 percent to Rs 38.4 crore.
- Margin at 11.9 percent versus 18 percent.
Berger Paints (Q1, YoY)
- Revenue up 18.9 percent to Rs 1,483 crore.
- Net profit up 19.5 percent to Rs 135 crore.
- Ebitda up 22.6 percent to Rs 227 crore.
- Margin at 15.3 percent versus 14.8 percent.
Waterbase (Q1, YoY)
- Revenue up 22.5 percent to Rs 154.3 crore.
- Net profit up 23 percent to Rs 17.7 crore.
- Ebitda up 3.6 percent to Rs 26 crore.
- Margin at 16.8 percent versus 19.8 percent.
Steel Authority of India (Q1, YoY)
- Revenue up 37.4 percent to Rs 15,907 crore.
- Net profit of Rs 540.4 crore versus net loss of Rs 801.4 crore.
- Ebitda at Rs 2,576.5 crore vs Ebitda loss at Rs 83.8 crore.
Indo Count Industries (Q1, YoY)
- Revenue up 10.2 percent to Rs 440.3 crore.
- Net profit down 10 percent to Rs 28.8 crore.
- Ebitda up 44.4 percent to Rs 47.5 crore.
- Margin at 10.8 percent versus 8.2 percent.
Jaiprakash Power Ventures (Q1, YoY)
- Revenue up 8.75 percent to Rs 1083.07 crore.
- Ebitda up 24.4 percent to Rs 436.8 crore.
- Margin at 40.3 percent versus 35.2 percent.
- Net profit at Rs 4.14 crore versus net loss of Rs 19.02 crore.
Laurus Labs (Q1, YoY)
- Revenue up 12.7 percent to Rs 539 crore.
- Net profit down 57.3 percent to Rs 16.6 crore.
- Ebitda down 16.6 percent to Rs 80.5 crore.
- Margin at 14.9 percent versus 20.2 percent.
Adlabs Entertainment (Q1, YoY)
- Revenue down 2.2 percent to Rs 84.7 crore.
- Net loss of Rs 20.9 crore versus net loss of Rs 22.5 crore.
- Ebitda up 5.9 percent to Rs 34.1 crore.
- Margin at 40.3 percent versus 37.2 percent.
Shipping Corporation of India (Q1, YoY)
- Revenue up 3.4 percent to Rs 894.3 crore.
- Net loss of Rs 206 crore versus net loss of Rs 6.7 crore.
- Ebitda down 98.2 percent to Rs 3 crore.
- Margin at 0.3 percent versus 19.2 percent.
Entertainment Network (India) (Q1, YoY)
- Revenue up 16.4 percent to Rs 121.6 crore.
- Net profit up 102.2 percent to Rs 9.3 crore.
- Ebitda up 65.5 percent to Rs 28.3 crore.
- Margin at 23.3 percent versus 16.4 percent.
Sandhar Tech (Q1, YoY)
- Revenue up 25 percent to Rs 493 crore.
- Net profit up 48 percent to Rs 22 crore.
- Ebitda up 15 percent to Rs 49 crore.
- Margin at 10 percent versus 10.8 percent.
PI Industries (Q1, YoY)
- Revenue up 9.5 percent to Rs 606 crore.
- Net profit down 18.4 percent to Rs 82 crore.
- Ebitda down 9.4 percent to Rs 118 crore.
- Margin at 19.5 percent versus 23.6 percent.
Stocks To Watch
- Avendus set to buy IDFC mutual funds and securities units in deal valued between Rs 5,000-6,000 crore (The Economic Times)
- Wipro to settle National Grid lawsuit for $75 million in the U.S.
- ICRA proposing a buyback of shares on Aug. 9.
- Allahabad Bank mulls raising equity capital by was preference issue to GoI on Aug. 14.
- Premier Explosives bagged orders worth Rs 68.9 crore from Coal India.
- Puravankara’s Goa arm received bookings for more than 800 units for residential project.
- Tata Group and Dabur India to bid for Kraft Heinz $1 billion sale of India business. Cadila Healthcare arm shows interest in the Kraft Heinz offer for sale. (Bloomberg)
- TCS’ board approved buyback. Record date fixed at Aug. 18.
- HDFC AMC shares to start trading on BSE/NSE after IPO that got 83 times demand at Rs 1,100 each.
- Delta Corp: Morgan Stanley France sold 23 lakh shares, or 0.9 percent equity at Rs 266.07 each.
- PVR: Fidelity Investment Trust-Fidelity International Discovery Fund sold 4.03 lakh shares, or 0.9 percent equity at Rs 1172.59 each.
Indiabulls Housing Finance Ltd
- Jasmine Capital Investments Pte Ltd bought 22.7 lakh shares, or 0.5 percent equity at Rs 1374.6 each.
- Orient Global Cinnamon Capital Limited sold 22.7 lakh shares, or 0.5 percent equity at Rs 1374.6 each.
Tejas Networks Ltd
- Eastbridge Capital Master Fund Limited bought 19.17 lakh shares, or 2.1 percent equity at Rs 259.98 each.
- Birla Sun Life MF bought 8 lakh shares, or 0.9 percent equity at Rs 260.25 each.
- Samena Spectrum Co. sold 45 lakh shares, or 4.9 percent equity at Rs 260.27 each.
- TVS Electronics Ltd. placed under the ASM framework.
- Venkys circuit filter revised to 10 percent.
- Music Broadcast buyback worth Rs 57 crore at a maximum Rs 385 per share starts today.
Who’s Meeting Whom
- Indian Toner’s and Developers to meet investors on Aug. 6.
- CRISIL to meet Motilal Oswal Securities and other investors from Aug. 6-20.
- Infosys to meet investors from Aug. 7-9.
- JSW Steel promoter JSW Techno Projects Management Ltd. acquired 8 lakh shares from July 31–August 1.
- Singer India promoter Retail Holdings (India) B.V. sold 4,500 shares on Aug. 2.
- Cosmo Films promoter Ashok Jaipuria acquired 16,244 shares from Aug. 1–2.
- Plastiblends India promoter Jyoti V Kabra acquired 11,085 shares from July 23–Aug. 1.
As reported on Aug. 3
- Rupee ended at 68.62/$ versus 68.71/$ on Thursday.
- Nifty August Futures closed trading at 11,395.7, premium of 34.9 points versus 37 points.
- August series-Nifty Open Interest up 3 percent and Bank Nifty Open Interest up 15 percent.
- India VIX ended at 12, down 3.8 percent.
- Maximum Open Interest for August series at 11,500 Call, Open Interest at 31.4 lakh, Open Interest down 12 percent.
- Maximum Open Interest for August series at 11,000 Put Open Interest at 49.5 lakh, Open Interest up 7 percent.
- In Ban: Adani Power, Jet Airways
- New In Ban: Jet Airways
- Out Of Ban: None
Put Call Ratio
- Nifty PCR at 1.72 versus 1.64.
- Nifty Bank PCR at 1.34 versus 0.86.
Stock Futures-OI Change All Series
Deutsche Bank on Berger Paints
- Initiated ‘Buy’ with a price target of Rs 375.
- Product differentiation and distribution expansion to drive double-digit volume growth.
- New niche segments a strong medium-term growth driver.
- Expect moderate margin expansion to continue.
- Expect revenue and net profit grow at a compounded annual growth rate of 17 percent and 22 percent respectively over FY18-21.
Deutsche Bank on Kansai Nerolac
- Initiated ‘Buy’ with a price target of Rs 575.
- Fastest-growing paint company and key beneficiary of a likely capex cycle revival.
- Margin expansion to continue led by premiumisation and operating leverage.
- Leveraging parents global technology for new launches.
- Capacity to increase by 50 percent over next three years.
- Expect revenue and net profit to grow at a compounded annual growth rate of 17 percent over FY18-21.
Morgan Stanley on GAIL (India)
- Maintained ‘Overweight’; cut price target to Rs 473 from Rs 511.
- Fundamentals are getting strong.
- Positives: push to lower pollution, clarity on hike in pipeline tariff.
- Weaker U.S. gas prices coupled with higher oil prices to lead to upside risks.
- Cut price target due to lower multiples across its businesses due to higher bond yields in India.
JPMorgan on HCL Tech
- Maintained ‘Overweight’ with a price target of Rs 1,050.
- Risk-reward balance delicately poised.
- Judicious course-correction can shift balance in a more favorable direction.
- Do not see HCL making disruptive moves to improve its positioning in digital.
- Maintaining margins can be difficult in the face of continued growth difficulties.
Morgan Stanley on Tata Global Beverages
- Maintained ‘Underweight’; raised price target to Rs 170 from Rs 150.
- June quarter earnings were in-line with estimates.
- Another quarter of weak operating performance.
- Low earnings visibility remains the key concern.
Citi on HDFC Bank
- Maintained ‘Buy’ with a price target of Rs 2,590.
- Capital raise to boost capital ratios and support growth.
- Accelerated growth to help net interest margins.
- See good lending opportunities across wholesale and SME space as well.
Brokerages On Hero MotoCorp
- Maintained ‘Buy’ with a price target of Rs 4,250.
- Supportive macro for two wheeler growth in India.
- Hero plans to counter opposition by product action rather than price action.
- Access and cost of finance could be big demand drivers.
- Second hand bike market could see a spurt.
- Maintained ‘Hold’ with a price target of Rs 3,550.
- Hero to continue its strategy of "better features, higher pricing".
- Rapid growth in 125cc segment to help improve overall scooter market-share.
- Remain cautious on mass-market two wheeler companies.
- Expect several headwinds for margins.
Brokerages On Godrej Properties
- Maintained ‘Neutral’ with a price target of Rs 850.
- Accounting change impacts net earnings.
- Like-to-like financials much better.
- Pre-sales come off partly on higher base.
- Real estate companies to now focus on deliveries rather than hitting revenue recognition thresholds.
- Maintained ‘Equal-weight’; raised price target to Rs 707 from Rs 682.
- Opening net worth lower by Rs 740 crore due to IND AS.
- Management optimistic on pickup and expects consolidation to continue.
- Expect Godrej to continue to deliver on new project acquisitions.
- Expect new launch momentum in the ensuing quarter.
Brokerages On Nestle
- Maintained ‘Neutral’ with a price target of Rs 10,750.
- June quarter was a strong quarter where profit surpassed estimates and volume were in line.
- New launches continue; management warns about raw material inflation.
- Margins to come under pressure in the near term.
- Strong performance priced in; limited upside.
- Maintained ‘Outperform’; raised price target to Rs 11,700 from Rs 10,200.
- June quarter results were ahead of estimates.
- Good growth with strong margin expansion.
- Input costs are inching up but strong pricing power allays margin concerns.
- Believe Nestle is on a good growth trajectory.
Brokerages On Titan
- Maintained ‘Outperform’ with a price target of Rs 1,050.
- June quarter results ahead of estimates; Massive margin gains in watches.
- Jewellery: Higher Ebit, but weaker revenues.
- Management sounded positive and maintained its guidance for above 25 percent jewellery growth.
- Sustained pick-up in growth is critical for stock-price performance.
- Maintained ‘Overweight’ with a price target of Rs 1,080.
- June quarter reported in line earnings.
- Key positive for the quarter is the watch business margin.
- Key disappointment during the quarter was the jewellery business margin.