All You Need To Know Going Into Trade On August 14
Asian stocks mostly steadied Tuesday as the contagion from the economic crisis in Turkey remained relatively contained in developed markets overnight. The dollar held near its highest in 14 months and Treasuries were little changed.
Equities climbed in Japan as the yen pared some of Monday’s rise. Australia’s shares nudged higher and were little changed in South Korea. Futures pointed to a lower open in 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 11,402.50 as of 7:05 a.m.
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Here’s a quick look at all that could influence equities today.
U.S. Market Check
- U.S. stocks were lower Monday but the contagion from the economic crisis in Turkey remained largely confined to emerging-market assets.
- The yield on 10-year Treasuries were steady at 2.88 percent.
European Market Check
- European stocks declined, paring some earlier losses, as technology, chemical and food shares shrugged off fears that the weakness in Turkey’s currency could widen to include other emerging markets, after the lira hit a fresh record low.
- Japan’s Topix index rose 0.7 percent.
- Australia’s S&P/ASX 200 Index gained 0.5 percent.
- South Korea’s Kospi index was up 0.2 percent.
- Hong Kong’s Hang Seng Index futures fell 0.4 percent
- S&P 500 Index futures rose 0.2 percent
- West Texas Intermediate crude rose 0.3 percent to $67.42 a barrel.
- Brent crude traded 0.3 percent higher at $72.85 a barrel.
- Gold was flat at $1193.27 after falling 1.4 percent Monday.
- Steel trades higher for third day; up 2.1 percent.
- Aluminium trades lower; down 0.2 percent.
- Zinc trades lower for third day; down 1.9 percent.
- Copper trades little changed.
- Rubber trades lower for second day; down 0.2 percent.
Stocks To Watch
- Shaily Engineering Plastics set up new furniture plant and has purchased 17 acres of land in Halol.
- Confidence Petroleum raised Rs 78 crore via private placement from Jasol Investment and Global Strong Growth Fund.
- Navneet Education to decide on buy back of shares on Aug. 20.
- Kirloskar Pneumatic won orders worth Rs 63.3 crore from ONGC.
- Jet Airways lenders are said to be wary of extending new loans, reports Bloomberg. Earlier, the carrier clarified that the stake sale report to private equity firms is speculative.
- Prism Johnson won bid for 47900 TPA of coal from Coal India, awaiting allotment letter.
Economic Data To Watch
- 12pm: India July wholesale prices inflation YoY, estimate 5.22 percent, prior 5.77 percent.
- 08/14-08/16: India June trade balance, est. -$15.66 billion, prior -$16.6 billion
- India June exports y/y, no estimate, prior 17.6 percent
- India June imports y/y, no estimate, prior 21.3 percent
Here are the key events coming up this week:
- China releases industrial production, fixed-asset investment and retail sales data Tuesday.
- Germany releases gross domestic product data for the second quarter and the U.K. publishes unemployment figures Tuesday.
- Earnings are due this week from companies including Tata Steel, Maersk, Home Depot, China Unicom, Tencent, Cisco, Walmart, and Carlsberg.
- Brexit talks between the EU and the U.K. resume in Brussels Thursday.
- Retail sales data in the U.S. is on Wednesday, followed by housing data on Thursday.
Nifty Earnings To Watch
- Sun Pharma
Other Earnings To Watch
- Allahabad Bank
- Bharat Dynamics
- Cox & Kings
- Dilip Buildcon
- Finolex Cables
- Fortis Healthcare
- Gujarat Fluorochemicals
- Housing Development & Infra
- IDBI Bank
- GMR Infrastructure
- Indiabulls Real Estate
- Indiabulls Ventures
- LA Opala RG
- Navkar Corp
- NLC India
- Rain Industries
- Rajesh Exports
- Shankara Building
- Suprajit Engineering
- Suven Life Sciences
Earnings Reaction To Watch
Shaily Engineering Products (Q1, YoY)
- Revenues up 28.4 percent to Rs 89.1 crore.
- Net profit up 29.5 percent to Rs 5.7 crore.
- Ebitda up 19.3 percent to Rs 13.6 crore.
- Margins at 15.3 percent versus 16.4 percent.
Kesoram Industries (Q1, YoY)
- Revenues up 6.1 percent to Rs 931.7 crore.
- Net loss of Rs 63.4 crore versus loss of Rs 122.6 crore.
- Ebitda at Rs 40 crore versus Rs 0.9 crore.
Oracle Financial Services (Q1, QoQ)
- Revenue up 25.1 percent at Rs 1,345 crore.
- Net profit up 70.3 percent at Rs 402 crore.
- EBIT up 81.3 percent at Rs 611 crore.
- Margin at 45.4 percent versus 31.3 percent.
Repco Home Finance (Q1, YoY)
- Net Interest Income up 6.9 percent to Rs 118.5 crore.
- Net profit up 8.7 percent to Rs 60.9 crore.
Apex Frozen Foods (Q1, QoQ)
- Revenues up 17.8 percent to Rs 239.3 crore.
- Net profit up 21.1 percent to Rs 21.2 crore.
- Ebitda up 30.1 percent to Rs 32.4 crore.
- Margins at 13.5 percent versus 12.3 percent.
DHFL (Q1, YoY)
- Net Interest Income up 42.7 percent to Rs 956.6 crore.
- Net profit up 34.9 percent to Rs 435 crore.
Oil India (Q1, QoQ)
- Revenues up 13.1 percent to Rs 3,390.5 crore.
- Net profit down 18.8 percent to Rs 703.2 crore.
- EBITDA up 75.9 percent to Rs 1408.4 crore.
- Margins at 41.5 percent versus 26.7 percent.
Lemon Tree Hotels (Q1, YoY)
- Revenue up 18.1 percent to Rs 127.9 crore.
- Net profit at Rs 2.3 crore versus net loss of Rs 2.4 crore.
- Ebitda up 30.3 percent to Rs 34.8 crore.
- Margin at 27.2 percent versus 24.7 percent.
AstraZeneca Pharma India (Q1, YoY)
- Revenue up 26.6 percent to Rs 161.4 crore.
- Net profit up 10.3 percent to Rs 6.4 crore.
- Ebitda up 50 percent to Rs 9.3 crore.
- Margin at 5.8 percent versus 4.9 percent.
Tata Steel (Q1, YoY)
- Revenue up 27.6 percent to Rs 37,833 crore.
- Net profit doubled to Rs 1,954 crore.
- Ebitda up 30 percent to Rs 6,468 crore.
- Margin at 17.1 percent versus 16.8 percent.
Tata Chemicals (Q1, YoY)
- Revenue up 12.9 percent to Rs 2,769.1 crore.
- Net profit up 15.8 percent to Rs 206 crore.
- Ebitda up 7.9 percent to Rs 515.6 crore.
- Margin at 18.6 percent versus 19.5 percent.
Precision Camshafts (Q1, YoY)
- Revenue down 7.3 percent to Rs 94.8 crore.
- Net profit down 15.7 percent to Rs 7.5 crore.
- Ebitda down 2 percent to Rs 19.2 crore.
- Margin at 20.3 percent versus 19.2 percent.
Nandan Denim (Q1, YoY)
- Revenue down 15.7 percent to Rs 357.1 crore.
- Net profit down 68.1 percent to Rs 5.2 crore.
- Ebitda down 23.7 percent to Rs 46.6 crore.
- Margin at 13 percent versus 14.4 percent.
Ashoka Buildcon (Q1, YoY)
- Revenue down 3.2 percent to Rs 683.7 crore.
- Net profit up 12.3 percent to Rs 63.9 crore.
- Ebitda down 12.1 percent to Rs 81.2 crore.
- Margin at 11.9 percent versus 13.1 percent.
Asian Granito (Q1, YoY)
- Revenue up 5.8 percent to Rs 238.7 crore.
- Net profit down 43.3 percent to Rs 5.9 crore.
- EBITDA down 30.6 percent to Rs 20.4 crore.
- Margin at 8.5 percent versus 13 percent.
SPML Infra (Q1, YoY)
- Revenue up 0.7 percent to Rs 327.1 crore.
- Net profit up 75.7 percent to Rs 12.3 crore.
- Ebitda down 7.9 percent to Rs 47.8 crore.
- Margin at 14.6 percent versus 16 percent.
- NCL Industries: HDFC Mutual Fund acquired 9.9 lakh shares, or 2.19 percent equity at Rs 147 each.
Who’s Meeting Whom
- Gujarat Pipavav Ports to meet investors on Aug. 14.
- Westlife Development to meet investors on Aug. 14 to Aug. 15.
- Ramco Cements to meet investors on Aug. 14.
- Chambal Fertilisers & Chemicals promoter acquired 20,000 shares on Aug. 10.
- JSW Steel promoter group acquired 6.7 lakh shares from Aug. 9-10.
- NOCIL promoters sold 2 lakh shares from Aug. 8-9.
- Skipper promoter acquired 2.5 lakh shares on Aug. 13
Money Market Update
- Rupee ended at an all-time low at 69.93/$ versus 68.84/$ on Friday.
- Nifty August Futures closed trading at 11,381 premium of 25.4 points versus 9.7 points.
- August series-Nifty Open Interest down 1 percent and Bank Nifty Open Interest down 7 percent.
- India VIX ended at 13.4, up 4.2 percent.
- Maximum Open Interest for August series at 11,500 Call, Open Interest at 45.5 lakh, Open Interest up 10 percent.
- Maximum Open Interest for August series at 11,000 Put Open Interest at 50.4 lakh, Open Interest down 1 percent.
- In Ban: Adani Enterprises, Adani Power, Jet Airways, Punjab National Bank
- Nifty PCR at 1.66 versus 1.77
- Nifty Bank PCR at 0.95 versus 1.13
CLSA on Lemon Tree
- June quarter results implied a strong start for 2018-19.
- Network expansion on track; Incremental focus shifting to asset-light model.
- Changing industry dynamics to support premium valuations.
- Will review estimates post the earnings call on Aug. 16.
On Tata Steel
- Maintained ‘Outperform’ with a price target of Rs 860
- Bhushan Steel acquisition drove net profit miss; Adjusted Ebitda was inline.
- India business inline; Europe business beats estimates.
- Cut EV/Ebitda multiple as cyclical profitability of industry improves.
- Maintained ‘Buy’ with a price target of Rs 855.
- Good operational results in June quarter.
- Steel margins expand QoQ in both India and Europe.
- Margins to ease sequentially from Q1 high.
- Iron ore integration can provide a boost to Bhushan Steel margins.
- Maintained ‘Buy’; raised price target to Rs 730 from Rs 720.
- Operational beat across geographies on back of stronger spreads.
- Balance sheet remains a concern.
- An expensive Bhushan power win and volatility in currencies are near term risks.
- Management refrained from commenting on Bhushan power.
On Cadila Healthcare
- Maintained ‘Neutral’; cut price target to Rs 370 from Rs 400
- Ebitda missed estimates as decline in the U.S. was led by Tamiflu.
- Cut EPS for the current and the next financial year by 6 percent and 7 percent respectively to factor weak June quarter results.
- Stay Neutral due to high concentration.
- Maintained ‘Buy’; cut price target to Rs 440 from Rs 460.
- Sales and operating income came inline; net profit beat driven by other income.
- U.S. expected to pick-up from the second half of the current financial year; India to remain stable.
- Strong U.S. along with improving India outlook are key potential earnings drivers.
On Cummins India
- Maintained ‘Outperform’ with a price target of Rs 850.
- Positives: exports grew, margins expanded & domestic does not reflect a worrying decline.
- Maintained guidance despite divergent performance in exports and domestic.
- Believe next quarter could possibly carry an upgrade.
- Sharp correction and underperformance in last two years driving reasonable valuations.
- Maintained ‘Outperform’; raised price target to Rs 975 from Rs 965.
- Expect 100 basis points margin improvement for 2018-19.
- Mix improvement, better pricing and favourable currency movements to expand margins.
- Tax rate hike limits earning upgrades, but confidence in earnings should still rise.
- Mgmt. commentary most positive; Cummins is the cheapest Indian industrial stock.