A worker looks out of a currency exchange bureau in the Grand Bazaar in Istanbul, Turkey (Photographer: Ismail Ferdous/Bloomberg)  

All You Need To Know Going Into Trade On August 16

Asian stocks extended declines and the yen climbed after technology shares slumped on earnings concerns and copper sank into a bear market, weighing on commodities.

Equities from Sydney to Seoul fell, tracking overnight moves in U.S. benchmarks that were led by the Nasdaq 100 Index. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, declined 0.3 percent to 11,399 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. stocks had their worst day in seven weeks Wednesday amid a broad decline in global equities as technology shares were roiled by disappointing results from Chinese internet giant Tencent Holdings Ltd. and copper sank into a bear market, weighing on commodities.
  • The yield on 10-year Treasuries held at 2.86 percent.

Europe Market Check

  • European equities plunged the most since June as miners extended declines amid a meltdown in metal prices.
All You Need To Know Going Into Trade On August 16

Asian Cues

  • Japan’s Topix index fell 1.7 percent.
  • Futures on Hong Kong’s Hang Seng Index slid 1.3 percent.
  • Australia’s S&P/ASX 200 Index lost 0.6 percent.
  • South Korea’s Kospi index fell 1.3 percent.
  • Futures on the S&P 500 Index dipped 0.1 percent. The S&P 500 dropped 0.8 percent and the Nasdaq 100 fell 1.2 percent.
  • The MSCI Emerging Market Index fell 1.8 percent, taking its slide since its January high to almost 20 percent.

Key Events To Watch This Week

  • Australia jobs data is coming Thursday.
  • Earnings are still to come from companies including Maersk and Carlsberg.
  • Brexit talks between the EU and the U.K. resume in Brussels Thursday.

Commodity Cues

  • The Bloomberg Commodity Index fell 1.9 percent Wednesday to the lowest since July 2017.
  • West Texas Intermediate crude slid 0.3 percent to $64.84 a barrel.
  • LME copper was up 0.3 percent after sinking 4 percent.
  • Gold fell 0.1 percent to $1,173.55 an ounce, having slid more than 3 percent this week.

Indian ADRs

All You Need To Know Going Into Trade On August 16

Stocks To Watch

  • RBI rejected Kotak Mahindra Bank’s plan for dilution of promoter stake.
  • Reliance Industries said that one of its units at its Jamnagar refinery has been shut down temporarily.
  • Shilpa Medicare to set up arm for North American operations.
  • Siyaram Silk Mills commenced production of indigo at Amravati unit.
  • Svendgaard Labs approved expansion manufacturing facilities at Kheri.
  • Jindal Worldwide board approved stock split of 5:1.
  • NCLT approved demerger of Cox & Kings forex division.
  • Monsanto India clarified that news of a lawsuit by cancer patient pertains to its U.S. arm.
  • Fortis Healthcare holders clear IHH proposal to buy company.
  • GMR Infra executed settlement agreement with PE investors for its airport arm.
  • Allcargo Logistics in talks to buy controlling stake in Gati (Economic Times).
  • Jet Airways seeks to raise Rs 5000 crore to pay debt (Mint).

IPO Watch

  • Cipla’s Ugandan unit sets IPO price at UGX 256.5 per share.
  • Mrs Bectors Food Specialities files with SEBI for IPO.

Earnings To Watch

SP Apparels (Q1, YoY)

  • Revenue up 26.7 percent at Rs 190.8 crore.
  • Net profit up 13.5 percent at Rs 12.6 crore.
  • Ebitda up 51.6 percent at Rs 28.5 crore.
  • Margin at 14.9 percent versus 12.5 percent.

Aster DM Healthcare (Q1, YoY)

  • Revenue up 14 percent at Rs 1,774.7 crore.
  • Net profit at Rs 12.4 crore versus net loss at Rs 76.9 crore.
  • Ebitda at Rs 124 crore versus Rs 39.8 crore.
  • Margin at 7 percent versus 2.6 percent.

Suven Lifesciences (Q1, YoY)

  • Revenue up 36 percent at Rs 191.7 crore.
  • Net profit up 31.1 percent at Rs 38.8 crore.
  • Ebitda up 28.7 percent at Rs 58.3 crore.
  • Margin at 30.4 percent versus 32.1 percent.

Dilip Buildcon (Q1, YoY)

  • Revenue up 46.4 percent at Rs 2,436.3 crore.
  • Net profit up 107.9 percent at Rs 254.9 crore.
  • Ebitda up 44.1 percent at Rs 432.6 crore.
  • Margin at 17.8 percent versus 18 percent.

Khadim India (Q1, YoY)

  • Revenue up 8.7 percent at Rs 189.6 crore.
  • Net profit unchanged at Rs 7.4 crore.
  • Ebitda flat at Rs 16.6 crore.
  • Margin at 8.8 percent versus 9.6 percent.

Cox & Kings (Q1, YoY)

  • Revenue up 14.5 percent at Rs 2183.9 crore.
  • Net profit down 56.1 percent at Rs 66.6 crore.
  • Ebitda down 20.2 percent at Rs 297.9 crore.
  • Margin at 13.6 percent versus 19.6 percent.

Indiabulls Real Estate (Q1, YoY)

  • Revenue up 38.5 percent at Rs 810.9 crore.
  • Net profit down 5.3 percent at Rs 117.5 crore.
  • Ebitda down 23.4 percent at Rs 246.2 crore.
  • Margin at 30.4 percent versus 54.9 percent.

Fortis Healthcare (Q1, YoY)

  • Revenue down 9.9 percent at Rs 1,042 crore.
  • Net loss at Rs 70.7 crore versus net profit at Rs 5.3 crore.
  • Ebitda at Rs 8 crore versus Rs 86.1 crore.
  • Margin at 0.8 percent versus 7.4 percent.

Bulk Deals

Parsvnath Developers

  • Globe Capital Markets acquired 82 lakh shares or 1.88 percent equity at Rs 12.2 each.
  • ITF Mauritus sold 82 lakh shares or 1.88 percent equity at Rs 12.2 each.

Who’s Meeting Whom

  • Shriram Transport Finance to meet Edelweiss Securities on Aug. 16.
  • Eris Lifesciences to meet Equirius Securities on Aug. 16.
  • TVS Motor company to meet Prince Street Capital Management on Aug. 16.
  • Westlife Development to meet investors on Aug. 16-17.
  • Himatsingka Seide to meet investors from Aug. 16-17.
  • Texmaco Rail & Engineering to meet HDFC Mutual Fund, SBI Mutual Fund and other investors from Aug. 16-17.

Insider Trades

  • Bajaj Finance promoter acquired 1 lakh shares from Aug. 10-13.
  • Raymond promoter group acquired 20k shares on Aug. 10.
  • Jagran Prakashan promoter acquired 3 lakh shares on Aug. 13.

Rupee

  • Rupee closed at 69.89/$ on Tuesday from 69.93/$ on Monday.

F&O Cues

  • Nifty August futures closed trading at 11,463, premium of 28.3 points versus 25.4 points.
  • August Series: Nifty open interest up 1.4 percent; Bank Nifty open interest down 0.6 percent.
  • India VIX ended at 13.2, down 0.8 percent.
  • Max open interest for August series at 11,500 Call (open interest at 42.1 lakh, down 7 percent).
  • Max open interest for August series at 11,000 Put (open interest at 51.3 lakh, up 2 percent).

F&O Ban

In ban: Adani Enterprises, Adani Power, Jet Airways, Punjab National Bank.

Put-Call Ratio

  • Nifty PCR at 1.70 versus 1.66
  • Nifty Bank PCR at 1.14 versus 0.95

Fund Flows

All You Need To Know Going Into Trade On August 16

Brokerage Radar

JPMorgan on Mindtree

  • Initiated ‘Neutral’ with a price target of Rs 1,050.
  • Mindtree has carved a strong positioning for itself in digital services.
  • RUN business nicely complementing digital and offering revenue stability.
  • Robust mid teen revenue growth and Rupee depreciation to lead to strong earnings growth.
  • Assign lower multiple on account of margin volatility and skewed top-client contribution.

IDFC Securities on India Strategy

  • June quarter review: Consumption, IT and commodities did well; financials disappointed.
  • Overall operationally strong quarter; broad-based in line performance.
  • Higher slippages, ageing provisions cause weakness in financials.
  • Cut Nifty EPS estimates for the current and the next financial year reduced to Rs 516 and Rs 645 respectively from Rs 549 and Rs 682 respectively.
  • Top Nifty Picks: Coal India, NTPC, IndusInd Bank, GAIL, Hero MotoCorp.

Morgan Stanley On MakeMyTrip

  • June quarter’s operating performance was better than expected.
  • Traffic metrics and customer metrics are strong.
  • Unit economics in budget hotels are improving.
  • Growth in key segments and market share dynamics remain healthy.

JPMorgan On Coal India

  • Maintained ‘Buy’ with a price target of Rs 330.
  • Strong fundamental outlook for near term.
  • Well placed in improving domestic coal market.
  • Expect dividend payout to remain elevated.
  • Technical overhang of a potential stake sale by Government.
  • Stock struggle to break out of Rs 260-330 range on concerns of earnings growth beyond 2018-19.

Deutsche Bank On UPL

  • Maintained ‘Buy’ with a price target of Rs 765.
  • Emerging Markets currency volatility is a worry, but risk-reward remains favorable.
  • Revenue growth for the current financial year is to recover to 12 percent from 6.5 percent in 2017-18.
  • Margins to also expand driven by backward integration.
  • Dollar appreciation of 1 percent can reduce post-acquisition EPS by 4 percent.

On Kotak Mahindra Bank

Goldman Sachs

  • Maintained ‘Buy’ with a price target of Rs 1,506.
  • RBI rejection to impact stocks’ performance in near-to-medium term.
  • Investor focus to shift from fundamental performance to regulatory aspect.
  • Continue to remain positive on Kotak’s fundamental performance.
  • Expect continued growth recovery and improving profitability.

Morgan Stanley

  • Maintained ‘Overweight’ with a price target of Rs 1,435.
  • Slight negative as the overhang of significant equity supply would increase.
  • Another potential solution could be sizeable inorganic growth opportunities.
  • Probability of equity capital raising appears low to given its good capital position.

Citi

  • Maintained ‘Buy’ with a price target of Rs 1,565.
  • If capital raised then it will further increase an already high Tier 1 and depress RoE for a long period.
  • Selling stake in secondary market - not preferred in the past.
  • Consider a meaningful acquisition either in the banking space or via one of its subsidiaries.

On Grasim Industries

Morgan Stanley

  • Maintained ‘Overweight’ with a price target of Rs 1,329.
  • June quarter’s Ebitda surpassed estimates, driven by strong VSF margins.
  • Outlook for VSF business remains constructive.
  • Capacity growth in VSF and chemicals should further support earnings.
  • While capex will rise, standalone balance sheet remains healthy.

Deutsche Bank

  • Maintained ‘Buy’ with a price target of Rs 1,380.
  • June quarter’s standalone result beats estimates on better margins.
  • Volume growth to be robust in both VSF and chemicals businesses.
  • Strong growth outlook in its core businesses.
  • Prefer Grasim over UltraTech given better valuation.

On Sun Pharma

CLSA

  • Maintained ‘Buy’; raise price target to Rs 750 from Rs 600.
  • June quarter was a strong quarter after the U.S. and India spring a positive surprise.
  • Specialty launches in the U.S. on track.
  • Regulatory challenges behind and pipeline monetisation underway.
  • Believe Sun is well-placed to double its adjusted EPS over the next two years.

Citi

  • Maintained ‘Neutral’ with a price target of Rs 600.
  • June quarter earnings was ahead of estimates largely on strong traction in U.S.
  • Low R&D spend drive earnings beat.
  • US traction is encouraging, margins could taper a bit.

Macquarie

  • Maintained ‘Neutral’ with a price target of Rs 522
  • June quarter’s performance was in line adjusted for lower R&D spend and tax rate.
  • Sun is guiding for higher cost largely due to upcoming specialty launches.
  • U.S. pricing remains challenging, as competitive intensity is not abating.