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.
Short on time? Well, then listen to this podcast for a quick summary of the article!
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.
- 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.
- 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.
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).
- 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.
- 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.
- 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 closed at 69.89/$ on Tuesday from 69.93/$ on Monday.
- 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).
In ban: Adani Enterprises, Adani Power, Jet Airways, Punjab National Bank.
- Nifty PCR at 1.70 versus 1.66
- Nifty Bank PCR at 1.14 versus 0.95
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
- 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.
- 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.
- 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
- 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.
- 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
- 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.
- 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.
- 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.