Morning commuters walk across a road in front of Tokyo Station in Tokyo, Japan. (Photographer: Takaaki Iwabu/Bloomberg)

All You Need To Know Going Into Trade On August 21

Asian stocks traded mixed after muted gains in U.S. equities. Equities fell in Japan and Australia and were higher in South Korea, while Hong Kong’s futures fell and China’s rose.

The Shanghai Composite Index will be closely watched after its rebound Monday, as state-backed funds were seen buying stocks to stabilise the market.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.1 percent lower at 11,572.50 as of 7:20 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 rose in thin volume as investors held onto hopes for an easing of the trade war.
  • The yield on 10-year Treasuries held at 2.82 percent, the lowest since July 6.

Also read: Trump Accuses China, EU of Currency Manipulation

Europe Market Check

European stocks rose, buoyed by hopes of easing tariffs ahead of a U.S. visit by China’s Vice Commerce Minister Wang Shouwen this week for the first significant trade negotiations between the two countries in more than two months.

All You Need To Know Going Into Trade On August 21

Also read: U.K. Demands Further EU Sanctions on Russia After Spy Poisoning

Asian Cues

  • Japan’s Topix index fell 0.4 percent.
  • S&P/ASX 200 Index lost 0.5 percent.
  • Hong Kong’s Hang Seng Index futures were down 0.2 percent.
  • CSI 300 Index futures rose 1 percent.
  • Futures on the S&P 500 Index lost 0.1 percent. The benchmark climbed 0.2 percent.
  • The MSCI Emerging Market Index gained 1.2 percent, the biggest gain in nearly a month.

Commodity Cues

  • West Texas Intermediate crude rose 0.2 percent to $66.53.
  • Brent crude traded flat at $72.22 a barrel.
  • Gold rose 0.2 percent to $1,192.25 an ounce after climbing 0.5 percent Monday.

Shanghai Exchange

  • Steel traded higher for third day; up 1 percent.
  • Aluminium traded higher; up 1.6 percent.
  • Zinc traded higher for second day; up 0.9 percent.
  • Copper traded higher for third day; up 0.7 percent.
  • Rubber snapped three-day losing streak; up 0.4 percent.

Key Events To Watch

  • Companies announcing earnings include Alibaba, Royal Bank of Canada, Lowe’s, Target, BHP Billiton, Qantas, Ping An and China’s Bank of Communications.
  • Central bankers gather at the Kansas City Fed’s annual Jackson Hole symposium, where Federal Reserve Chairman Jerome Powell speaks on Friday.
  • The Fed releases the minutes from latest FOMC meeting on Wednesday.

Also read: ‘Bitcoin Jesus’ Is Having a Hard Time Winning Over True Believers

Stocks To Watch

  • Reliance Infrastructure’s Anil Ambani denied Rahul Gandhi’s allegation that Reliance Defence was set up just before the Rafale deal announcement with French government.
  • HCL Technologies fixed Aug. 31 as a record date for buyback.
  • Apollo Tyres said Kerala state factories’ estimates loss at 1,500 tons till yesterday due to floods.
  • Goa Carbon said Indian Petcoke import ban to impact production.
  • FDC received eight observations under Form 483 for its Aurangabad unit from U.S. FDA. The observations pertain to the ophthalmic products being exported to the U.S.
  • CG Power inaugurated its first high-voltage and extra high-voltage air insulated switchgear factory at Indonesia.
  • NR Agarwal Industries’ plant is to be temporarily shut down for 15 days with effect from Aug. 27 for annual maintenance and technological upgradation.
  • ICICI Lombard launched AI-based technology to facilitate instant health insurance claim approvals.
  • Kellogg and Reckitt Benckiser are latest entrants in the race to acquire GSK Healthcare joining Nestle, Unilever, Mondelez and Coca-Cola (Economic Times).
  • Manali Petro is looking to adopt strategy to accelerate growth, revamps management (Business Standard).
  • Max Estates (realty arm of Max Ventures) set to invest Rs 1,500 crore in office realty (Economic Times).

Aviation Data For July 2018

  • Strong passenger growth for aviation sector at 20.8 percent (YoY) In July 2018.
  • IndiGo’s passenger growth at 31.5 percent (YoY) - highest in last 18 months.
  • SpiceJet’s passenger growth at 5.1 percent (YoY) - lowest in last 33 months.
  • Jet Airways’ passenger growth at 4.2 percent (YoY).

Telecom Data For June 2018

  • Bharti Airtel added 10,689 subscribers (MoM)
  • Vodafone India added 2,75,219 subscribers (MoM)
  • Idea Cellular added 63,69,785 subscribers (MoM)
  • Reliance Jio added 97,13,047 subscribers (MoM)

Also read: Can We Celebrate High GDP Growth Alone?

Earnings To Watch

  • HDFC AMC
  • Motilal Oswal Financial Services

Bulk Deals

  • TVS Motor Company: Europacific Growth Fund sold 34.06 lakh shares, or 0.72 percent equity at Rs 519.49 each.

Vadilal Industries

  • EQ India Fund acquired 48,000 shares, or 0.67 percent equity at Rs 590.24 each.
  • Ashish Ramchandra Kacholia sold 3.62 lakh shares, or 5.04 percent equity at Rs 611 each.

Teamlease Services

  • Franklin Templeton Investment Funds acquired 4.8 lakh shares, or 2.82 percent equity at Rs 2,645 each.
  • Kuwait Investment Authority acquired 94,800 shares, or 0.55 percent at Rs 2,645 each.
  • Gaja Capital Fund India sold 1.06 lakh shares, 0.612 percent equity at Rs 2,645 each.
  • GPE (India) sold 4.6 lakh shares, or 2.66 percent equity at Rs 2645.01 each.

Newgen Software Tech

  • Malabar India Fund acquired 9.7 lakh shares, or 1.41 percent equity at Rs 239 each.
  • Birla Sun Mutual Fund sold 9.7 lakh shares, or 1.4 percent equity at Rs 239 each.

Who’s Meeting Whom

  • FIEM Industries to meet SAIF Partners and Kitara Capital on Aug. 21 and Aug. 27 respectively.
  • Narayana Hrudayalaya to meet ICICI Prudential Life Insurance, Tattva Capital and other investors on Aug. 21.
  • Godrej Agrovet to meet Invesco, Nomura and other investors from Aug. 21-24.

Insider Trades

  • Singer India promoter sold 2.4 lakh shares on Aug. 16.
  • Srikalahasthi Pipes promoters acquired 26,000 shares from Aug. 16-17.
  • DCM Shriram Industries promoters acquired 2.7 lakh shares from July 2 to Aug. 17.
  • Skipper promoter Devansh Bansal acquired 2.5 lakh shares on Aug. 20.

Money Market Update

  • Rupee rebound from all-time low, up 33 paise at 69.83 a dollar.
  • Home unit gained 0.8 percent intraday, most since May 25.
  • Dollar index weakens past 96-mark, trades lower for fifth day.

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F&O Cues

  • Nifty August Futures closed trading at 11,578.9 premium of 27 points versus 17.7 points.
  • August series-Nifty Open Interest up 1.5 percent and Bank Nifty Open Interest up 0.5 percent.
  • India VIX ended at 13.0.3, down 1 percent.
  • Maximum Open Interest for August series at 11,600 Call, Open Interest at 33.8 lakh, Open Interest down 6 percent.
  • Maximum Open Interest for August series at 11,400 Put Open Interest at 43.5 lakh, Open Interest up 9 percent.

F&O Ban

  • In Ban: Adani Power, Jain Irrigation, Raymond
  • Out Of Ban: Adani Ent, Jet Airways

Put-Call Ratio

  • Nifty PCR at 1.72 versus 1.66
  • Nifty Bank PCR at 1.41 versus 1.38

Fund Flows

All You Need To Know Going Into Trade On August 21

Brokerage Radar

Credit Suisse on Avenue Supermarts

  • Initiated ‘Underperform’ with a price target of Rs 1,150.
  • Very well-run business with a proven track record.
  • Store expansion to keep margins capped.
  • Food & grocery retailing is a tough business and valuations need to account the same.
  • Valuations are factoring in a bull case scenario with low margin for safety.
  • Current price implies 40 percent organised retail market share for DMART by March 2040, which is highly unlikely.

BofAML on Tech Mahindra

  • Upgraded to ‘Buy’ From ‘Underperform’; raised price target to Rs 800 from Rs 600.
  • Telecom revival to boost both top-line & margin outlook.
  • Expect operating profit to grow at a compounded annual growth rate of 18 percent over FY18-21.
  • Such growth to provide more qualitative stock rally.

UBS on Tata Motors

  • Maintained ‘Neutral’; cut price target to Rs 280 from Rs 370.
  • Deterioration in JLR performance is likely to result in rapid re-leveraging.
  • Risk-reward not compelling as JLR vol growth falters and negative FCF expands.
  • Domestic business improving but profitability could peak in the next financial year.

Citi on IndiGo

  • Maintained ‘Sell’ with a price target of Rs 850.
  • Strong growth partly aided by weak base.
  • Believe lower fares could have also helped overall demand.
  • Recent uptick in IndiGo primarily reflects market share gain expectations.

UBS on Federal Bank

  • Maintained ‘Buy’; cut price target to Rs 105 from Rs 115.
  • Flooding in Kerala could impact repayments; 25 percent of the loan book from Kerala.
  • Target cut to factor in higher credit cost.
  • Maintain Buy due to inexpensive valuation.

Macquarie on Asian Paints

  • Maintained ‘Neutral’ with a price target of Rs 1,300.
  • GST cut to aid premiumisation and growth in the medium term.
  • Rising input prices will weigh on margin in the near term.
  • Like dominant position in Indian paint sector; Advise long-term investors to buy on dips.

HSBC on DLF

  • Maintained ‘Hold’ with a price target of Rs 217.
  • Expect sales momentum to remain moderate and dependent purely on market conditions.
  • Fund raising and receivables settlement are last leg of restructuring.
  • Operating business stabilising; Material pick-up still several quarters away.

Deutsche Bank on Indian Real Estate

  • Worst of demand slowdown has passed.
  • Pace of industry consolidation has accelerated.
  • Margins unlikely to see further compression.
  • Expect cash flow momentum to improve in coming quarters.
  • Top picks are: Sobha, Godrej Properties and Oberoi Realty.

Deutsche Bank on NTPC

  • Maintained ‘Buy’ with a price target of Rs 200.
  • Near-term issues undermine attractive stock valuations & medium-term story.
  • Strong potential of two times and 2.3 times growth in regulated equity and profit respectively by March 2022.
  • Scenario analysis on Tariff Regulations suggest more positives than negatives.