All You Need To Know Going Into Trade On August 23
Asian stocks meandered this morning, with Australia’s benchmark down modestly and Japan little changed, while shares nudged higher in South Korea. Futures tipped a firmer open in Hong Kong.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, was trading little changed at 11,633 as of 7:20 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 slipped yesterday, halting a four-day advance as weakness in industrials outweighed gains in technology shares.
- The dollar weakened a fifth day and the 10-year Treasury yield fell to 2.82 percent after the Fed signaled in meeting minutes a readiness to hike again if the economy stays on track.
Europe Market Check
European shares ended higher as advances in commodities outweighed a slide in the auto sector.
- Japan’s Topix index was little changed.
- Australia’s S&P/ASX 200 Index fell 0.2 percent with trading volumes about 85 percent above the 30-day average amid the unfolding political drama.
- South Korea’s Kospi index added 0.3 percent.
- Futures on the FTSE China A50 Index rose 0.3 percent.
- Futures on Hong Kong’s Hang Seng Index climbed 0.3 percent.
- S&P 500 Index futures were little changed.
- West Texas Intermediate crude was steady at $67.90 a barrel after jumping 3.1 percent.
- Brent crude snapped five-day sinning streak, its longest winning streak in four months. It traded 0.12 percent lower at $74.69 a barrel.
- Gold fell 0.3 percent to $1,192.76 an ounce.
- Steel traded lower for second day; down 0.7 percent.
- Aluminium snapped two-day winning streak; down 0.1 percent.
- Zinc traded higher for fourth day; up 1.7 percent.
- Copper snapped four day winning streak; down 0.1 percent.
- Rubber snapped two-day winning streak; down 1.1 percent.
Stories You Might’ve Missed
- India unlikely to accept foreign donations for Kerala floods.
- Kerala floods show Modi has his priorities wrong.
- Check bad loan-related frauds or face action, India tells bankers.
- Ola, Hero MotoCorp’s Pawan Munjal back scooter-sharing startup.
- SEC could face backlash if Elon Musk is exonerated.
- War of words: India’s GDP fracas could hurt Modi and maul rupee bears.
- How could IMF continue lending amid the era of political crisis? Here’s Mihir Sharma’s take.
- Bill Adieu: Will Cheques Soon Check-Out Of The Indian Payment System?
- Ordered something online? Here’s how it gets to your doorstep.
- The power of influence: How a makeup mogul built a $1 billion business on Instagram.
- Keeping the series alive: Pandya, Bumrah shine in India’s 203-run victory.
Here are the key events to watch out for this week:
- Companies announcing earnings include Alibaba and China’s Bank of Communications.
- Central bankers gather at the Kansas City Fed’s annual Jackson Hole symposium, where Powell speaks Friday.
- Euro area preliminary PMI data for August is due on Thursday.
Stocks To Watch
- Ultratech Cement received Competition Commission of India’s approval for the acquisition of cement business of Century Textiles and Industries Ltd. with self. The company says that copy of the CCI order is awaited.
- Bharat Petroleum clarified on the news item: “BPCL likely to keep Mumbai refinery shut for two months”, is factually incorrect. The company says only the hydrocracker unit is closed and period of shut down is currently being assessed. All other units are operating normal.
- Tata Motors launched its compact SUV Nexon in Sri Lanka priced between 1.99 million and 4.6 million Sri Lankan rupees. The company has launched the vehicle in the island nation in partnership with its distributor Diesel & Motors Engineering PLC.
- HDFC entered into an agreement for acquiring 30.5 lakh shares, representing 25.01 percent share capital of Good Host Spaces Private Limited from Manipal Integrated Services Private Ltd. The cost of acquisition for this transaction is Rs 69.5 crore. Good Host Spaces is engaged in the business of managing and operating student housing facilities and related services.
- Nestle India partnered with Flipkart to launch Maggi Special Masala noodles. The pre-booking starts from Aug. 21. The product will be available exclusively on Flipkart from August 25-30, following which it will be available nationwide. Suresh Narayanan, chairman of Nestle India said in annual general meeting held on May 10, that Maggi noodles regained market leadership with close to 60 percent share after its relaunch.
- Granules India received approval for Abbreviated New Drug Application from the US Food & Drug Administration for Ranitidine Tablets USP (150 mg) and Cool Mint (OTC-150 mg). The approved ANDA is bio-equivalent of Reference Listed Drug of Maximum Strength Zantac Tablets of Sanofi-aventis US LLC. Company intends to commercialise this product shortly.
- ITI Ltd received Letter of Intent from Maharashtra State Government for execution of MahaNet-I project (Bharat Net II project) for value of Rs 2,658 crore (excluding annual maintenance charges and taxes), for two packages. LoI will be converted as contract on submission of prime bank guarantee within one month and signing contract with customers. The Bharat Net II project’s main aim is to provide connectivity to all 250, 500 gram panchayats in the country using optimal mix of underground fiber, fiber over power lines, radio and satellite media.
- Prataap Snacks plans to acquire 80 percent equity in Gujarat-based Avadh Snacks Private for Rs 148 crore. “This marks the entry of Prataap Snacks into India’s largest snacks market – Gujarat,” Amit Kumat, managing director and chief executive officer, said in a statement. Kumat further said Prataap Snacks would like to build its presence along with Avadh brand in Gujarat, the biggest salty snacks market in India.
- Lupin received tentative FDA approval for generic Nudovra tablets. The tablets had annual sales of approximately $31.4 million in the U.S., according to the company’s stock exchange notification.
- Jet Airways to consider cost reduction initiatives and turnaround plan on Aug. 27., PTI reported. The full-service carrier, grappling with financial woes, has been looking at ways to reduce costs amid high oil prices and intense competition. On Aug. 9, the airline's board deferred announcement of unaudited financial results for the June quarter and that would be taken up on Aug. 27.
- Prism Jhonson received Letter of intent from Madhya Pradesh government for allotment of cement grade limestone mining lease for 50 years with approximately 77 million tons of reserves. The Mining Lease would be captive to the cement plants of the company at Satna, Madhya Pradesh.
- Bandhan looks to bid for PNB Housing Finance; is likely to submit an EoI this week (Times of India).
- Centrum Capital to take over L&T Finance’s supply chain lending (Times of India).
Earnings Reaction To Watch
HDFC AMC Q1 YoY
- Revenues up 20.7 percent at Rs 471.2 crore.
- Net profit up 24.7 percent at Rs 205.3 crore.
- Mutual Fund Asset Under Management up 22 percent at Rs 301,100 crore.
Motilal Oswal Q1FY19 (Consolidated, YoY)
- Revenues up 10 percent at Rs 646.5 crore versus Rs 588.3 crore.
- Total Income up 8 percent at Rs 648 crore versus Rs 599 crore.
- Net Profit down 18 percent at Rs 103.8 crore versus Rs 125.9 crore.
Reliance Capital - Reliance General Insurance (Q1, YoY)
- Net Profit up 30 percent at Rs 57 crore.
- Gross Written Premium up 23 percent at Rs 1,571 crore.
- Combined Ratio was stable at 104 percent.
- Investment Book up 20 percent at Rs 8,261 crore.
P&G (Q1, YoY)
- Revenue up 4 percent at Rs 525 crore.
- Net profit down 43 percent at Rs 44.6 crore.
- Ebitda down 36 percent at Rs 84 crore.
- Margin at 16 percent versus 26 percent.
- Ebitda impacted due to higher employee cost, advertising expenses and other expenses.
- Employee cost up 56.5 percent at Rs 24.4 crore.
- Advertising expenses up 103 percent at Rs 67.7 crore.
- Other expenses up 25.5 percent at Rs 162 crore.
- Recommended a final dividend of Rs 40 per share.
- BG Asia Pacific to sell 1.38 crore Mahanagar Gas’ shares Aug. 23
- CreditAccess Grameen shares to start trading on the exchanges. Its IPO got 2.2 times demand at Rs 422 per share.
- AGS Transact Technologies seeks SEBI approval for Rs 1,000-crore IPO.
- Harsha Engineers seeks SEBI’s approval for initial share sale.
- Jewelry retailer Senco Gold files for Rs 600 crore IPO in India.
- Asian Granito India Limited: Edelweiss Multi Strategy Funds Management Private Limited sold 1.95 lakh shares or 0.65 percent equity at Rs 224.31 each,
- Ashish Rameshchandra Kacholia sold 1.42 lakh shares or 1.98 percent equity at Rs 548.35 each.
- Over the last two days he has sold 504,832 shares or 7 percent equity and has decreased his stake from 7.21 percent in the company, as reported on BSE, to 0.21 percent at present.
- NOCIL promoter sold 80,000 shares on Aug. 14.
- Nava Bharat Ventures promoter group acquired 20,000 shares from Aug. 17-20.
- United India Assurance Company sold 30,000 shares of Axis Bank from Aug. 16-17.
- Skipper India promoter acquired 2.5 lakh shares on Aug. 21.
- Laurus Labs promoters acquired 4.5 lakh shares from Aug. 14-17.
Money Market Update
- Rupee ended flat at 69.83/$ on Tuesday versus 69.83/$ On Monday.
- Money markets were shut Wednesday on account of Bakrid.
- Nifty August Futures closed trading at 11,586.5 premium of 15.6 points versus 27 points.
- August series-Nifty Open Interest up 0.5 percent & Bank Nifty Open Interest down 3.8 percent.
- India VIX ended at 12.9, down 1 percent.
- Max Open Interest for August series at 11,600 Call, Open Interest at 34 lakh, Open Interest up 1 percent.
- Max Open Interest for August series at 11,400 Put Open Interest at 43.5 lakh, Open Interest unchanged.
- In Ban: Jain Irrigation, Raymond
- Out Of Ban: Adani Power
Put Call Ratio
Nifty PCR at 1.70 versus 1.71
Nifty Bank PCR at 1.30 versus 1.41
Citi on Tata Power
- Maintained ‘Neutral’; cut price target to Rs 77 from Rs 100.
- Higher coal costs, CERC order and price cap on domestic sale of coal to impact.
- Cut EPS estimates to factor in higher losses in Mundra, lower Maithon and coal profits.
- Top pick in electric utilities is NTPC; ‘Buy’ rating also on Power Grid and CESC.
Goldman Sachs on Maruti Suzuki
- Maintained ‘Buy’ with a price target of Rs 11,041.
- Ciaz will underpin the brand’s strong customer loyalty.
- Expect new model to kick-start the roll out of hybrid powertrain in India.
- Expect new Ciaz to further widen leadership and add to existing robust order backlog.
Deutsche Bank on Indian Cement Sector
- Cement prices remain weak; All-India price dropped by 1.8 percent since end-June to Rs 325 per bag.
- Prices correct as expected in lean season; cost inflation to impact margins.
- Remain constructive on longer term outlook; Central and North best placed.
Morgan Stanley on Ultratech Cement
- Maintained ‘Overweight’ with a price target of Rs 4,954.
- Century deal approved by CCI.
- Ultratech’s domestic capacity should increase to 104 million tonnes.
- Market share of 23-24 percent, making it 2.5 times larger than the second player by capacity.
Deutsche Bank on Federal Bank
- Maintained ‘Buy’ with a price target of Rs 115.
- Limited business impact of Kerala Floods.
- Do not see any credit risk for corporate sector and retail sector.
- Credit costs to rise marginally in 2018-19.
Nirmal Bang on Dixon Technologies
- Initiated ‘Buy’ with a price target of Rs 3,285.
- Preferred play in highly scalable electronic manufacturing services industry.
- Backward integration to improve value addition.
- Market leadership and capacity expansion to drive growth.
- Expect revenue and net profit to grow at a compounded annual growth rate of 19 percent and 31 percent respectively over FY18-21.