A tanker ship sits anchored in this aerial photograph taken above Saanich Inlet, British Columbia. (Photographer: James MacDonald/Bloomberg)

All You Need To Know Going Into Trade On Aug. 27

Asian stocks gained at the start of the week following a fresh all-time high in their U.S. counterparts Friday, as the Federal Reserve reaffirmed a slow and gradual pace of policy tightening.

Equities rose in Japan and South Korea, and were little changed in Australia, while futures trading from late Friday indicated gains for stocks in Hong Kong and China. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.4 percent higher at 11,619.50 as of 7:20 a.m.

Short on time? Well, then listen to this podcast for a quick summary of the article!

BQ Live

U.S. Market Check

  • U.S. stocks dropped and the dollar rallied the most in two weeks as the trade dispute with China showed no signs of easing. Commodities sank.
  • The yield on 10-year Treasuries rose one basis point to 2.82 percent.
All You Need To Know Going Into Trade On Aug. 27

Europe Market Check

  • European stocks gained ground in early trade as investors’ focus shifts to Federal Reserve’s Chairman Jerome Powell, set to speak in Jackson Hole.
All You Need To Know Going Into Trade On Aug. 27

Asian Cues

  • Japan’s Topix index rose 0.5 percent.
  • Australia’s S&P/ASX 200 Index slid 0.2 percent.
  • South Korea’s Kospi index rose 0.3 percent.
  • Futures on Hong Kong’s Hang Seng advanced 1 percent.
  • S&P 500 Index futures rose 0.2 percent.

Commodity Cues

  • West Texas Intermediate crude decreased 0.2 percent to $68.57 a barrel after jumping 1.3 percent Friday.
  • Brent crude traded 0.1 percent lower at 75.73 a barrel.
  • Gold was steady at $1,206.64 an ounce. It advanced 1.7 percent Friday.

Shanghai Exchange

  • Steel snapped three day losing streak; up 0.5 percent.
  • Aluminium traded higher for second day; up 0.5 percent.
  • Zinc traded higher for sixth day; up 1.8 percent.
  • Copper traded higher for second day; up 0.5 percent.
  • Rubber traded lower for third day; down 0.5 percent.

Stories That You Might’ve Missed

  • Defence Ministry approves procurement of nearly Rs 46,000 crore
  • Modi’s chances of getting re-elected have fallen to 50 percent from 99 percent, says Ruchir sharma
  • How India’s largest SUV maker plans to regain lost footing
  • AM Naik asked marshals to throw out shareholders at the L&T AGM
  • Capping political parties’ poll spends: Will it work?
  • Public sector banks plan closure of 70 overseas offices this fiscal year
  • SEBI may junk its plan to identify high-risk countries for foreign investments
  • Switch to chip-based debit cars by Dec. 31, SBI tells customers
  • Bankers are burning midnight oil to resolve bad loans worth Rs 3.8 lakh crore
  • Only 40 people will own this supercar
  • Going on a family vacation? Get it teen-approved

Here are the key events to watch out for this week:

  • It’s the U.K. summer bank holiday on Monday, when the London Stock Exchange is shut.
  • Earnings are due from companies including Canada’s largest banks and China Construction Bank Corp., ICBC, Pernod Ricard and Dollar General.
  • China’s official factory PMI may have dropped again in August, to 51.0 from July’s 51.2, according to economists surveyed by Bloomberg.
  • The U.S. economy probably grew in the second quarter at a slightly slower pace. Gross domestic product likely expanded at a 4 percent annualized rate, compared with 4.1 percent in the advance report, economists predict ahead of Wednesday’s report.
  • The Bank of Korea sets policy on Friday. Weak jobs growth has cooled speculation of an interest-rate increase, but the central bank has indicated its next move is up.

Stocks To Watch

  • Bharat Heavy Electricals is considering passing a special resolution for a share buyback. The annual general meeting is scheduled to be held on Sept. 19.
  • Tata Motors’ Jaguar Land Rover said the electric version of the classic Jaguar E-Type will go into production at the JLR factory in the U.K., and will hit the roads by 2020. The concept version of the car has a 40kWh battery, which can be recharged in six to seven hours. JLR is in the process of building another electric vehicle I-Pace in Austria.
  • Manpasand Beverages has completed the setting up of their new manufacturing facility at Varanasi, Uttar Pradesh. The plant located at UPSIDC Agropark, Phoolpur, Varanasi is spread over 7 acres with an installed capacity to produce up to 50,000 cases per day. The company has invested around Rs 170 crore to set up this facility. With the expansion, the company will now have a manufacturing capacity of around 2,75,000 cases per day, Dhirendra Singh, chairman and managing director, said. “Apart from the existing range of products, this unit will also focus on new product segments like milk-based and protein-based drinks.”
  • Delhi High Court will hear plea against IDBI Bank’s stake sale to Life Insurance Corporation of India on Aug. 28. The court’s single judge bench of Justice Vibhu Bhakru issued notices to Indian government, central bank and capital markets and insurance regulators seeking views on petition against IDBI Bank’s stake sale to LIC, Pranav Sachdeva, lawyer of All India IDBI Officer’s Associations said in an email. He also said IDBI Staff Association challenged dilution of the government’s stake in the bank below 51 percent, with LIC’s decision being ‘arbitrary and unreasonable’.
  • Fortis Healthcare extends the long stop date for the acquisition of the entire portfolio of assets of Singapore-based RHT Health Trust from Sept. 30 to Dec. 31. For the extension of the date, Fortis will be compensating RHT Health Trust for all reasonable costs. On Feb. 13, the company had signed a definitive agreement with RHT in relation to acquisition of all securities of clinical establishment and business indirectly held by the Singaporean company.
  • Patanjali moves the NCLT challenging Ruchi Soya Industries lenders’ decision to select Adani Wilmar’s offer to take over the debt-laden firm. The Mumbai bench of the National Company Law Tribunal will hear Patanjali’s petition on Aug. 27. Adani Wilmar and Patanjali group have been engaged in a long-drawn battle to take over Ruchi Soya. While Adani Wilmar emerged as the highest bidder with a Rs 6,000-crore offer, Patanjali came second with a Rs 5,700-crore bid.
  • PTC India announced that it has operationalised the flow of 126 megawatt inter-state power commissioned capacity to different beneficiary states under a government scheme. The power will flow to Uttar Pradesh, Bihar, Jharkhand and Odisha. According to the statement, the commissioned capacities are a part of the Ministry of New and Renewable Energy Wind Scheme (tranche 1) of 1,050 MW in June 2016. The statement said the company has executed power purchase agreements with developers and power sale agreements with seven state utilities.
  • Punjab Chemicals & Crop Protection has repaid its entire outstanding debt to Export Import Bank of India. The company had received letter of “settlement of dues” dated Aug. 24 from EXIM Bank.
  • Dewan Housing Finance Corporation has proposed to issue non-convertible debentures amounting to Rs 1,000 crore plus a green shoe option of Rs 1,000 crore on private placement basis.
  • GVK Group has called for bids for construction of facilities at the Navi Mumbai airport, Business Standard reported. The last date of submission of bids is Sept. 10.
  • JK Paper’s Orissa plant halted work from Saturday due to strike/lockout by contract workers. Odisha is one of the two plants operated by the company.
  • Karda Construction sought shareholders’ approval to raise borrowing limit to Rs 1,000 crore from Rs 100 crore.
  • Bosch to meet various investors and fund house along with Reliance Mutual Fund and First State Capital on August 28. Will also investor conference organised by Motilal Oswal.
  • Anil Ambani resigned as the director of the financially beleaguered Reliance Naval and Engineering on Aug. 25, “in compliance with provisions of Section 165 of the Companies Act, 2013, prescribing the limit on directorships to only 10 public companies, the company said in its stock exchange filing.

Media Reports

  • SAIL set to exit non-performing, non-operational JV companies as per details in its annual report (Mint).
  • DLF seeks strategic partner to develop 12-acre Gurugram plot; in talks with PE firms with exposure to NCR for partnership (Economic Times).
  • IRB in focus as toll fee on NH8 (Dahisar Surat) will increase from Sept. 1 (DNA).
  • Abbott India lines up 100 product launches over the next five years (PTI).
  • Aurobindo Pharma says it won’t buy Mallinckrotdz’s business (Business Standard)
  • Amazon plans to invest $700 million in Kishore Biyani’s Future Group (Business Standard).

Earnings To Watch

  • Jet Airways

Indian ADRs

All You Need To Know Going Into Trade On Aug. 27

Bulk Deals

  • Goa Carbon: Ajo Emerging Markets Small-Cap Master Fund Ltd. acquired 65,700 shares or 0.72 percent equity at Rs 826.91 each.
  • Mahindra CIE Automotive: Promoter Mahindra Vehicle Manufacturers Ltd. sold 30 lakh shares or 0.79 percent equity at Rs 265 each.
  • Ramkrishna Forgings: Religare Invesco Asset Management Company Pvt Ltd. sold 1.94 lakh shares or 0.60 percent equity at Rs 615 each.
  • Ruchi Soya: Promoter Disha Foundation sold 95.6 lakh shares or 2.86 percent equity at Rs 9.44 each.

Hexaware Technologies

  • Citigroup Global Markets Mauritius Pvt Ltd. acquired 38.5 lakh shares or 1.3 percent equity at Rs 447.5 each.
  • Societe Generale acquired 41 lakh shares or 1.38 percent equity at Rs 447.5 each.
  • HT Global IT Solutions Holdings Ltd. sold 2.5 crore shares or 8.43 percent equity at Rs 447.83 each.

Who’s Meeting Whom

  • Crompton Greaves Consumer Electricals to meet DSP Mutual Fund. Motilal AMC and other investors from Aug. 27-31.
  • Tata Motors to meet Kotak Group, Axis Mutual Fund and other investors from Aug. 29-30.

Insider Trades

  • Nocil’s promoter Mafatlal Industries sold 30,000 shares on Aug. 21.
  • Ultramarine & Pigments promoter Thirumalai Chemicals acquired 27,500 shares on Aug. 23.
  • Nava Bharat Ventures promoter group acquired 11,000 shares on Aug. 23.

(As Reported On Aug. 24)

Trading Tweaks

  • Amrutanjan Health Care and Sequent Scientific circuit filter revised to 10 percent.
  • Kaveri Seed buy back window from Aug. 27 to Sept. 07.

Money Market Update

  • Rupee snapped two-week losing streak against the dollar.
  • Home unit ended 0.4 percent higher at 69.91/$ for the week.
  • U.S. dollar extends decline after Powell speech, set for worst week since February.

F&O Cues

  • Nifty Aug Futures closed trading at 11,571.6, premium of 14 points versus 12.7 points.
  • August series-Nifty OI down 2.4 percent and Bank Nifty OI down 1 percent.
  • India VIX ended at 12.4, down 2.7 percent.
  • Max OI for August series at 11,600 Call, OI at 39.2 lakh, OI up 11 percent.
  • Max OI for August series at 11,000 Put OI at 41.7 lakh, OI unchanged.

F&O Ban

  • In Ban: Hexaware, Jet Airways, Jain Irrigation, Raymond
  • New In Ban: Hexaware, Jet Airways

Call And Put Ratio

  • Nifty PCR at 1.62 versus 1.72
  • Nifty Bank PCR at 0.91 versus 1.18
All You Need To Know Going Into Trade On Aug. 27

Brokerage Radar

Equirus Securities on Dr Lal PathLabs

  • Initiated ‘Add’ with a price target of Rs 1,100; implying a potential upside of 7 percent from the last regular trade.
  • Favorable industry tailwinds to be leveraged by extensive reach.
  • New regional lab to help fetch more B2B reach in eastern region.
  • Wellness package to offer further thrust on volumes.
  • Low-margin hospital laboratory management to help aid volumes.

Equirus Securities on Thyrocare Technologies

  • Initiated ‘Long’ with a price target of Rs 714 implying a potential upside of 14 percent from the last regular trade.
  • Preventive care to see solid growth aided by extensive network.
  • Cost leadership and low-cost model to aid margins.
  • See favorable dynamics for Wellness segment.
  • Nuclear Healthcare (NHL) laggard in long-term strategy.

JPMorgan on LIC Housing Finance

  • Maintained ‘Neutral’ with a price target of Rs 520; implying a potential downside of 9 percent from the last regular trade.
  • June quarter review: Asset quality shows pressure in retail and wholesale book.
  • Loan growth remains steady at over 15 percent.
  • Spreads show improvement QoQ; INDAS impact limited.

Edelweiss on LIC Housing Finance

  • Maintained ‘Buy’ with a price target of Rs 787; implying a potential upside of 38 percent from the last regular trade.
  • June quarter’s net profit optically in line, operating metrics trends were below expectations.
  • Individual loan growth modest; developer book lends support.
  • Asset quality under pressure; recovery holds key.

HSBC on Mahindra CIE

  • Maintained ‘Buy’; hiked price target to Rs 300 from Rs 290, implying a potential upside of 16 percent from the last regular trade.
  • Growth momentum intact despite macro headwinds in Europe business.
  • Revenue diversification and capital allocation at core of long-term growth strategy.
  • Raise earnings expectation by 3-4 percent on strong reverb quarter and robust outlook.

HSBC on Prestige Estates

  • Maintained ‘Buy’; hiked price target to Rs 350 from Rs 345, implying a potential upside of 4 percent from the last regular trade.
  • HDFC platform, office space deal with GIC and monetisation of hotel and malls to unlock value.
  • Weak collections and unsold finished stock have weighed on the stock.
  • Expect new launches in 2018-19 to be new catalyst.

Morgan Stanley on Indian Steel

  • Steel industry raised flat products prices by Rs 200/ton and long products prices by Rs 1,500-2,000 per tonne.
  • Price hike ahead of expectation helped by global prices and strong domestic demand.
  • Margins during July-September period is likely to decline marginally on a sequential basis, reflecting seasonality.

Investec on Prism Jhonson

  • Maintained ‘Hold’ with a price target of Rs 121, implying a potential upside of 10 percent from the last regular trade.
  • Cement operations in a sweet spot.
  • Incremental cost initiatives to enhance profitability further.
  • Await sustainable operating metrics before biting the turnaround bullet.
  • Like management’s focus on deleveraging and TBK turnaround.