A vendor pours chai at a market stall in Ahmedabad, Gujarat. (Photographer: Dhiraj Singh/Bloomberg)

All You Need To Know Going Into Trade On Sept. 6

Asian stocks posted modest losses Thursday amid ongoing concerns about emerging-markets and as U.S. tech shares tumbled after executives of some heavyweights faced scrutiny on Capitol Hill.

Benchmarks fell in Japan and Australia, while futures signaled losses for equities in China and Hong Kong. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.4 percent higher at 11,546 as of 7:20 a.m.

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U.S. Market Check

  • Most U.S. stocks fell, with FANG shares tumbling as executives of the tech heavyweights faced scrutiny on Capitol Hill. The selloff in emerging market assets deepened, adding to the risk-off tone on global financial markets.
  • The yield on 10-year Treasuries was stuck just below 2.90 percent.

Also read: American Shoppers to Be Hit Harder Than Chinese by Tariff War

Europe Market Check

  • European stocks fell to the lowest since April amid concerns over the region’s exposure to sliding emerging markets.
All You Need To Know Going Into Trade On Sept. 6

Also read: Germany and U.K. Drop Key Brexit Ask, Easing Path to Deal

Asian Cues

  • Japan’s Topix index fell 0.5 percent.
  • Australia’s S&P/ASX 200 Index lost 0.6 percent.
  • South Korea’s Kospi index was little changed.
  • FTSE China A50 Index futures declined 0.5 percent.
  • Futures on Hong Kong’s Hang Seng Index lost 0.1 percent.
  • S&P 500 Index futures slipped less than 0.1 percent.
  • The MSCI Emerging Market Index was little changed after losing 1.8 percent.

Commodity Cues

  • West Texas Intermediate crude edged lower to $68.50 a barrel, adding to a 1.7 percent drop.
  • Gold added 0.2 percent to $1,198.50 an ounce.
  • LME copper gained 0.5 percent to $5,898.50 per metric ton.

Shanghai Exchange

  • Steel traded higher; up 0.4 percent.
  • Aluminium traded flat after dropping in last four trading sessions.
  • Zinc snapped two-day losing streak; up 0.3 percent.
  • Copper snapped five-day losing streak; up 0.6 percent.
  • Rubber traded higher; up 0.5 percent.

Indian ADRs

All You Need To Know Going Into Trade On Sept. 6

Stocks To Watch

  • Delhi High Court ordered Malvinder Singh to deposit S$3.5 million and release of Rs 9 crore to Daiichi. The money has been attained from the sale of shares Iisted by the Singh brothers. The deposit order is due to the allegation of share sale despite ban. The court also barred the brothers from moving any assets abroad, and froze their shares in the company that owns the Fortis trademark (Bloomberg News).
  • ONGC’s overseas investment arm ONGC Videsh said that it will decide on the Iran gas project post November amidst U.S. sanctions. The foreign arm expects its first LNG production from the Mozambique project in 2022. It also said that output from the South Sudan oil field will increase from 8,000 barrel/day to 20,000 barrel/day. (Bloomberg News)
  • PSP Projects reported that it has received work orders worth Rs 226.07 crore (standalone basis) from various clients for industrial and institutional projects since its last intimation date of July 26. The total work order received during this financial year till date stands at Rs 419.97 crore.
  • Sagar Cements August sales are up by 24 percent at 247,051 MT versus 199,179 MT on a consolidated year to year basis.
  • Nandan Denim received a sanction of subsidy under the Gujarat State Textile Policy, 2012. The company expects to save Rs 65 crore on account of interest and power subsidy over a period of five years starting from December 2016. Further, the company is entitled to a GST / VAT refund up to Rs 340 crore till 2024.
  • Jindal Stainless mull increasing its foreign portfolio investor investment limit to 100 percent of the paid-up equity share capital of the company. The annual general meeting is scheduled for Sept. 27.
  • Welspun Corp board approved the merger plan pf Welspun Pipes with self. Post the merger, there will be no change in the shareholding of promoters in the listed entity.
  • Bharti Infratel: Vodafone Idea Ltd. to exit 27,447 co-locations w.e.f. Sept. 1, 2018. The aforesaid co-locations contributed 13.7 percent of the total co-locations as on June 30, 2018. Exit to results in revenue loss of Rs 60-65 crore per month. Some of this will be mitigated by exit charges.

Media Reports

  • GSK Pharma in search of buyer for non-core brands. Expects to mop-up Rs 100 crore from the sale.

New Offerings

  • Angel Broking files for IPO. The company plans to raise Rs 300 crore via new shares.

Earnings To Watch

  • Religare Enterprises

Earnings Reaction To Watch

Hudco (Q1, YoY)

  • Net Profit at Rs 333.38 crore versus Rs 162.38 crore.
  • Provisions at Rs 248 crore versus Rs 220 crore.
  • Gross NPA at 6.87 percent versus 9.32 percent.
  • Net NPA at 1.09 percent versus 2.81 percent.

SREI Infrastructure (Q1, YoY)

  • Revenue from operations up 20.7 percent at Rs 1,467.8 crore.
  • Net Profit up 114 percent to Rs 139.5 crore.
  • Provisions at Rs 95.8 crore versus Rs 104 crore.
  • Consolidated AUM up 24.2 percent at Rs 49,390 crore.
  • Disbursements growth at 35 percent at Rs 5,941 crore.

Bulk Deals

  • GSS Infotech Aspire Emerging Fund sold 1 lakh shares or 0.59 percent equity at Rs 105.09 apiece.

Who’s Meeting Whom

  • Igarashi Motors to meet DSP Mutual Fund, Axis Mutual Fund and other investors from Sept. 6-7.
  • Allcargo Logistics to meet Morgan Stanley, Edelweiss Securities and other investors from Sept. 6-11.
  • Syngene International to meet Mirae Asset, Perpetuity Ventures LLP and other investors from Sept. 6-27.
  • PSP Projects to meet Unilazer Ventures Private Limited on Sept. 6.

Insider Trades

  • IG Petrochemicals promoter group sold 10.2 lakh shares on Sept. 3.
  • Oriental Hotels promoter acquired 60,500 shares from Aug. 29-Sept. 3.
  • NOCIL promoter sold 25,000 shares on Sept. 3.
  • UPL promoter acquired 1.3 lakh shares from Aug. 31-Sept. 3.
  • Nava Bharat Ventures promoter group acquired 10,000 shares from Sept 3-4.
  • Panama Petrochem promoter group acquired 10,600 shares from Aug. 31-Sept 4.

Trading Tweaks

  • Vindhya Telelinks and Gallantt Ispat placed under ASM framework.
  • Jaiprakash Power Ventures’ circuit filter revised to 5 percent.
  • TCS buyback period from Sept. 6-21
  • Adani Enterprises ex date for demerger. Shareholders to get 1 share of Adani Gas for every share of Adani Enterprises.
  • Zensar Technologies last trading day before ex bonus date.

Last Trading Day Under ASM Framework

  • Amrutanjan Health Care
  • Borosil Glass Works
  • International Paper APPM
  • JK Paper
  • Kirloskar Oil Engines
  • Lincoln Pharmaceuticals
  • Pfizer
  • Tamil Nadu Newsprint & Papers

Money Market Update

  • Rupee hit record closing low of 71.75 on macro worries. The home unit has lost 165 paise in last six trading sessions.
  • Sovereign bonds gained for the first time in seven sessions. The 10-year benchmark bond yield settled at 8.05 percent after rising to 8.09 percent intraday, its highest level since December 2014.

F&O Cues

  • Nifty September futures closed trading at 11,518.2 premium of 41.3 points versus 52.8 points.
  • September series-Nifty open interest up 5.4 percent; Bank Nifty open interest down 7 percent.
  • India VIX ended at 13.6, down by 1 percent.
  • Max open interst for the September series call at 11,800 strike call option (open interest at 41.8 lakh shares, open interest up 0.5 percent).
  • Max open interest for the September series put at 11,400 strike put option (open interest at 38.8 lakh shares, open interest up 13 percent).

Put-Call Ratio

  • Nifty PCR at 1.37 versus 1.45
  • Nifty Bank PCR at 0.64 versus 0.61
All You Need To Know Going Into Trade On Sept. 6

Brokerage Radar

CLSA on Reliance Industries

  • Maintained ‘Buy’; raised price target to Rs 1500 from Rs 1365, implying a potential upside of 22 percent from the last regular trade.
  • Grand omni-channel strategy may be a big long-term promise for the stock.
  • Remove holding company discount on retail and Jio to raise target.
  • High customer engagement to create a big market opportunity.

Morgan Stanley on Zee Entertainment

  • Downgraded to ‘Underweight’ from ‘Overweight’; cut price target to Rs 410 from Rs 610, implying a potential downside of 15 percent from the last regular trade.
  • Investments in Zee5 likely to drag margins in near term.
  • Expect possible breakeven for Zee5 only by March 2025.
  • The operating income growth could significantly decelerate and derate valuation multiples.

JPMorgan on NMDC

  • Upgraded to ‘Overweight’ from ‘Underweight’; raised price target to Rs 145 from Rs 130, implying a potential upside of 30 percent from the last regular trade.
  • Domestic iron ore pricing strong on pellet pricing, domestic steel pricing.
  • Market is giving zero value to steel investments, we value it at Rs 45 per share.
  • Steel investment positives: capacity to come at an ideal time, low fixed costs and captive iron ore.
  • NMDC also offers an interesting option to potential mining disruption post March 2020.

Nomura on Tata Motors

  • Maintained ‘Buy’ with a price target of Rs 356, implying a potential upside of 34 percent from the last regular trade.
  • JLR’s August 2018 U.S. retail volumes better than our estimate.
  • For the current financial year, we expect 4 percent growth in overall JLR volumes driven by stronger demand in China.
  • Stock trading at lowest end of the historical trading band.

Credit Suisse on Bharat Forge

  • Maintained ‘Outperform’ with a price target of Rs 750, implying a potential upside of 13 percent from the last regular trade.
  • The company is expected to benefit with sharp rupee depreciation. About 60 percent of revenues come from exports.
  • Stands to benefit from the strong crude price environment as rig counts have started rising again.
  • Main concern is peaking of U.S. Class 8 trucks cycle.

Credit Suisse on Avenue Supermarts

  • Maintained ‘Underperform’ with a price target of Rs 1,150, implying a potential downside of 26 percent from the last regular trade.
  • On most financial and business metrics, DMART scores low versus India FMCG.
  • With FMCG multiples starting to correct, think DMART risks a derating.
  • Valuations are factoring in a bull case scenario with low margin for safety.

CLSA on Two-wheelers

  • Bajaj’s price cuts have boosted demand in entry-level motorcycles.
  • Aggressive pricing of Pulsar has also helped but cannibalization as well.
  • TVS’s dealers have not felt much impact on their premium Apache bike sale.
  • Dealers slightly concerned due to big price increase post new insurance norms.

Brokerages On Bharat Electronics

UBS

  • Maintained ‘Sell’; cut price target to Rs 95 from Rs 115, implying a potential upside of 0.5 percent from the last regular trade.
  • New pricing policy reduces margins on nominated orders to 7.5 percent from 12.5 percent.
  • Estimate a 150-225 basis point margin impact due to the new policy.
  • EVM order to help the current financial year’s revenue, but defence revenue to decline.

Antique

  • Maintained ‘Buy’; cut price target to Rs 146 from Rs 175, implying a potential upside of 54.5 percent from the last regular trade.
  • In the worst-case scenario, expect margin to fall to 16 percent in the financial year-ending March 2023 from 19 percent expected in the current financial year.
  • Expect lower 10 percent earnings CAGR over the next five years versus 13 percent growth over FY18-20
  • Cut target on lower growth along with uncertainty related to new guidelines.