All You Need To Know Going Into Trade On Sept. 10

Asian stocks were off to a muted start Monday as investors digested President Donald Trump’s threat to escalate the trade war with China.

Benchmarks were little changed in Japan, Australia and South Korea while futures indicated 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 fell 0.4 percent to 11,587 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 fell for a fourth straight days after President Donald Trump’s threat to escalate the trade war with China roiled technology and multinational shares.
• The yield on 10-year Treasuries held at 2.94 percent after advancing seven basis points.

Europe Market Check

• European equities posted their biggest weekly decline since March as a confluence of risks from emerging markets to trade converged.

Asian Cues

• Japan’s Topix index was little changed.
• Australia’s S&P/ASX 200 Index fell 0.3 percent.
• Futures on Hong Kong’s Hang Seng lost 0.5 percent.
• FTSE China A50 Index futures sank 0.4 percent.
• Futures on the S&P 500 Index rose less than 0.1 percent.

Commodity Cues

• West Texas Intermediate crude rose 0.5 percent to $68.10.
• Gold fell 0.1 percent to $1,195.28 an ounce.

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

• Policy decisions from the Bank of England and the European Central Bank.
• Russian President Vladimir Putin and Japanese Prime Minister Shinzo Abe will meet.
• Apple unveils its latest iPhones.

Indian ADRs

Stocks To Watch

• Amitabh Chaudhry has received the Reserve Bank of India’s approval to be appointed as the managing director and chief executive officer at Axis Bank. Chaudhry, who will be succeeding Shikha Sharma, will be appointed for a period of three years, effective Jan. 1.
• Tata Motors’ Jaguar Land Rover’s total retail sales for August fell 4.9 percent to 36,629 units on a year on year basis. Jaguar retail sales were 11,802 units, up 7.7 percent, driven by the introduction of the E-PACE and I-PACE, as well as XE long wheelbase sales in China. Land Rover retailed 24,827 vehicles, down 9.9 percent as increased sales of the Velar and the refreshed Range Rover were offset by the impact of the lower sales in China on Range Rover Evoque and Discovery Sport in particular.
• Coal India received a notice from Orissa State Pollution Control Board for non-compliance of environmental norms. The notices issued in July and August to two mines, alleged that sludge treatment plant in one of the mines was found to be defunct and water sprinkling systems keep inadequate dust under control. The pollution board also said that a coal fire was observed in one of the mines and the firefighting measures were inadequate. The company said that the issues are being rectified or are in the process of rectification. (Bloomberg News)
• Thyrocare Technologies approved buyback of 8.63 lakh shares at Rs 730 per share aggregating to Rs 66 crores. The buyback size is 14.97 percent of the aggregate paid-up share capital and free reserves.
• Omax Autos’ board approved proposal for establishing a new manufacturing unit in Uttar Pradesh, for manufacturing products and equipment supplied to railways. The investment required will be between Rs 100 crore-120 crore.
• RITES received a turnkey railway contract of Rs 294.67 crore from ministry of railways for doubling of rail lines for South Western Railways.
• Union Bank of India, Bank of India and Bank of Maharashtra received a penalty order of Rs 1 crore each from Reserve Bank of India. The Penalty is levied on delay on the part of the banks to detect and report fraud in an account.
• JK Lakshmi Cement to issue securities up to Rs 500 crore.
• Indian Overseas Bank raised its MCLR by five basis points across various tenors.
• State Bank of India spokesperson said that the bank withdrew itself from the process of sale of debt of Essar Steel India Ltd. and will proceed as per the order of NCLAT.
• HDIL sought shareholders’ approval to raise $200 million. The annual general meeting will be held on Sept. 29.
• Reliance Capital received certificate of registration from RBI as a core investment company- non-deposit taking systemically important institution.
• Linde India got approval from Competition Commission of India for its combination with Praxair, subject to compliance of certain modifications. (Bloomberg News)
• Tata Power Solar introduced residential rooftop solution. (Bloomberg News).
• Soril Infra Resources plans to raise Rs 550 crore for diversification/expansion of the existing and future businesses. Promoters to infuse Rs 440 crore, while non-promoters to infuse Rs 110 crore. The company to issue 1 crore convertible warrants at Rs 550 each (28 percent discount).
• Reliance Industries’ subsidiary Reliance Retail Ventures acquired additional 16.31 percent equity holding in Genesis Colors Ltd. for Rs 34.8 crore. Post the acquisition Reliance Retail Ventures along with its subsidiaries owns 65.77 percent in Genesis Colors.
• HEG and Graphite in focus as Supreme Court allowed import of needle pet coke.

Earnings To Watch

• Reliance Home Finance

Who’s Meeting Whom

• Asian Paints to meet Government of Singapore Investment Corporation and AXA Investment Managers U.K. on Sept. 11.
• Mahanagar Gas to meet SBICAP Securities and Ocean Dial Asset Management on Sept. 11.
• Mannapuram Finance to meet Quantum Securities on Sept. 12.

Insider Trades

• Apollo Tyres promoter Classic Auto Tubes acquired 1.5 lakh shares on Sept. 5.
• UPL promoter acquired 1 lakh shares on Sept. 5.
• Apar Industries promoter acquired 11,000 shares on Sept. 5-6.
• AU Small Finance Bank promoter group sold 21,000 shares July 27-Aug. 10.

(As reported on Sept. 7)

Trading Tweaks

• Texmo Pipes & Products placed under ASM framework.
• GlaxoSmithKline Pharmaceuticals last trading day before ex date for 1:1 bonus.

Money Market Update

• The Indian rupee closes at 71.74 against the U.S. dollar on Friday versus 71.99 the previous session.

F&O Cues

• Nifty September Futures closed trading at 11,632.9 premium of 43.8 points versus 30 points
• September series-Nifty open interest up 2 percent and Bank Nifty open interest unchanged
• India VIX ended at 13.8, up 1.2 percent.
• Max open interest for September series at 11,800 Call, (open interest at 40 lakh, open interest down 4 percent).
• Max open interest for September series at 11,500 Put (open interest at 47.6 lakh, open interest up 14 percent).

Put-Call Ratio

• Nifty PCR at 1.49 versus 1.39
• Nifty Bank PCR at 1.08 versus 0.83

Fund Flows

Brokerage Radar

Macquarie on Minda Industries

• Initiated ‘Outperform’ with a price target of Rs 550, implying a potential upside of 36 percent from the last regular trade.
• Dominant market share and technology leadership in core products.
• Future ready products to gain from impending shift in Indian autos.
• Well aligned to the growth drivers of Indian automotive industry.
• Expect revenue, operating income and net profit to grow at a compounded annual growth rate of 24 percent, 28 percent and 34 percent over FY18-21.

Elara Capital on Cholamandalam Investment

• Initiated ‘Buy’ with a price target of Rs 1,816, implying a potential upside og 26 percent from the last regular trade.
• Solid core: Continues to shine on diversification, market share.
• Expect broad-based AUM growth; expect 20 percent CAGR over FY18-21.
• GNPA stable over FY18-21, with credit cost likely to sustain at 1 percent.

Elara Capital on Magma Fincorp

• Initiated ‘Buy’ with a price target of Rs 190, implying a potential upside of 34 percent from the last regular trade.
• Visible transformation: ongoing restructuring paying dividends.
• Improving trajectory: AUM CAGR of 17 percent over FY18-21.
• Expect credit cost fall to 2.1 percent in the financia year ending March 2021., thereby improving ROA.

Elara Capital on M&M Financial

• Initiate Accumulate with a price target of Rs 501, implying a potential upside 9 percent from the last regular trade.
• Play on rural revival: AUM CAGR of 18 percent over FY18-21.
• Growth Drivers: ability to sustain NIM, revamped vertical structure and stable AUM growth.
• Expect earnings CAGR of 30 percent over FY18-21 aided by AUM growth and reduction in credit cost.

Elara Capital on Shriram Transport Finance

• Initiated ‘Accumulate’ with a price target of Rs 1,324, implying a potential upside of 9 percent from the last regular trade.
• Concentrated play: The current financial performance holds key.
• Concentration a dampener: AUM CAGR of 17 percent over FY18-21.
• Waiting game: asset quality slow to show signs of sustainability.
• Expect reversal in credit cost from the peaks of 4.4 percent in the previous financial year to 2.8 percent in the financial year ending March 2021.

Morgan Stanley on Havells India

• Downgraded to ‘Equalweight’ from ‘Overweight’; hiked price target to Rs 712 from Rs 642, implying a potential upside of 6 percent from the last regular trade.
• Remains in a structural sweet spot.
• Lloyd is a potential growth boost in the medium term.
• Downgrade on recent stock performance; See modest upside from current levels.

Citi on GAIL (India)

• Upgraded to ‘Buy’ from ‘Neutral’; hiked price target to Rs 420 from Rs 408, implying a potential upside of 11 percent from the last regular trade.
• Increasingly become a play on rising oil prices.
• Positives: Rise in LPG prices, widening spread in gas trading and petchem stabilization.
• Stock’s year-to-date underperformance offers an attractive entry point.

Citi on Wipro

• Maintained ‘Sell’ with a price target of Rs 280, implying a potential downside of 14 percent from the last regular trade.
• Management continues to be upbeat on demand environment.
• Investments to be focused on digital, cloud and cybersecurity.
• Growth catch versus peers remains key to any valuation rerating.

Goldman Sachs on Bajaj Auto

• Maintained ‘Neutral’; raised price target to Rs 2,908 from Rs 2,685, implying a potential downside of 0.5 percent from the last regular trade.
• Expect higher volumes across domestic and exports segments.
• Expect higher average selling price on back of rupee weakness and recent price hike.
• Full benefit of rupee weakness will get reflected in the next financial year.

Goldman Sachs on Two-wheelers

• Price competition concerns ease as Bajaj raises price of CT100/Pulsar.
• Within six months of dropping prices Bajaj has raised prices in the range of 1-4 percent.
• Maintain Buy on TVS Motor and Neutral on Bajaj Auto and Hero MotoCorp.

Nomura on India Industrials

• PSU share buyback news is a positive.
• Cash distribution through any form is a welcome change.
• Expect RoE boost in near-term and makes a case for a structural re-rating.
• Buyback is a longer-term positive for PSUs in general.

Brokerages On Axis Bank

Edelweiss

• Maintained ‘Hold’; hiked price target to Rs 647 from Rs 543, implying a potential upside of 0.3 percent from the last regular trade.
• Appointment of Amitabh Chaudhry is a positive development because of a proven track record.
• News already been doing the rounds and stock has outperformed recently.
• Further structural re-rating will be driven by asset quality performance, visibility on execution and strategic changes.

Motilal Oswal

• Maintained ‘Buy’; raised price target to Rs 750 from Rs 670, implying a potential upside of 16 percent from the last regular trade.
• RBI’s approval removes a big overhang.
• Building blocks falling in place to further strengthen recovery.
• Expect earnings to start normalizing the second half of the current financial year onwards.