All You Need To Know Going Into Trade On Sept. 12
Asian stocks were off to a muted start Wednesday as investors assessed how cementing expectations for more Federal Reserve interest-rate increases will affect emerging markets.
Equity benchmarks in Japan and South Korea were little changed as trading began, while Australian stocks declined. Futures indicated Hong Kong shares would nudge higher after sliding into a bear market. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.3 percent higher at 11,349.50 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 gained as the technology sector rebounded and energy-related shares rallied with crude oil.
- The yield on 10-year Treasuries rose was steady at 2.97 percent after rising five basis points.
Europe Market Check
- European stocks fell for the fourth time in six sessions as trade and geopolitical concerns took center stage again.
- Japan’s Topix index was little changed.
- Australia’s S&P/ASX 200 index slid 0.4 percent.
- South Korea’s Kospi index rose 0.2 percent.
- Futures on Hong Kong’s Hang Seng index added 0.1 percent.
- S&P 500 Index futures were little changed.
- West Texas Intermediate crude rose 0.8 percent to $69.79 a barrel.
- Gold was little changed at $1,197.81 an ounce.
- Steel traded lower for second day; down 3.6 percent.
- Aluminium snapped two-day winning streak; down 1 percent.
- Zinc traded lower for second day; down 1.2 percent.
- Copper traded marginally lower.
- Rubber traded higher; up 0.1 percent.
Here are the key events to watch out for this week:
- Policy decisions from the Bank of England and the European Central Bank on Thursday.
- Apple unveils its latest iPhones on Wednesday.
- Australia employment is due Thursday.
- China releases August industrial production, retail sales data on Friday.
- U.S. retail sales, industrial production, consumer sentiment on Friday.
Data To Watch
- 5:30 pm: India July Industrial Production (YoY), estimate 6.5 percent, prior 7 percent.
- 5:30 pm: India August CPI (YoY), estimate 3.78 percent, prior 4.17 percent.
- 09/12-09/15: India August trade balance, estimate $17.3 billion deficit, prior $18.0 billion deficit.
Stocks To Watch
- Sun Pharma clarified that it’s Mohali facility is undergoing inspection by U.S. FDA. The inspection had started on Sept. 10.
- Cipla received approval for its HIV treatment combination medicine ‘TLD’ from the South African Health Products Regulatory Authority. This drug will be manufactured at the companies’ Durban and Uganda plants.
- InterGlobe Aviation’s IndiGo has grounded another Airbus A320 neo aircraft due to Pratt and Whitney engine problem. The aircraft was grounded on Monday afternoon after it operated from Nagpur to New Delhi. The sources said oil chips were detected in the engine, a problem responsible for grounding other IndiGo neo aircraft earlier as well, according to a PTI report.
- Godrej Agrovet mulls to merge its subsidiary Astec LifeSciences with self on Sept. 14. The company holds a 57.4 percent stake in Astec Lifesciences, as reported to the exchanges.
- Wipro appointed as a Europe-based delivery partner for Duck Creek Technologies’ insurance software products. The IT major will offer implementation services and related software and data solutions for the property and casualty insurance products of Duck Creek.
- NTPC clarified that it is considering an investment approval for Talcher plant expansion. Details from the meeting to be disclosed are under the stages of finalisation.
- Redington (India) to consider share buyback on Sept. 17.
- Alembic’s board has given approval for demerging Identified Real Estate Undertaking of the Company into Shreno Limited. The demerger would consist of a premium residential real estate project of Alembic Ltd., interest in real estate business held through investment in Shreno Ltd. and project management consultancy business, services of which are provided by the company to Shreno Ltd.
- Narayana Hrudayalaya’s Bangladesh step down subsidiary entered into an agreement with Imperial Hospital Ltd. to operate and manage the latter’s cardiac services department in Bangladesh.
- Ajanta Pharma received U.S. FDA nod for Fenofibrate oral capsule.
- Reliance Industries’ Reliance Jio and Bharti Airtel received demand notices towards penalties totalling to Rs 34 lakh and Rs 11 lakh respectively from the TRAI for not meeting certain call centre service parameters.
- CARE and ICRA downgraded IL&FS Transportation’s NCDs and bank loan facilities.
- Maruti wants to move factory out of Gurugram (Economic Times).
- Seven bidders in race for $2.3 billion PNB Housing Finance buyout; Godrej, Bandhan Bank, Dewan Housing among suitors (Times of India).
- U.S. to probe Mahindra & Mahindra over Fiat Chrysler Jeep complaint (Economic Times).
Earnings To Watch
- Tourism Finance Corp.
Earnings Reaction To Watch
Reliance Capital (Q1, YoY)
- Revenue up 4.5 percent at Rs 4,619 crore versus Rs 4,420 crore.
- Net profit at Rs 272 crore versus net loss at Rs 378 crore.
- Marshall Machines: Ashish Kacholia acquired 6.99 lakh shares at Rs 41.88 apiece. The SME is listed on NSE Emerge.
Who’s Meeting Whom
- Magma Fincorp to meet Reliance MF, Motilal PMS and Elara Capital on Sept. 12.
- Jain Irrigation Systems to meet KBI Global Investors (North America) Ltd on Sept. 13.
- TATA Chemicals to meet Habrok Capital, Mobius Capital Partners and other investors on Sept 13.
- Maharashtra Seamless promoter acquired 1 lakh shares on Sept. 7.
- Confidence Petroleum India promoter acquired 58,000 shares on Sept. 7.
- Fedders Electric And Engineering removed from ASM framework.
- Godrej Consumer Products ex date for 1:2 bonus. F&O lot size revised to 1,200.
Money Market Update
- Rupee closes at record low of 72.69 per dollar versus 72.45 per dollar on Monday. The home unit has dropped 95 paise in the last two trading sessions.
- Sovereign bond extend losses as yield ends near 4-year high. The 10-year benchmark bond yield rose two basis points to 8.18 percent.
- Nifty September futures closed trading at 11,336 premium of 49 points versus 53 points.
- September series: Nifty open interest down 1.6 percent; Bank Nifty open interest up 9 percent.
- India VIX ended at 15.3, up 0.8 percent.
- Max open interest for September series at 11,800 at strike price call option (open interest at 45.5 lakh, open interest up 0.5 percent)
- Max open interest for September series at 11,400 at strike price put option (open interest at 41.6 lakh, open interest down 6 percent)
Put Call Ratio
- Nifty PCR at 1.25 versus 1.33.
- Nifty Bank PCR at 0.58 versus 0.84.
Citi on HDFC AMC
- Initiated ‘Neutral’ with a price target of Rs 1,850, implying a potential upside of 14 percent from the last regular trade.
- Strong brand and franchise, fairly valued.
- Higher equity AUM drives profitability; SIPs add stability.
- Expect AUM, Equity AUM and net profit to grow at a compounded annual growth rate of 21 percent, 30 percent and 17 percent respectively over FY18-21.
HSBC on Oil & Gas
- Oil India: Maintained ‘Buy’; raised price target to Rs 270 from Rs 253, implying a potential upside of 33 percent from the last regular trade.
- ONGC: Maintained ‘Buy’ with a price target of Rs 240, implying a potential upside of 43 percent from the last regular trade.
- Upside from higher oil to be offset by risks of higher costs and subsidy burden.
- Yet earnings should grow, driven by higher volumes and increasing gas.
- Trough valuations and attractive dividend yield still make risk-reward look.
UBS on Steel
- Tata Steel: Maintained ‘Buy’; raised price target to Rs 750 from Rs 710, implying a potential upside of 27 percent from the last regular trade.
- JSW Steel: Maintained ‘Neutral’; raised price target to Rs 425 from Rs 360, implying a potential upside of 8 percent from the last regular trade.
- India volume and price environment strong.
- External pressures look to be limited for now.
- Still see Tata Steel as attractively valued relative to peers.
Credit Suisse on Titan
- Maintained ‘Neutral’; cut price target to Rs 935 from Rs 950, implying a potential upside of 14 percent from the last regular trade.
- Absence of wedding dates to squeeze near-term demand.
- Growth guidance of 25 percent in jewellery for the current financial year is in serious risk.
- Potential regulatory action is an overhang if currency depreciates further.
Deutsche Bank on Vodafone Idea
- Maintained ‘Buy’ with a price target of Rs 100, implying a potential upside of 116.5 percent from the last regular trade.
- Key concern for the mergeco remains its leverage.
- Expect funding gap on a cashflow basis to be around Rs 7,100 crore.
- Funding gap to increase net debt by Rs 3,600 crore.
Deutsche Bank on Grasim
- Maintained ‘Buy’ with a price target of Rs 1,430, implying a potential upside of 43 percent from the last regular trade.
- Positive on growth outlook of standalone businesses.
- Expect robust 20 percent EPS CAGR in FY18-21 driven by strong margins and volumes.
- Share price fully discounts the risk of further equity infusion in Vodafone Idea.
Macquarie on Lupin
- Maintained ‘Underperform’ with a price target of Rs 788, implying a potential downside of 16 percent from the last regular trade.
- U.S.-based business continues to remain under the weather.
- Slower than expected ramp-up of key products could play spoilsport.
- Ex-currency, any meaningful topline and margin improvement will be protracted.
Credit Suisse on Sun Pharma
- Maintained ‘Outperform’ with a price target of Rs 705, implying a potential upside of 12 percent from the last regular trade.
- India margins (ex. Ranbaxy) scaled up to 50 percent now; Stub margins low on specialty loss and Halol.
- India business provides downside protection.
- Halol’s observations not very critical; Stay positive for new approvals.
Emkay on Apollo Tyres
- Maintained ‘Buy’; cut price target to Rs 295 from Rs 310, implying a potential upside of 28 percent from the last regular trade.
- Channel checks indicate that aftermarket demand remains robust.
- Price increases to pass on commodity inflation and adverse currency movements.
- Cut FY19/20 EPS estimates to factor in lower margins.