All You Need To Know Going Into Trade On Sept. 14
Asian stocks extended a rally after their recent battering drove valuations to a two-year low, following a technology-supported advance in U.S. equities.
Shares in South Korea and Japan led gains, while futures signaled a strong start in Hong Kong and China. Emerging-market currencies climbed, with the lira surging after Turkey’s larger-than-expected interest-rate hike.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.4 percent higher at 11,489.50 as of 7:10 a.m.
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Here’s a quick look at all that could influence equities today.
U.S. Market Check
- Gains in the information technology and health care sectors helped to propel U.S. stocks higher for a fourth day.
- The yield on 10-year Treasuries held at 2.97 percent.
Europe Market Check
- European shares reversed earlier gains to end the day in the red after U.S. President Donald Trump tweeted that America isn’t under pressure to reach a trade deal with China, dashing earlier hopes another round of talks will lead to an agreement.
- Japan’s Topix index rose 0.8 percent.
- South Korea’s Kospi index advanced 1.1 percent.
- Futures on Hong Kong’s Hang Seng gained 1 percent.
- FTSE China A50 futures climbed 0.6 percent.
- Australia’s S&P/ASX 200 Index rose 0.2 percent.
- Futures on the S&P 500 Index were little changed.
- The MSCI Emerging Market Index gained 0.3 percent, adding to Thursday’s 1.3 percent advance.
- West Texas Intermediate crude rose 0.4 percent to $68.88 a barrel.
- Brent crude traded 0.3 percent higher at $78.41 per barrel.
- Gold was steady at $1,202.90 an ounce.
- Steel traded flat after ending lower for last three trading sessions.
- Aluminium snapped two-day losing streak; up 0.3 percent.
- Zinc traded higher for second day; up 0.2 percent.
- Copper traded higher for second day; up 0.4 percent.
- Rubber snapped two-day winning streak; down 0.3 percent.
Data To Watch
- 12 p.m.: India August wholesale prices inflation YoY, estimate 4.62 percent, prior 5.09 percent.
- Sept. 12-15: India August Trade Balance, estimate $17.3 billion deficit, prior $18. billion deficit.
Here are the key events to watch out for this week:
- China releases August industrial production, retail sales data on Friday.
- U.S. retail sales, industrial production, consumer sentiment on Friday.
Stocks To Watch
- Sun Pharma gets U.S. FDA approval for Xelpros. The drug is used to treat ocular hypertension.
- HCL Technologies offered to buyback 3.63 crore shares (representing 2.61 percent of its equity capital) at Rs 1,100 per share. The buyback size for this offer will aggregate to Rs 4,000 crore. The offer will open on Sept. 18 and close on Oct. 3.
- Cabinet approved transfer of land of Rashtriya Chemicals & Fertilizers to Mumbai Metropolitan Regional Development Authority and Municipal Corporation of Greater Mumbai; and selling of transferable development right certificate received/receivable against this transfer.
- Dr Reddy’s Laboratories launched Neostigmine Methylsulfate Injection in the U.S.. This injection is a generic version of Bloxiverz injection, which was approved by the U.S. FDA. The brand and generic had U.S. sales of approximately $111 million MAT for the most recent twelve months ending in July 2018 according to IMS Health.
- Lupin received U.S. FDA approval for generic Atovaquone Oral Solution USP to market a generic version of GlaxoSmithKline’s Mepron Oral Suspension. This drug will help in treatment of pneumonia.
- Glenmark Pharma’s development of immune-oncology drugs received a boost, as the U.S. based-Mitra Biotech announced its partnership with the pharma company. This will be used for translation and clinical studies of immune-oncology and bispecific antibodies.
- Maruti Suzuki announced that it will boost productions of Baleno cars to cut down the waiting time for its customers. The automobile company has sold over 4.5 lakh units cumulatively since its launch.
- Jain Irrigation Systems’ U.S. arm acquired irrigation technology company ‘ETwater’. The company said that its position in U.S. smart agriculture market will be fortified and its operations will scale up, post this acquisition.
- Wipro and Anaplan announce a partnership to deliver cloud-based enterprise performance management solutions. As part of this alliance, Wipro will leverage its strong consulting and execution expertise to deploy Anaplan’s Connected Planning platform across customers’ business functions.
- State Bank of India appointed deputy managing director Prashant Kumar as the chief financial officer of the bank.
- LIC lawyer said it will take around three months to complete IDBI Bank deal, according to a Bloomberg report.
- Zydus Cadila received a final approval from the U.S. FDA to market Risedronate Sodium Delayed-Release Tablets, 35 mg. The product will be manufactured at the group’s formulations manufacturing facility at Moraiya, Ahmedabad.
- Voltas formed a Joint Venture with Arcelik. JV’s new brand Voltas Beko plans to launch over 100 units of refrigerators, washing machines and microwaves over the next three months.
- Adani Enterprises shrink Carmichael rail ambitions to trim coal mine costs. It will save more than A$1 billion ($719 million) by shortening the rail line to its planned Carmichael coal mine in Australia.
- Vedanta encountered indications of hydrocarbon during drilling and formation evaluations. The company still needs to assess potential commerciality of this discovery.
- Engineers India to acquire 100 percent stake from Government of India in Projects and Development India Ltd. Details not disclosed due confidentiality of the matter.
- The Federal Bank MD and CEO sold two lakh shares consequent to a margin call on credit facilities availed to buy ESOS shares allotted to him.
- NBCC (India) to acquire 100 percent stake in HSCC for Rs 285 crore from Government of India.
- Fitch revised Tata Motors’ JLR outlook to negative from stable, according to a Bloomberg report. Rating reaffirmed at BB+. Outlook revised as Fitch expects further negative free cash flow for the next two years.
- Torrent Pharmaceuticals: The U.S. FDA testing of products showed an additional unexpected impurity in three lots of earlier recalled Valsartan drug products, according to Bloomberg report.
Earnings To Watch
- Rural Electrification Corp.
Who’s Meeting Whom
- Dr. Lal PathLabs to meet HDFC Mutual Funds, Sudhir Power Limited and other investors from Sept. 13-20.
- IIFL Holdings to meet Helios Capital, Ward Ferry and Taiyo Pacific from Sept. 14-24.
- Mahindra & Mahindra to meet Ambit Capital, AIA Hongkong and other investors from Sept. 18-21.
- JSW Steel promoter group acquired 7.25 lakh shares from Sept. 10-11.
- Raymond promoter JK Investors (Mumbai) acquired 50,00 shares on Sept. 11.
- Apollo Tyres promoter PTL Enterprises acquired 2.7 lakh shares on Sept. 10.
- Balaji Telefilms promoter and director Ekta Kapoor acquired 74,000 shares on September 11.
- Syngene International promoters Biocon Limited and Biocon Research Limited sold 10 lakh shares on Sept. 11.
- Dharamsi Morarji Chemical Co. Ltd. placed under ASM framework.
Money Market Update
- Rupee recovered from record low after Govt official hints measures on oil, rupee, according to a Bloomberg report. The domestic currency ended 0.7 percent higher at 72.19 against the dollar amid speculation of policy steps.
- Sovereign bond gained as yield on 10-year benchmark security dropped five basis points to 8.13 percent.
- Nifty September Futures closed trading at 11,336 premium of 47 points versus 49 points.
- September series-Nifty Open Interest down 2.3 percent & Bank Nifty Open Interest up 0.5 percent.
- India VIX ended at 14.25, down 7 percent.
- Max Open Interest for September series at 11,800 Call, Open Interest at 45.5 lakh, Open Interest down 3.5 percent.
- Max Open Interest for September series at 11,400 Put Open Interest at 41.6 lakh, Open Interest down 0.6 percent.
- In Ban: Adani Enterprises
- New In Ban: Adani Enterprises
Put Call Ratio
- Nifty PCR at 1.29 versus 1.25.
- Nifty Bank PCR at 0.68 versus 0.58.
Active Stock Futures
Deutsche Bank on JSW Steel
- Maintained ‘Buy’; raised price target to Rs 440 from Rs 390, implying a potential upside of 10 percent from the last regular trade.
- Strong domestic demand to sustain robust spreads; depreciating rupee positive.
- Low inventory in China and winter capacity cuts should support robust spreads.
- Rising share of VAP to drive higher margins over FY18-20.
Credit Suisse on Shriram Transport
- Maintained ‘Neutral’; cut price target to Rs 1,250 from Rs 1,500, implying a potential upside of 6 percent from the last regular trade.
- Holding company of Shriram group admitted into bankruptcy process by NCLT.
- See high likelihood of corporate guarantees getting invoked.
- Expect higher credit cost and cut growth expectations.
- Maintain Neutral with a cautious stance.
Deutsche Bank on Power Finance Corp
- Maintained ‘Buy’ with a price target of Rs 110, implying a potential upside of 34 percent from the last regular trade.
- June quarter review: Book value impacted, but NPLs now recognised and well provided for.
- Coverage ratios improve under Ind AS; Loan growth steady.
- NIMs could continue to remain under some stress.
Citi on Cement Industry
- Checks suggest average cement realizations to be flattish to higher on a sequential basis during the second quarter.
- Would Buy into weakness in share prices as cement prices expected to rise.
- Expect June quarter’s EBITDA/tonne to likely be lower on a sequential basis.
Macquarie on United Spirits
- Maintained ‘Underperform’ with a price target of Rs 443, implying a potential downside of 23 percent from the last regular trade.
- Launch of McDowell’s No.1 Platinum whisky in U.P. could mean market share gains.
- Underperform rating based on significantly lower margin estimates.
- Negatives: reversal in input cost deflation, higher A&P spend and lower price hike in run-up to general elections.
Citi on HDFC Standard Life
- Maintained ‘Sell’ with a price target of Rs 380, implying a potential downside of 13 percent from the last regular trade.
- New CEO appointment should ensure continuity.
- Padalkar has been associated since Aug 2008 and her elevation to ensure smooth transition.
- Maintain Sell rating on valuations expensive.
Brokerages on CPI
- CPI inflation softens in line with expectations on lower food inflation.
- Expect moderation in inflation to be temporary.
- Headline inflation to rise to upper end of RBI’s target band by late 2018.
- Risks are tilted towards earlier rate hikes after sharp fall in rupee.
- Overall CPI outturn is definitely better than expectations.
- Expect positive trend to continue till the end of this calendar year.
- No need for RBI to hike the policy rate immediately.
- Will review rates outlook, post announcement on rupee stabilisation measures next week.
- Inflation cools on food and base effects.
- Cautious in the near term owing to weakness in rupee.
- Believe lower inflation trajectory and relaxed stance on monetary policy to reduce correlation between rates markets and FX over time.
- Expect adjusted core inflation to continue to soften gradually.
- Core inflation could turn sticky if recent spike in crude oil prices and the rupee depreciation persist.
- Expect food inflation to remain benign as global food prices continue to be subdued.