A jogger runs past steam rising from a stack as Mount Fuji stands the background (Photographer: Tomohiro Ohsumi/Bloomberg)

All You Need To Know Going Into Trade On Sept. 17

Stocks in Asia kicked off the week under pressure after the latest U.S. move to place a further tranche of tariffs on Chinese goods.

Shares in South Korea and Australia edged lower, while futures on equity indexes in Hong Kong and China signaled declines. Japanese markets are closed for a holiday. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.3 percent lower at 11,511 as of 7:05 a.m.

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

BQ Live

Here’s a quick look at all that could influence equities today.

U.S. Market Check

  • U.S. stocks posted a late rally to close mostly higher for a fifth consecutive day, led by gains in the financial and energy sectors.
  • The yield on 10-year Treasuries increased two basis points to 2.99.
All You Need To Know Going Into Trade On Sept. 17

Also read: The Emerging Market Rout Is Nearing a Turning Point, Templeton Says

Europe Market Check

  • European shares advanced on Friday to cap their largest weekly gain since July amid optimism over trade and a jump in wobbly emerging-market currencies.
All You Need To Know Going Into Trade On Sept. 17

Asian Cues

  • Indonesia trade data comes Monday.
  • The Bank of Japan holds its policy meeting.
  • South Korean President Moon Jae-in visits Pyongyang for a summit with Kim Jong Un Tuesday.

Commodity Cues

  • West Texas Intermediate crude fell 0.3 percent to $68.82 a barrel.
  • Brent crude traded 0.2 percent lower at $77.93 per barrel.
  • Gold dropped 0.1 percent to $1,193.59 an ounce.

Shanghai Exchange

  • Steel traded at one-week high; up 2 percent.
  • Aluminium traded lower; down 0.2 percent.
  • Zinc snapped two-day winning streak; down 1.4 percent.
  • Copper snapped two-day winning streak; down 0.8 percent.
  • Rubber traded higher; up 0.4 percent.

Here are some key events coming up this week:

  • Indonesia trade data comes Monday.
  • The Bank of Japan holds its policy meeting.
  • South Korean President Moon Jae-in visits Pyongyang for a summit with Kim Jong Un Tuesday.

Stories You Might’ve Missed

  • Signs of the future? DUSU, By-Elections, and ‘Peak Modi’, But 2019 is still a dead heat.
  • Crop Procurement: PM-AASHA unlikely to ensure MSP to all farmers.
  • The Gatekeepers: Is there something rotten in the state of audits in India?
  • The new Apple watch shows the money the tech giant sees in health.
  • India has third-highest number of family-owned businesses: Credit Suisse.

Indian ADRs

All You Need To Know Going Into Trade On Sept. 17

Stocks To Watch

  • MEP Infrastructure Developers: Toll tax department asked the company to extend suspension of collection of toll tax from any specified commercial vehicle till Sept. 30 (from Sept. 13) pending completion of installation of RFID work. Any settlement of claims will be dealt as per the Contract Agreement executed with the authority.
  • Kwality Ltd. QIP issue opened on Sept. 17. The company plans to raise upto Rs 80 crores via QIP.
  • Sterlite Technologies will be making an addition of 15 million fibre km to its optical fibre cabling capacity, doubling it to 33 million fibre km. The enhanced capacity is expected to come on-line by June 2020 in a phased manner. Board approved the expansion plan and capital expenditure of Rs 320 crores which will be financed through a mix of internal accruals and debt.
  • Infosys to acquire 100 percent stake in cloud consulting and training services company Fluido for Euro 65 million. The company said that this acquisition will strengthen its presence in the Nordic region.
  • Cipla’s Uganda arm raised 16,646.8 crore shillings (UGX) from its IPO listing in the East African country. The market capitalisation will be around UGX 937 billion ($250 million), according to Bloomberg report.
  • Wipro’s arm signed an agreement with Mercury Network to jointly offer loan appraisal management platform. As a part of the agreement Mercury Network’s appraisal order management system will be integrated with company’s NetOxygen Loan Origination System platform.
  • Future Supply Chain Solutions signed an agreement with Voltbek (a JV of Voltas and Turkey based appliance company Arcelik). The company is appointed as the logistics partner for the brand “Voltas Beko”.
  • Videocon Industries clarified that the income tax department has not given any notice to the company regarding news reports of sale of an ICICI Bank building in Mumbai.
  • Rashtriya Chemicals and Fertilizers clarified that it has put up a proposal to Department of Fertilizers (Government of India) for post-defacto cabinet approval for transfer of Mumbai’s eastern express highway land parcel and also for sale of transfer of development rights certificates already received and likely to be received in future.
  • Kirloskar Pneumatic fixed Sept. 27 as its share-split record date.
  • Corporation Bank revised its overnight MCLR to 8.1 percent and the one-year rate to 8.95 percent. The changes will be effective from Sept. 15.

New Offerings

  • Ircon International Ltd., a state-run railway company, will be launching its three-day initial public offering today as the government looks to offload part of its stake. The company is offering 99.1 lakh shares at a price of Rs 470-475 apiece.

Earnings Reaction To Watch

Rural Electrification Corp. (Q1, YoY)

  • Net Interest Income down 10.5 percent at Rs 2,041 crore.
  • Net Profit up 36.5 percent at Rs 1,468.7 crore.
  • NIM at 3.72 percent versus 4.63 percent.
  • Gross NPA at 8.12 percent.
  • Net NPA at 4.27 percent.

Bulk Deals

  • IRBInvit Fund: Promoter Virendra D Mhaiskar acquired 75 lakh shares at Rs 75.6 each.
  • Fortis Healthcare: Goldman Sachs Singapore Pte acquired 26 lakh shares or 0.50 percent equity at Rs 144.73 each.
  • J.Kumar Infraprojects: Well Management Co LLP A/C The WTC Nam Coll Invst FDS TR Opportunistic EQ Portfolio acquired 4.9 lakh shares or 0.64 percent at Rs 242 each.

Balrampur Chini Mills

  • Norges Bank A/C Norges Bank on account of the Government sold 19.2 lakh shares or 0.82 percent equity at Rs 84.44 each.
  • Aequitas Investment Consultancy Pvt Ltd sold 11.7 lakh shares or 0.50 percent equity at Rs 90.24 each.

Who’s Meeting Whom

  • KEI Industries to meet ICICI Securities on 18 Sept.
  • Shriram City Union Finance to  meet Laburnum Capital Advisors and SAIF Partners on Sept. 17-19.
  • Crompton Greaves Consumer Electricals to meet Kotak Mahindra AMC, GIC Private and other investors from Sept. 17-19.
  • Shriram Transport Finance to meet Evenstar Capital, Fred Alger Management and other investors from Sept. 18-19.
  • TATA Motors to meet Reliance MF, AIA Hongkong and other investors from Sept. 17-20.
  • Voltas to meet AXA Investment Managers UK on Sept. 17.
  • Chola Mandalam Investment and Finance to meet Emkay Global Financial Services on Sept. 17.
  • Indraprastha Gas to meet HSBC Securities and Capital Markets (India) Pvt Ltd on Sept. 19.

Insider Trades

  • Apollo Tyres promoter group PTL Enterprises acquired 2.25 lakh shares on Sept. 12.
  • UPL promoter Nerka Chemicals Pvt acquired 1 lakh shares on Sept. 11.
  • Nava Bharat Ventures promoter group acquired 8k shares on Sept. 12.

Trading Tweaks

  • Lanco Infratech Ltd. placed under ASM framework

Money Market Update

  • Rupee ended at 71.86/$ on Friday versus 72.19/$ on Wednesday. The home unit depreciated for the third consecutive week.

F&O Cues

  • Nifty September futures closed trading at 11,547,  premium of 32 points
  • Nifty September open interest down 1.9 percent; Nifty Bank Sept. Open Interest down 17 percent.
  • Max Open Interest for September series at 11,800 Call, Open Interest at 40.8 lakh shares.
  • Max Open Interest for September series at 11,500 Put OI at 38.5 lakh shares.

F&O Ban

  • In Ban: Adani Enterprises, Balrampur Chini Mills.

Put Call Ratio

  • Nifty 1.38 versus 1.29
  • Nifty Bank 1.02 versus 0.89

Fund Flows

All You Need To Know Going Into Trade On Sept. 17

Brokerage Radar

CLSA on Indian Pharma

  • Improving fundamentals and forex drive outperformance.
  • Still see certain levers for the rally to sustain.
  • Positives: low correlation to electoral outcomes, underweight position in FII portfolios and potential earnings upgrade in near term.
  • Like Sun Pharma for its specialty focus in the U.S. and good execution in key specialty products.
  • Cipla is well-placed to grow its U.S. business and has strong domestic portfolio.
  • Downgrade Cadila Healthcare to Outperform from Buy on valuations.

CLSA on PVR

  • Maintained ‘Buy’; raise price target to Rs 1,690 from Rs 1,450, implying a potential upside of 22.5 percent from the last regular trade.
  • Deal with ticketing aggregators reassures multiplexes’ bargaining power.
  • Acquisition of SPI Cinemas fortifies southern India presence.
  • Raise valuation multiple as uncertainty around F&B prices is now waning.

Citi on Jindal Steel & Power

  • Maintained ‘Buy’; cut price target to Rs 400 from Rs 401, implying a potential upside of 71 percent from the last regular trade.
  • Previous financial year’s annual report shows growth in cash flow; Debt pay-down started.
  • Favorable steel market dynamics to help capacity ramp-up.
  • Valuations are still very attractive.

Citi on India Paints

  • Remain positive on revenue growth prospects of Indian paints industry
  • Negatives: weak rupee and price hardening of raw materials
  • Think paint companies would take price hikes in October or November.
  • Could see downside risks to earnings if cost push sustains or price hikes are delayed.

Deutsche Bank on REC

  • Maintained ‘Buy’ with a price target of Rs 155.
  • Book value impact negative but coverage ratios improve.
  • Loan growth steady at 16 percent; share of renewables picking up.
  • Expect sharply lower credit costs in 2018-19 as coverage ratios now comfortable.

Macquarie on KEC International

  • Maintained ‘Outperform’ with a price target of Rs 443.
  • Beneficiary of 100 percent railway electrification by March 2022.
  • KEC’s market share in railway electrification stands at above 40 percent.
  • Estimate 7 percent upside risk to order inflow estimate over FY19-21.