All You Need To Know Going Into Trade On May 17

Asian stocks climbed early Friday after U.S. equities posted a third day of gains, with investors for now looking through the flare-up in the U.S.-China trade war.

Japanese equities rose along with those in South Korea and Australia. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded little changed at 11,300 as of 7 a.m.

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BQ Live

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

U.S. Markets Check

U.S. stocks rose and Treasuries slumped anew as the rebound in risk assets from the trade-fomented sell-off continued.

Also Read: These Are the Worst-Case Scenarios for China in the Trade War

Asian Cues

• Japan’s Topix index rose 0.6 percent.
• South Korea’s Kospi index gained 0.3 percent.
• Hang Seng futures earlier added 0.6 percent.
• Australia’s S&P/ASX 200 Index advanced 0.6 percent.
• Futures on the S&P 500 Index were little changed.

Also Read: The World’s Most Successful Economy Looks Set to Swing Left

Commodity Cues

• Brent crude extended gains fr the third consecutive trading session, ended 1.18 percent higher.
• West Texas Intermediate crude increased 0.4 percent to $63.09 a barrel.
• Gold fell less than 0.1 percent to $1,286.48 an ounce.

London Metal Exchange

• Copper ended higher for the third day, up 0.25 percent.
• Aluminium extended gains for the fifth consecutive trading session, ended 0.27 percent higher.
• Zinc ended higher for the third day, up 0.42 percent.
• Nickel ended higher for the third day, up 0.22 percent.
• Lead ended higher for the third day, up 1.3 percent.
• Tin halted a two-day rally, closed 1.86 percent lower.

Indian ADRs

Stocks To Watch

• Punjab National Bank terminated agreement to sell 1.08 crore shares of PNB Housing Finance to General Atlantic Group aggregating to Rs 925.8 crore, as conditions were not met on Long Stop Date of May 15. The Bank continues to remain the sole promoter of PNB Housing Finance.
• Action Construction Equipment: Board approved buyback of 9.9 percent of equity capital to Rs 125 per share, aggregating to Rs 34.25 crore.
• InterGlobe Aviation: Clarified on news of promoters’ differences over airline’s control stating the company is not in a position to comment on such news as it relates to the promoters of the company.
• Infosys: announced stock ownership program for 2019. To grant stock-incentives worth, Rs 10 crore to CEO & MD Salil Parekh and Rs 4 crore to COO UB Pravin Rao.
• ICICI Pru Life Insurance: Reduced its stake in Cyient from 5.02 percent to 2.99 percent.
• Minda Industries: Announced merger of its four wholly owned arm with self. The company said that the rationale behind this merger is to create a stronger standalone entity.
• Trigyn Technologies: Unit awarded IT placement services contract from Houston Independent School District (U.S.), with potential to extend the contract till June 2024.
• KDDL: Unit Ethos opened flagship store in Hyderabad.
• Punjab & Sind Bank: Reviewed its MCLR rate across various tenors with effect from May 16. One-month MCLR at 8.45 percent per annum and one-year MCLR at 8.75 percent per annum.
• IL&FS Investment Managers: Clarified on reports of audit finding 107 cases of shady lending doesn’t apply to the company.
• SREI Infra Finance: Allotted 10.57 lakh NCDs worth Rs 106 crore on May 15.
• Nippon Life to acquire majority of joint venture partner Reliance Capital’s 43 percent stake. The acquisition price values the company at Rs 10,400 crore, while the current market cap of the company is Rs 12,060 crore. (Nikkei)

Nifty Earnings To Watch

• Bajaj Auto
• Dr. Reddy's Laboratories
• Indian Oil Corporation
• UPL

Other Earnings To Watch

• CESC
• Sobha
• Apollo Microreo Systems
• Arvind
• Jubilant Life Sciences
• Bajaj Holdings & Investment
• Balakhrishna Industries
• Birla Cable
• CESC Ventures
• City Union Bank
• Corporation Bank
• Dr. Lal Path Labs
• Engineers India
• Spencer's Retail
• Jtekt India
• Khadim India
• Kirloskar Oil Engines
• National Peroxide
• Onward Technologies
• Paisalo Digital
• PI Industries
• Sanghi Industries
• Sical Logistics
• Siyaram Silk Mills,
• Sundaram Finance Holdings
• Tuticorin Alkali Chemicals & Fertilisers
• Hindusthan National Glass & Industries
• Triveni Enterprises
• Uniphos Enterprises
• Zee Learn

Earnings Reaction To Watch

Bajaj Finserv (Q4, YoY)

• Net revenue up 41.6 percent to Rs 11,110.4 crore.
• Net profit up 31.7 percent to Rs 838.7 crore.
• Declares dividend of Rs 2.5 per share.

JK Tyre & Industries (Q4, YoY)

• Revenue up 18.5 percent to Rs 2705.9 crore.
• Net profit down 76.9 percent to Rs 33.6 crore.
• Ebitda down 20.7 percent to Rs 261.1 crore.
• Margin at 9.6 percent versus 14.4 percent.
• Other Income of Rs 113.1 crore in base quarter.
• Stock purchase expenses to Rs 352 crore.
• Finance cost up 23 percent to Rs 141.5 crore.

Praj Industries (Q4, YoY)

• Revenue up 34.1 percent to Rs 368.2 crore.
• Net profit up 24.6 percent to Rs 33.4 crore.
• Ebitda up 26.2 percent to Rs 34.2 crore.
• Margin at 9.3 percent versus 9.9 percent.

Action Construction Equipment (Q4, YoY)

• Revenue down 17.3 percent to Rs 299.7 crore.
• Net profit down 18.1 percent to Rs 12.2 crore.
• Ebitda down 7.3 percent to Rs 24 crore.
• Margin at 8 percent versus 7.1 percent.
• Inventory gain of Rs 49.3 crore.

Neuland Laboratories (Q4, YoY)

• Revenue up 7.8 percent to Rs 172.7 crore.
• Net profit down 17.3 percent to Rs 6.7 crore.
• Ebitda down 2.1 percent to Rs 18.4 crore.
• Margin at 10.7 percent versus 11.7 percent.
• RM as percent of sales at 51.5 percent versus 49.6 percent.
• Employee expense up 21 percent to Rs 27.3 crore.

Blue Dart Express (Q4, YoY)

• Revenue up 8.7 percent to Rs 779.3 crore.
• Net profit down 62.2 percent to Rs 12.9 crore.
• Ebitda down 51.7 percent to Rs 27.8 crore.
• Margin at 3.6 percent versus 8 percent.
• Other expenses up 17 percent to Rs 92.8 crore.
• Employee expenses up 15 percent to Rs 131.8 crore.
• Declares dividend of Rs 12.5 per share.

Bulk Deals

Blue Star

• T Rowe Price International Discovery Fund acquired 23.54 lakh shares (2.44 percent) to Rs 750 each.
• Aditya Birla Sun Life MF sold 23.6 lakh shares (2.45 percent) to Rs 750 each.

Pledge Share Details

• Gati promoter group pledges 95,000 shares on May 10.

Trading Tweaks

• Roto Pumps to move into short term ASM Framework.

Who’s Meeting Whom

• Mahindra & Mahindra Financial Services to meet Avendus Capital, Neuberger Berman and other investors from May 17-June 10.
• South Indian Bank to meet Kotak Securities on May 21.
• Chalet Hotels to meet Fidelity International on May 17.
• Polycab to meet IDFC Securities, Investec India and other investors on May 17.
• Great Eastern Shipping to meet HDFC Mutual Fund on May 21.
• Mahindra Holidays & Resorts to meet East Bridge and ENAM on May 17.
• Syngene International to meet Mondrian Investment Partners on May 17.

Insider Trading

• Mindtree: Larsen & Toubro acquired 8.86 lakh shares on May 16. (Post this acquisition the acquirer has 26.48 percent stake in the company.).
• Globus Spirits promoter and director Ajay Kumar Swarup acquired 22,000 shares from May 14-15.
• Tanla Solutions promoter D. Tanuja Reddy acquired 4.1 lakh shares on May 14.

(As reported on May 16)

Money Market Update

• The rupee on Thursday strengthened for the third straight day to close at 70.03/$ versus Wednesday’s closing of 70.34/$.

F&O Cues

Nifty

• Nifty futures closed trading at 11,285, premium of 28 points versus 20.4 points.
• Nifty open interest down 1.5 percent, sheds 2.4 lakh shares in open interest.

Bank Nifty

• Bank Nifty futures closed trading at 28,959.7, premium of 105 points versus 50.8 points.
• Bank Nifty open interest down 13 percent sheds 1.9 lakh shares in open interest.

Options

• Nifty PCR at 1.44 versus 1.13 (across all series).

Nifty Weekly Expiry 23 May

• Max open interest on call side at 12,000 (5.5 lakh shares).
• Max open interest at Put side at 11,200 (3.5 lakh shares).
• Max open interest addition seen at 11,200 Put (+2 lakh shares), 11,000 Put (+1.3 lakh shares).

Nifty Monthly Expiry 30 May

• Max open interest on call side at 12,000 (30.4 lakh shares).
• Max open interest on put side at 11,000 (28.4 lakh shares).

Stocks In F&O Ban

• Jet Airways

Brokerage Radar

On Bajaj Finance

Deutsche Bank Research

• Maintained ‘Hold’; hiked price target to Rs 2,700 from Rs 2,400.
• March Quarter Review: strong all-round quarter.
• Pristine asset quality; PCR maintained at 60 percent.
• Confidence of broadbased growth rising; rural grows faster.

JPMorgan

• Maintained ‘Overweight’; hiked price target to Rs 3,500 from Rs 3,400.
• March quarter beat estimates, driven by higher loan growth and steady cost income.
• Unsecured business leverage looks to be under control.
• Execution on housing will be key in FY20-22.

Morgan Stanley

• Maintained ‘Equal-weight’; hiked price target to Rs 2,950 from Rs 2,600.
• March Quarter Review: strong delivery in a tough quarter.
• Management comfortable with risk indicators across segments.
• Raise EPS estimates by 9 percent and 8 percent for the current and the next financial year respectively, led by higher fee income and profitability.

On Hindalco

CLSA

• Maintained ‘Sell’ with a price target of Rs 180.
• Weak India business performance in March quarter.
• Falling aluminium cost curve and slowing global auto pose headwinds.
• Concerns on both – Indian and Novelis business.

HSBC

• Maintained ‘Buy’; cut price target to Rs 300 from Rs 320
• March quarter’ Ebitda missed estimates as copper segment disappointed.
• Rising contribution from Novelis, expected recovery in LME and cheap valuation make Hindalco strong investment case.
• Hindalco remains our preferred pick in metals.

More Calls

CLSA on Arvind Fashions

• Maintained ‘Buy’; cut price target to Rs 1,126 from Rs 1,294.
• March quarter was subdued due to weaker demand environment.
• Portfolio consolidation to improve capital efficiency.
• Margin recovery in value retailing format is key.

Morgan Stanley on Bank of India

• Maintained ‘Underweight’ with a price target of Rs 80.
• Moderation in slippages was the key positive.
• Good asset quality; pre-provisioning operating profit was miss on higher cost.
• Loan growth was muted and flat.

UBS on Punjab National Bank

• Maintained ‘Sell’; cut price target to Rs 64 from Rs 70.
• Stake sale cancelled; given low capital cushion, expect bank to cede market share.
• Despite capital infusion, tier-1 capital to stay under pressure.
• Stock appear cheap, by earnings to remain weak in the current and the next financial year.