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

Asian stocks began Wednesday mixed following a volatile session for U.S. equities and as yields on Treasuries retreated from a seven-year peak.

Japanese shares rising after four days of losses, while stocks were little changed in South Korea and Australia. Futures nudged higher in Hong Kong and China.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.4 percent to 10,352.50 as of 7:15 a.m.

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

U.S. Market Check

• U.S. equities end mixed. Technology stocks rebounded from a three-day rout but failed to lead the broader market higher.
• The yield on 10-year Treasuries held at 3.21 percent.

Europe Market Check

• European stocks erased earlier losses, closing in the green after Italian shares jumped as Finance Minister Giovanni Tria appealed for calm amid the war of words between the government and European Union authorities.

Asian Cues

• Japan’s Topix index rose 0.5 percent.
• Futures on the FTSE China A50 Index added 0.1 percent.
• Futures on Hong Kong’s Hang Seng Index advanced 0.2 percent.
• Australia’s S&P/ASX 200 Index slipped 0.1 percent.
• South Korea’s Kospi dipped 0.1 percent.

Commodity Cues

• West Texas Intermediate crude slid 0.3 percent to $74.76 a barrel.
• Brent crude traded 0.1 percent lower at $84.89 per U.S. dollar.
• Gold was steady at $1,189.76 an ounce.

Shanghai Exchange

• Steel traded higher for second consecutive session; up 0.85 percent.
• Aluminium traded higher for second session; up 0.18 percent.
• Zinc traded higher for third straight session; up 2.2 percent to its highest level in four months.
• Copper traded higher; up 1.28 percent.
• Rubber traded higher; up 0.12 percent.

Here are the key events to watch this week:

• The U.S. Treasury has $230 billion worth of debt auctions this week.
• The IMF and World Bank will hold meetings in Bali from Friday, where finance chiefs from around the world will gather.
• A closely watched gauge of U.S. consumer prices probably remained elevated in September and rose 2.3 percent from a year earlier, according to forecasts ahead of Thursday’s release.
• JPMorgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. kick off earnings season for U.S. banks on Friday.

Indian ADRs

Stocks To Watch

• Indiabulls Housing Finance increased effective lending rates for builder loans by 100 basis points. The benchmark rate for such loans has been increased by 200 basis points to 14.9 percent, with effect from Oct. 1.
• Tata Motors Group September Global Wholesales including Jaguar Land Rover rose by 6 percent to 1.23 lakh units on a year on year basis. Tata Motors’ commercial vehicles and Tata Daewoo global wholesales up 25 percent at 52,018 units. For all the passenger vehicles global wholesales declined by 4 percent to 71,559 units and lastly JLR global wholesales stood at 52,987 units.
• State Bank of India step up target to purchase good portfolio of assets from non-banking financial companies, the lender believed there is a good opportunity to expand loan portfolio at attractive rates, according to an emailed statement. The bank sees an opportunity to buy additional portfolio in the range of Rs 20,000 crore to Rs 30,000 crore this year in both priority and non-priority sectors.
• Usha Martin clarified that the union quoted in the news for raising concern over irregular payment of salaries is not a recognised trade union of the company and that does not represent the voice of the employee of the company at the Ranchi plant.
• Graphite India decided to halt operations in its Bengaluru graphite electrode plant by halting the furnaces in a sequential manner by October end, during the ongoing revamp work for the replacement of roof sheets. The revamping work will be completed by November end. The company said that it will make up for the production loss and expects total production level to remain unchanged from other production facilities.
• Bharat Forge initiated voluntary liquidation process of its joint venture with NTPC for business of manufacturing, buying and selling equipment relating to the power sector. The company said since its incorporation the venture has not commenced any business activity.
• Healthcare Global Enterprises’ associate arm has signed an agreement to acquire Indian medical diagnostics business of Quess Diagnostics.

• Glenmark Pharma executed pact to transfer the company’s API business to its wholly owned subsidiary Glenmark Life Sciences.
• NLC India board approved to buy back 14.19 lakh shares at Rs 88 per share, aggregating to Rs 1,249 crore. The shares proposed in the buyback represent 9.28 percent of the company’s equity paid-up share capital.
• NALCO to consider share buyback on Oct. 12.

Media Reports

• Carlyle, PNB drop plans to sell stake in PNB Housing Finance as valuation dips (Economic Times).
• Jet Airways grounds two aircraft on fund crunch (Financial Express).

Who’s Meeting Whom

• Finolex Industries to meet Emkay Global Financial Services on Oct. 10.

Insider Trades

• Kirloskar Industries promoter acquired 30,000 shares on Oct. 5.
• Greaves Cotton promoter acquired 2.5 lakh shares on Oct. 8.
• Cox & Kings promoter acquired 77,000 shares on Oct. 8.
• MEP Infra Developers promoters acquired 2 lakh shares on Oct. 6.
• Lemon Tree Hotel promoter acquired 50,000 shares from Oct. 3-5.

(As reported on Oct. 9)

Trading Tweaks

• Bhushan Steel and Viceroy Hotels added in ASM Framework.
• JB Chemicals & Pharma buy back window starts from Oct. 10-24.
• Veto Switchgears and Cables Ltd price band revised to 10 percent.
• IL&FS Transportation Network price band revised to 5 percent.
• Jubilant Industries price band revised to 5 percent.

Money Market Update

• The Indian rupee on Tuesday closed at an all-time low of 74.39 against Monday’s closing of 74.07 per dollar.

F&O Cues

• Nifty October future closed trading at 10,314, premium of 13 points.
• Nifty October open interest down 4 percent; Nifty Bank Oct open interest down 7 percent.
• Max open interest for October series at 10,500 Call (open interest at 29.9 lakh shares).
• Max open interest for October series at 10,000 Put (open interest at 41.6 lakh shares).

Put-Call Ratio

• Nifty PCR at 1.11 versus 1.12.
• Nifty Bank PCR at 0.73 versus 0.76.

Brokerage Radar

BofAML on HEG

• Initiated ‘Buy’ with a price target of Rs 6,700, implying a potential upside of 108 percent from the last regular trade.
• Purest play on the global graphite electrode profit boom.
• Strong cash flow – expansion and higher payout ahead.
• Expect 30-40 percent dividend payout ratio implying 8.5 percent dividend yield.
• Substantial value seen as multiples below prior troughs.

BofAML on Graphite India

• Initiated ‘Buy’ with a price target of Rs 1,550, implying a potential upside of 96 percent from the last regular trade.
• India's largest producer; Cheapest stock electrode globally.
• Extended period of high profit not currently priced into valuation.
• Expect record earnings this year and next on strong global electrode demand.
• Likely strong cash flow means higher shareholder returns.

Macquarie on Ashoka Buildcon

• Maintained ‘Outperform’ with a price target of Rs 215, implying a potential upside of 102 percent from the last regular trade.
• Financial closure of all HAM projects boost confidence on execution pick up from the third quarter.
• EPC business in sweet spot with strong revenue and net profit growth of 30 percent and 17 percent respectively over FY18-21.
• Minimal dependency on new order inflows due to strong order book.

JPMorgan on Tata Steel

• Maintained ‘Overweight’ with a price target of Rs 980, implying a potential upside of 71 percent from the last regular trade.
• Management said that Bhushan ramping up well with iron ore supplies from Tata starting.
• Management sees strength in domestic steel market for the next three years.
• Expect Tata Steel to surprise positively on deleveraging over next two years.

Credit Suisse on Avenue Supermarts

• Maintained ‘Underperform’ with a price target of Rs 1,150, implying a potential downside of 16 percent from the last regular trade.
• Even D-Mart is not immune to 100 percent FDI in multi-brand retail.
• Near-term earnings momentum should be decent.
• Expect potential valuation derating due to 100 percent FDI.

CLSA on Financials

• NBFCs have outperformed Bank growth but liquidity will shift the pendulum.
• Expect an elevated level of securitisation activity from NBFCs.
• Securitisation to lift domestic credit growth to 15-16 percent for banks
• Prefer banks and select HFCs over NBFCs.