Traders work on the Mizuho Americas trading floor in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

All You Need To Know Going Into Trade On April 16

Asian stocks stalled near six-month highs Tuesday as investors weighed earnings in the U.S. and Japan.

Shares were little changed in Tokyo, Sydney and Seoul, while futures signalled Hong Kong equities will decline. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.15 percent to 11,753 as of 7: 20 a.m.

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BQ Live

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

U.S Market Check

  • U.S. stocks halted a three-day advance mixed after disappointing results from Goldman Sachs Group Inc. and Citigroup Inc. dragged down bank shares.
  • The yield on 10-year Treasuries was steady at 2.55 percent.

Also read: After 60,000% Rally, America’s Top Stock Has Suddenly Gone Cold

Asian Cues

  • Topix index fell 0.2 percent.
  • Australia’s S&P/ASX 200 Index fell 0.2 percent.
  • Hong Kong’s Hang Seng Index futures lost 0.4 percent.
  • S&P 500 futures were little changed. The S&P 500 fell 0.1 percent.

Also read: The World's Worst Major Stock Market Is Really, Really Boring

Commodity Cues

  • Brent crude remained unchanged at $71.16 per barrel.
  • WTI crude oil rose 0.1 percent to $63.49 a barrel after dropping 0.8 percent.
  • Gold was steady at $1,287.40 an ounc

Also read: Libya Fighting Has Erupted Again. Here’s the Oil Impact

London Metal Exchange

  • Aluminium gained for the session straight session, ended 0.11 percent higher.
  • Copper halted a two-day gain, ended 0.06 percent lower.
  • Lead snapped its four-day fall, ended 0.1 percent lower.
  • Tin halted its one-day gain, ended 0.24 percent lower.
  • Nickel resumed losses after a one-day gain, ended 0.24 percent higher.

Also read: The Palladium ‘Bubble Has Burst’ With Biggest Drop Since 2010

Key Events/Data To Watch This Week

  • The Reserve Bank of Australia releases the minutes of its latest rate-decision meeting Tuesday.
  • Wednesday brings China GDP, industrial production and retail sales data.
  • Stock markets will be closed for Easter holidays in countries including the U.S., U.K. and Germany on Friday.

Also read: India’s Trade Deficit Widens In March

Indian ADRs

All You Need To Know Going Into Trade On April 16

Stocks To Watch

  • Cipla’s arm entered into a definitive agreement with Pulmatrix for commercialization of Pulmazole which is used for treatment of asthma-related allergies. The arm will pay $22 million to Pulmatrix in exchange of assignment of all rights for Pulmazole in relation to pulmonary indications.
  • Dr Reddy’s received an establishment inspection report from the U.S. FDA for its Hyderabad Formulations Manufacturing Plant. In February, the plant had received eleven observations under Form 483 by the FDA. The regulatory body has determined the inspection classification of this facility as Voluntary Action Initiated.
  • Delhi High Court rejected petitions by Essar Power and GMR’s energy arm seeking to surrender coal mines they won in 2015 auctions and refund of money paid to the government, according to an order on the court’s website. (Bloomberg News)
  • Suven Life Sciences board approved increasing investment limit from $25 million up to $50 million in its U.S. arm, in order to undertake clinical trials on molecules.
  • Info Edge invested $60 miilion in fin-tech company Etechaces for 6.25 percent stake. Etechaces owns Policybazaar.com and Paisabazaar.com.  The company said post this transaction, its holding through wholly owned arms will be 7.59 percent and via company’s subsidiary Makesense Technolgies (where company holds 50.01 percent stake) holds 16.51 percent in Etechaces.
  • Lakshmi Vilas Bank to consider actual price for the preferential allotment of equity shares on April 22. As per the press release, the bank has clarified that the Bank is proposing to make a preferential allotment to Indiabulls Housing Finance Limited to the extent of 4.99 percent of the Bank’s post-money equity, with the relevant date for this action being by end of April.
  • Prestige Estate Project’s arm acquired remaining 51 percent stake in Babji Realtors for Rs 364 crore. The company says that the target entity is in the business of real estate development including developing and leasing of shopping malls.
  • Dynamatic Technologies launched Tejas Main Fuselage assembly line for Hindustan Aeronautics. (Alert: The company has a market capitalization of Rs 966 crore)
  • Deepak Fertilisers and Petrochemicals board to consider issuance of foreign currency bonds upto $30 million and for raising upto $30 million for its arm Smartchem Technolgies, from International Finance Corporation, on April 22.
  • Nestle put May 7 as the record date for payment of interim dividend.
  • Cyient launched digital solutions for 5G network deployment.
  • Syndicate Bank reduced MCLR by five basis points across various tenors with effect from April 15. One-year MCLR at 8.6 percent and one-month MCLR at 8.25 percent.
  • Shriram Properties got the SEBI approval for IPO. (Press Trust of India)
  • LEEL Electricals: Mukat Behari Sharma, wholetime director and CFO has resigned due to his health and personal reasons. Ajay Dogra and Deepti Sahai, non-executive independent director has resigned due to health and personal reasons.
  • ICICI Lombard General Insurance: IRDAI has approved re-appointment of Bhargav Dasgupta as MD and CEO for a period of five years effective from May 1, 2019.

Shriram Transport Finance Updates

  • Company has received show cause notice from Directorate of Enforcement in relation to erstwhile Shriram Holdings (Madras) Pvt. Ltd. which was amalgamated with Shriram Transport Finance w.e.f April 1, 2012.
  • Shriram Holding had relevant approval for foreign equity participation of up to 74 percent. Shriram Holding had issued warrants to the extent of Rs 243.6 crore in 2006 which were converted into equity shares within the prescribed limit.
  • The notice alleges that the warrants were issued without relevant approvals. The company had sought clarification from Foreign Investment Promotion Board (FIPB) at that point of time.
  • However, Department of Economic Affairs said that the policy regarding issuance of warrants was not explicit in the year 2006 and an approval of FIPB was not required.
  • Company is under the bona fide view that it has not contravened any of the provisions of FEMA for which it has been alleged.

Jet Airways Update

  • Airline extended international operations cancellation to April 18. CEO Vinay Dube said the airline has been in talk with vendors but it hasn’t secured any funding so far. (Bloomberg News)
  • SBI spokesperson said the bid process for orderly sale of equity in Jet Airways is currently being run by SBI CAPS and is being vetted by the legal team. The prospective bidders will be shortlisted  by SBI CAPs shortly. The proposed equity conversion by banks, if any, will be undertaken as a transitory mechanism to facilitate the bidding cum sale process. SBI is acting on behalf of the group of lenders as part of the Bank Led Resolution Process. (Press Statement by SBI)

New Listing

  • Polycab India shares to start trading on the exchanges after IPO gets 51.9 times demand at Rs 538 per share.

Also read: Polycab India’s IPO: Here’s All You Need To Know

Nifty Earnings To Watch

Wipro (Q4,QoQ)

  • IT Services revenue seen 2 percent higher at $2,086 million.
  • Revenue 0.1 percent higher at Rs 15,069 crore.
  • EBIT 0.9 percent lower at Rs 2,749 crore.
  • EBIT margins seen 20 basis points lower at 18.2 percent.
  • Profit seen seen 0.8 percent lower at Rs 2,489 crore.

Also read: All You Need To Know Going Into Fourth-Quarter Earnings Season

Other Earnings To Watch

  • Mastek
  • Den Networks
  • 5paisa Capital

Earnings Reaction To Watch

Hathway Cable and Datacom (Q4, YoY)

  • Revenue down 9.1 percent to Rs 132.4 crore.
  • Net profit at Rs 212.7 crore versus Rs 12.6 crore.
  • Ebitda down 28.1 percent at Rs 42.4 crore versus Rs 59 crore.
  • Margins at 32 percent versus 40.5 percent.
  • Other Income of Rs 41 crore.
  • Deferred Tax Income of Rs 267.7 crore.
  • Exceptional loss of Rs 84.54 crore.

Tata Metaliks (Q4, YoY)

  • Revenue up 8.7 percent to Rs 593.8 crore.
  • Net profit up 17.5 percent to Rs 64.5 crore.
  • Ebitda down 8.1 percent to Rs 80.8 crore.
  • Margins at 13.6 percent versus 16.1 percent.
  • Deferred Tax Income of Rs 19.5 crore.
  • RM as percent of sales at 60 percent versus 52 percent.
  • Pig Iron Revenue up 10 percent to Rs 426.5 crore.
  • Ductile Iron Pipe Revenue up 15 percent at Rs 345.2 crore.
  • Declares dividend of Rs 3.5 per share.

Tinplate Company of India (Q4, YoY)

  • Revenue up 4.7 percent to Rs 727.8 crore.
  • Net profit down 3.2 percent to Rs 27.6 crore.
  • Ebitda down 8.2 percent to Rs 53.6 crore.
  • Margins at 7.4 percent versus 8.4 percent.
  • Decrease in inventories to Rs 79.4 crore.
  • Employee benefit expenses up 24 percent to Rs 31 crore.

Reliance Industrial Infrastructure (Q4, YoY)

  • Revenue down 11.4 percent to Rs 20.9 crore versus.
  • Net profit down 24 percent to Rs 1.9 crore.
  • Ebitda down 27.8 percent to Rs 2.6 crore.
  • Margins at 12.4 percent versus 15.3 percent.
  • Declares dividend of Rs 3 per share.

Bulk Deals

Metropolis Healthcare (Total shareholding details not given).

  • Bright Star Investments acquired 7 lakh shares at Rs 948.39 each.
  • Smaller Cap World Fund acquired 6.87 lakh shares at Rs 957.67 each.

(Alert: Bright Star Investments is promoted and managed by RK Damani).

Reliance Communications

  • Rattanindia Finance sold 4.5 crore shares or 1.63 percent equity at Rs 2.43 each.

Pledge Share Details

  • Jet Airways promoter Naresh Goyal created a pledge of 59 lakh shares on April 11.
  • Gati promoter group TCI Finance revoked pledge of 33.8 lakh shares and created pledge of 33.3 lakh shares from April 9-12.
  • Mangalam Drugs & Organics promoter revoked pledge of 5.6 lakh shares on April 12.
  • Gati promoter group invoked pledge of 66.85 lakh shares from April 2-9.

Trading Tweaks

  • Balrampur Chini Mills ex-date for share buyback.
  • Foods & Inns price band revised to 10 percent.

Who’s Meeting Whom

  • Mahindra & Mahindra to meet Theleme Partners and Elo Mutual Pension Insurance from April 16-17
  • Ramco Systems to meet HDFC MF, Reliance AMC and other investors on April 16.

Insider Trading

  • NCL Industries promoter group S Gokul sold 5,000 shares on April 8.

Money Market Update

  • The rupee on Monday weakened for the second straight day to close at 69.42/$. Friday’s closing was 69.16/$.

Also read: Tackling The Growing Influence Of The Offshore Rupee Market

F&O Cues

April Futures

  • Nifty open interest up 3 percent, adds 4.1 lakh shares in open interest
  • Bank Nifty open interest up 2 percent adds 34,400 shares.
  • Nifty futures premium at 37.4 points versus 60.4 points, closed trading at 11,727.7.
  • Bank Nifty futures premium at 83 points versus 124.5 points, closed trading at 30,187.5.

Options

  • Nifty PCR at 1.61 versus 1.54 (across all series)

Nifty Weekly Expiry 18 April

  • Max open interest at 11,600 Put (18 lakh shares) 11,700 Call (16.7 lakh shares)
  • Open interest addition seen for 11,650 Put (6.2 lakh shares), 11,700 Put (5.5 lakh shares) & 11,800 Call (4.2 lakh shares)
  • Open interest shedding seen for call strike 11,600

Nifty Monthly Expiry 25 April

  • Max open interest at 11,000 Put (28.7lakh shares) and 11,500 Put, Call (27.4lakh shares), 12,000 Call (26.2lakh shares)
  • Open interest addition seen for put strikes 11,600, 11,700, and 11,800.
  • Open interest shedding seen for call strikes 12,000, 11,800.

Stocks In F&O Ban

In Ban:

  • Dewan Housing
  • IDBI
  • Jet Airways
  • PC Jewellers*
  • Reliance Power
  • Wockhardt

Out of Ban:

  • DLF

New in ban*

All You Need To Know Going Into Trade On April 16

Brokerage Radar

Goldman Sachs on Financials

  • IDFC First Bank: Downgraded to ‘Sell’ from ‘Neutral’; maintained price target at Rs 45.
  • PNB: Downgraded to ‘Sell’ from ‘Neutral’; hiked price target to Rs 74 from Rs 70.
  • LIC Housing: Downgraded to ‘Sell’ from ‘Neutral’; hiked price target to Rs 437 from Rs 423.
  • Confidence returns to sector but valuations high.
  • Downgraded PNB on low capital adequacy and exposure to Agri/SME.
  • Downgraded LIC Housing on valuations and profitability outlook.
  • Downgraded IDFC First on valuation and execution/credit cost risks.

Goldman Sachs on ICICI Bank

  • Maintained ‘Buy’; hiked price target to Rs 492 from Rs 451.
  • Turnaround in the corporate business.
  • Expect bank to deliver RoA and RoE of 1.8 percent and 17 percent respectively over FY20-21.
  • Banking on franchise strength – add to conviction list.

Macquarie on ITC

  • Maintained ‘Buy’ with a price target of Rs 376.
  • Expect step-up in earnings growth led by higher cigarette EBIT.
  • Launch of Marlboro Gold Advanced Compact means higher competition.
  • Believe it will be difficult task for the product to make in roads.

PhillipCapital on Polycab India

  • Initiated ‘Buy’ with a price target of Rs 718.
  • Expect better working capital, improvement in margin and improvement in balance sheet.
  • Expect earnings CAGR of 19 percent over FY19-21; Expect RoCE to improve to 23 percent in 2020-21 from 20 percent in 2017-18.
  • Valuations to trade at premium compared to other wire and cable players.

Antique on Escorts

  • Initiated ‘Buy’ with a price target of Rs 976.
  • Structural turnaround of tractor division alleviates earnings volatility linked to cyclicality.
  • Railways business remains crown prince; Construction Equipment business requires reorientation.
  • Expect Revenue, Ebitda and net profit to grow at a compounded annual growth rate of 11 percent, 12 percent and 13 percent respectively over FY19-22.

Edelweiss on Reliance Industries

  • Maintained ‘Buy’; hiked price target to Rs 1,636 from Rs 1,435.
  • Higher GRM, petcoke ramp up to drive refining earnings.
  • Expect Jio to start raising prices from the second half.
  • Expect EBITDA CAGR of 19 percent over FY19-23 driven by retail and telecom.
  • Announced monetisation of fiber and tower assets will trigger value accretion.

SBICAP on SpiceJet

  • Maintained ‘Buy’; hiked price target to Rs 175 from Rs 154
  • SpiceJet best placed among peers
  • If Jet’s troubles linger, SpiceJet may well lease more planes to lift market share
  • Revise estimates upwards on higher yields and PLFs