All You Need To Know Going Into Trade On April 16

Stocks in the news, big brokerage calls of the day, complete trade setup and much more!

BQ Research @bqprime

16 Apr 2020, 01:09 PM IST

Coffee pours from an espresso machine into a cup at a Starbucks Corp. coffee shop. (Photographer: Taylor Weidman/Bloomberg)

Asian markets have opened weaker on Thursday morning following weak cues from Wall Street. Poor retail, manufacturing and home building data added to investor concerns about a severe recession in the U.S.

Financial stocks have led the losses globally as companies like Goldman Sachs, Bank of America and Citigroup have set aside billions for loan loss provisions due to the Covid-19 pandemic.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.42 percent to 8,869 as of 7:00 a.m.

Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell.

Here is a look at all that can influence equities in today’s session:

Markets in Japan, South Korea and Australia have opened with losses, although the declines were shallower than those seen overnight on Wall Street.
Futures on the S&P 500 too are declining after the benchmark index slipped over 2 percent on Wednesday, erasing most of Tuesday's rally.
Value of overall retail sales in the U.S. fell 8.7 percent in March, the biggest decline on record dating back to 1992. Factory output in March fell the most since 1946, just after the end of the second World War.
U.S. President Donald Trump said that data suggests the country has 'passed the peak' on new Covid-19 cases and that he will announce fresh guidelines on Thursday to relax the stay-at-home rules.
Treasuries held thier gains while the U.S. dollar continued to climb.
West Texas Intermediate Crude trades 2.3 percent higher at $20.33 per barrel after Wednesday's fall post a record collapse in fuel demand and the biggest ever weekly increase in domestic fuel supplies.

All You Need To Know Going Into Trade On April 16

Earnings Fineprint: Wipro Q4FY20

I.T. services revenue down 1.1 percent to $2,073 million.
Revenue up 1.8 percent to Rs 15,750 crore.
EBIT down 4.2 percent to Rs 2,539 crore.
EBIT Margin at 16.1 percent versus 17.1 percent.
Net profit down 4.5 percent to Rs 2,345 crore.
All Numbers compared on a sequential basis.
Company temporarily suspends practice of providing quarterly guidance.

The quarters ahead seem challenging and require a tremendous response on costs. We also anticipate our working capital to increase, but our strong balance sheet provides us the confidence that we will emerge stronger and better.

Jatin Dalal, CFO, Wipro

Brokerages On Wipro

CLSA

Sell rating maintained
Price target cut to Rs 180 from Rs 235
Weak revenue and no guidance for Q1FY21
See margin decline and headwinds for Q1FY21
Business continuity plans well in place

UBS

Sell rating maintained
Price target of Rs 170
FY21 to start on an uncertain note
Cost pressures, working capital may rise due to uncertainty
Lack of guidance was anticipated
Expect muted reaction from stock

Macquarie

Neutral rating maintained
Price target cut to Rs 200 from Rs 226
Guidance suspension reflects uncertainties in developed markets
Client behaviour in flux with higher risks in key impacted verticals
Large EBIT margin drop likely in Q1

Emkay

Hold rating maintained
Price target cut to Rs 195 from Rs 200
Weak results on expected lines
Negatively surprised by sequential decline in headcount
Valuations remain inexpensive with net cash at 25 percent of market cap

Investec

Buy rating maintained
Price target of Rs 220
Sharp revenue declines have immediate impact with lower utilisation and lower operating leverage
Current crisis is as bad if not worse than the Global Financial Crisis as the impact is likely across most verticals

Earnings Expectations From TCS

A BloombergQuint poll sees the company's Dollar revenue declining 0.5 percent to $5,560 million from $5,586 million
Rupee revenue seen 1.3 percent higher at Rs 40,739 crore
EBIT seen 0.7 percent higher at Rs 10,044 crore
EBIT Margins likely to remain flat at 24.9 percent versus 25 percent
Net profit seen 1.2 percent higher at Rs 8,219 crore
All estimates on a sequential basis

Key Factors To Watch For TCS

Outlook under Covid-19 environment
Company had indicated an 8 percent growth for FY20
Margins unlikely to move above targeted range of 26-28 percent
Demand from impacted BFS and retail verticals
Client budget and spending trends
Pace of project execution under new settings
Outlook on employee costs and on-boarding

Stocks To Watch

BPCL: Seeking to cut Saudi Arabia oil imports by 50 percent in May, as the tankers are full, as per a Bloomberg News report.
Tata Steel: Moody’s has reviewed the company for a downgrade and has downgraded Tata Steel U.K. Holdings’ corporate family rating to B3 from B2. The outlook has been revised to ratings under review from stable. S&P Global Ratings has downgraded the company’s issuer credit rating to B+ from BB-, with outlook changing from stable to negative. The rating agency expects that Covid-19 related disruptions and the consequent economic slowdown will result in weak credit metrics for the company.
Escorts: Factories and offices to remain shut till May 3.
Deepak Fertilizers and Petrochemicals: SEBI grants an extension till May 15 for the conversion of warrants worth Rs 41.66 crore into equity shares made by the promoters.
Shriram Transpot Finance: To consider raising funds on April 20
Eveready Industries: Battery manufacturing facility in Karnataka partially resumes operations
Apollo Tyres: Operations at four plants in Kerala to remain shut till April 20
Prataap Snacks: Third party job working manufacturing units in Uttarakhand, Maharashtra and Haryana have resumed operations.
Navin Fluorine: Operations at two plants in Gujarat and Maharashtra resumed from April 14.
Shree Cement: Looking for necessary approvals from the government to resume production at various locations.
Galaxy Surfactants: Operations at Tarapur unit are shut and will resume only after necessary permissions from statutory authorities.
Sobha: All manufacturing units and offices to be shut till May 3.
Punjab and Sind Bank: One-month MCLR revised to 8 percent while one-year MCLR revised to 8.2 percent with effect from April 16.
Sobha: All manufacturing units and offices to remain shut till May 3
Bajaj Consumer Care: Launches new hand sanitiser product
Endurance Technologies: Italian arm acquires 99 percent stake in Adler for 3.5 million Euros. Adler provides system solutions for clutches, gears and friction plates for OEM customers in Europe.
Suzlon: To consider fund raising via shares, debentures, warrants on April 18.

Brokerage Radar

Morgan Stanley On HPCL

Overweight rating maintained
Price target of Rs 246
Retail fuel prices and margins have remained high
Fuel demand should see the fastest rebound as people, goods start moving
Recent OPEC+ supply cuts should ease shipping costs as well as cap inventory losses

Morgan Stanley On Motherson Sumi

Overweight rating maintained
Price target of Rs 103
Lower debt, good liquidity a positive
Pledged shares to come down to 19 percent of promoter holding
Both news to be taken positively by the market

Jefferies On India Strategy

Partial relaxation of lockdown comes across as positive
Greater freedom allowed in rural areas
Production ramp-up will be slow and constrained by demand
Forecast of normal monsoon another positive for rural activity
Both developments a partial relief for investor sentiments

BofA Securities On BPCL

Upgrade to buy from neutral
Price target cut to Rs 470 from Rs 596
Privatisation on the anvil, but difficult
Diversified business should help hedge risks
Valuations are inexpensive
Marketing segment to drive earnings in FY21

Bulk Deals

IndusInd Bank: Goldman Sachs acquired 41 lakh shares (0.65 percent) at Rs 430.3 per share.
Metropolis Healthcare: CA Lotus Investments sold 65.5 lakh shares (13.06 percent) at Rs 1,152.64 per share and Smallcap World Fund acquired 10 lakh shares (1.99 percent) at Rs 1,152.5 per share.
Phoenix Mills: Schroder Group acquired 26.59 lakh shares (1.73 percent) at Rs 512.54 per share and Nordea Fund sold 21.06 lakh shares (1.37 percent) at Rs 512.54 per share.
CARE Ratings: FPA Funds Trust acquired 5.19 lakh shares (1.76 percent) at Rs 412.3 per share and Boabab Global Fund sold 4.95 lakh shares (1.68 percent) at Rs 412.31 per share.
Deep Industries: Antara India Evergreen Fund acquired 2.11 lakh shares (0.66 percent) at Rs 60.5 per share and Plutus Terra India Fund sold 2.11 lakh shares (0.66 percent) at Rs 60.5 per share.

Pledged Share Details

Motherson Sumi Systems: Promoter Samvardhana Motherson International released pledge of 2.5 crore shares on April 13
JSW Steel: Promoters created pledge of 47 lakh shares on April 8
Adani Enterprises: Promoter SB Adani Family Trust revoked pledge of 1.79 crore shares on April 13
Adani Transmission: Promoter SB Adani Family Trust revoked pledge of 90.41 lakh shares on April 13

(As Reported On April 15)

Trading Tweaks

GSK Consumer Health Care ex-date for amalgamation
Price Band Revised To 5 Percent From 10 Percent: Astra Microwave Products, CG Power, MTNL, PNC Infratech, Shakti Pumps, Take Solutions
Price Band Revised To 10 Percent From 20 Percent: Andhra Cements, FACT, Tata Communications, Parag Milk Foods, Zuari Global, Zuari Agro
Move Into ASM Framework: Andhra Cements, HCL Infosystems
Move Into Short-Term ASM Framework: Tata Communications, A2Z Infra, Wockhardt, Everest Industries, Zuari Global, MT Educare, Alembic Pharma, Avanti Feeds, Take Solutions
Move Out Of Short-Term ASM Framework: Mangalore Chemicals & Fertilisers, Advanced Enzymes, Caplin Point, Godrej Agrovet.

Money Market Update

The currency ended weaker at 76.45 against the U.S. dollar as compared to Monday's close of 76.28.

F&O Cues

Nifty April futures closed at 8,930, premium of 5 points versus 17.3 points
Nifty April futures open Interest down 6 percent, shed 6 lakh shares.
Nifty Bank April futures closed at 18,989.7, discount of 67 points versus 3.9 points
Nifty Bank April futures open Interest up 16 percent, add 1.7 lakh shares
Nifty Put-Call Ratio at 1.27 versus 1.39 across all series

Nifty Weekly Expiry: April 16

Maximum Open Interest on Call side at 9,500 strike (20.1 lakh shares)
Maximum Open Interest on Put side at 8,000 strike (14.7 lakh shares)
Open Interest addition seen in 9,300 Call (5.8 lakh shares), 9,500 Call (5.7 lakh shares), 8,900 Put (3.6 lakh shares)

Nifty Monthly Expiry: April 30

Maximum Open Interest on Call side at 10,000 strike (16.6 lakh shares)
Maximum Open Interest on Put side at 8,000 strike (23.8 lakh shares)