All You Need To Know Going Into Trade On April 30

Asian stocks declined in early trading Tuesday ahead of key China data that will provide clues on global economic growth.

Equities in Sydney and Seoul dropped, while futures signalled a muted open in Hong Kong. Japanese markets are closed for the week. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.25 percent to 11,844 as of 7:15 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 rose above their record high at the start of a week packed with data that will provide clues on global economic growth.
• The yield on 10-year Treasuries rose three basis points to 2.53 percent. The cash market won’t trade until London opens because of the Japan holiday. Futures on 10-year Treasuries were little changed in early Asian trading.

Asian Cues

• Australia’s S&P/ASX 200 Index fell 0.3 percent.
• South Korea’s Kospi index dropped 0.3 percent.
• Futures on Hong Kong’s Hang Seng Index were little changed.
• S&P 500 futures ticked lower.

Commodity Cues

• Brent crude traded 0.26 percent lower at $71.85 per barrel
• West Texas Intermediate crude was steady at $63.53 a barrel.
• Gold traded at $1,280.48 an ounce.

London Metal Exchange

• Copper ended 0.06 percent lower.
• Aluminium ended lower for the third consecutive trading session, down 0.49 percent.
• Nickel ended 0.11 percent lower.
• Tin halted a two-day gaining streak, closed 1.36 percent lower.
• Lead ended higher for the fourth consecutive trading session, up 0.87 percent.
• Zinc ended higher for the second day, up 0.87 percent.

Key Events To Watch This Week

• U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin travel to Beijing to continue trade talks. China and the U.S. hope to seal a deal by early May.
• Euro-zone GDP data and China’s manufacturing PMI are due on Tuesday.
• The U.S. Fed’s rate decision is on Wednesday, while the Bank of England sets interest rates Thursday.
• Friday brings the U.S. jobs report: non-farm payrolls are projected to rise by 187,000 in April. Economists expect an unemployment rate of 3.8 percent, with average hourly earnings growth picking up to 3.3 percent.
• 5 p.m.: India eight infrastructure industries index for March (prior +2.1 percent)

Indian ADRs

Stocks To Watch

• Sun Pharma clarified that the U.S. FDA conducted an inspection in its Dadra plant from March 22-29, issuing Form 483 with 11 observations. The pharma company stated in its press release that it has submitted its response to the U.S. FDA within stipulated timeline and there is no material impact of the news of the drug regulator finding quality issues in the afore mentioned plant on the company.
• Sudarshan Chemical completed the divestment of its Industrial Mixing Solutions Division to GMM Pfaudler.
• Bank of Maharashtra: Board approved fund raising of Rs 3,000 crore via issue to Government and Rs 1,000 crore via bonds. Also approved set-off of accumulated losses worth Rs 7,327.5 crore against reserves.
• Reliance Home Finance: CARE Ratings downgraded company’s long-term debt program to default rating. The long-term debt program at Rs 4,978 crore. ICRA downgrades company’s commercial paper program worth Rs 1,200 crore to A4 from A2.
• Eclerx Services: Board determined the buyback price at Rs 1,500 per share for 17.46 lakh shares, or 4.52 percent of total equity capital, aggregating to Rs 262 crore, Record date for this buyback is set on May 10. The buyback price is at a premium of 33 percent to the lat regular trade.
• Eveready Industries: BM Khaitan resigned from the chairman’s and non-executive director’s post with effect from April 26, due to old age. Board designated him as ‘Chairman Emeritus’ of the company. India Ratings and Research has downgraded company’s long-term credit rating from IND AA- to IND A, with negative outlook, due to high net leverage and weakened liquidity.
• Tata Steel confirmed incident occurring at Port Talbot site involving a spillage of molten iron during the routine transfer from the blast furnace to the Steel Making Facilities. In its press release it stated that the spillage led to fire which was extinguished by emergency services. The company said that further investigations are underway to assess the damage and potential material impact on production.
• Shankara Building Products: Board approved partial sale of assets of its arm, Taurus Value Steel and Pipes.
• Dr. Lal Pathlabs: Received show-cause notice (dated April 22) from the GST department, demanding for a service tax of Rs 229.51 crore from services provided from October 2013 to June 2017. The company says it is currently examining the aforesaid notice and legal options available.
• SKF India: Chandramowli Srinivasan resigned from the post of CFO of the company, due to personal reason with effect from July 24.
• Texmaco Rail & Engineering: Board said that the NCLT approved amalgamation between the company, Texmaco Hitech and Bright Power. Board has also approved rights issue up to Rs 200 crore and raising capital via debt up to Rs 300 crore. In its press release, the management also approved acquisition of steel casting foundry from Simplex Castings for Rs 87.5 crore, resulting in the capacity addition of more than 50 percent for the company.
• Sanghvi Movers Promoter Dispute Case: Former CMD P.Sanghvi and family (CPS Group) stated that they are in the process of challenging the arbitrator’s order. The family dispute is between CPS group and Ani lakhumar Sanghvi and family (APS) group. Present controlling stake of CPS group in the company is at 46.83 percent as per recent exchange filings.
• Repro India: Board approved conversion of 5.92 lakh warrants into same number of equity shares. Malabar Group received 5.18 lakh shares while Vijay Kedia received 74,000 shares. These warrants were allotted at Rs 675 per share, which is still at premium of 14 percent to the current market prices.
• Corporation Bank appointed V Muthukrishnan as CFO with effect from April 25
• NBCC submitted its revised resolution plan for Jaypee Infratech
• Greaves Cotton to consider share buyback on May 2.
• CCI approved acquisition of share capital of NIIT Technologies by Hulst BV
• Max India: said it is exploring new lines of businesses after divesting healthcare and health Insurance. Likely to enter businesses with adjacencies to current group businesses of life insurance, real estate, senior care, hospitality. Part of the divestment proceeds proposed to be offered to public shareholders.
• Garden Reach Shipbuilders: awarded contract for construction and delivery of eight ASW Swallow Water Craft valuing around Rs 6,311.32 crore under fixed price basis. The project is expected to be completed within 84 months from the date of signing of the contract.
• NHPC: signed a Memorandum of Understanding (MoU) with Indian Army to undertake construction of semi underground bunkers and fully underground caverns at different locations in India.

Nifty Earnings To Watch

• Kotak Mahindra Bank

Other Earnings To Watch

• TVS Motor
• Raymond
• Ajanta Pharma
• Ambuja Cements
• Astec LifeSciences
• Can Fin Homes
• Container Corporation of India
• Exide Industries
• Filatex India
• Godrej Properties
• BASF India
• Gammon India
• Gruh Finance
• Indian Hotels
• LGB Forge
• Mahindra EPC Irrigation
• Maithan Alloys
• Monsanto India
• Orient Electric
• Patel Engineering
• Pioneer Distilleries
• Shoppers Stop
• Schaeffler India
• Zensar Technologies
• Godawari Power And Ispat
• Tube Investments of India
• Shree Digvijay Cement
• Sanwaria Consumer
• Datamatics Global Services

Earnings Reaction To Watch

Hero MotoCorp (Q4, YoY)

• Revenue down 7.9 percent to Rs 7,885 crore
• Net profit down 24.5 percent to Rs 730.3 crore
• EBITDA down 22 percent to Rs 1,069 crore
• Margin at 13.6 percent versus 16 percent

Yes Bank (Q4, YoY)

• Net Interest Income up 16 percent to Rs 2,505.93 crore
• Net loss at Rs 1,506 crore versus net profit to Rs 1,179 crore
• Provisions at Rs 3,661 crore versus Rs 550 crore (QoQ)
• Gross NPAs at 3.22 percent versus 2.10 percent (QoQ)

HDFC AMC (Q4, YoY)

• Revenue up 3.8 percent to Rs 486.50 crore
• Net Income up 60 percent to Rs 276.17 crore

Indian Energy Exchange (Q4, YoY)

• Revenue up 2.2 percent to Rs 56.4 crore
• Net profit up 20.7 percent to Rs 37.9 crore
• Ebitda up 13 percent to Rs 49.7 crore
• Margin at 88.1 percent versus 79.7 percent

Foseco (Q4, YoY)

• Revenue down 10 percent to Rs 84.2 crore
• Net profit up 8.9 percent to Rs 8.6 crore
• EBITDA up 2.4 percent to Rs 13 crore
• Margin at 15.4 percent versus 13.6 percent

Supreme Petrochem (Q4, YoY)

• Revenue down 7.4 percent to Rs 822 crore
• Net profit down 5.6 percent to Rs 38.9 crore
• Ebitda down 4.7 percent to Rs 65.1 crore
• Margin at 7.9 percent versus 7.7 percent

Bank of Maharashtra (Q4, YoY)

• NII up 13.5 percent at Rs 999.93 crore
• Net Profit at Rs 72.38 crore versus loss of Rs 113.51 crore
• Gross NPAs at 16.40 percent versus 17.31 percent (QoQ)
• Net NPAs at 5.52 percent versus 5.91 percent (QoQ)

Reliance Nippon (Q4, YoY)

• Revenue down 22 percent to Rs 343.2 crore
• Total expenses down 35 percent to Rs 185 crore
• Net profit up 31.6 percent to Rs 152.1 crore crore
• Other Income up 25 times to Rs 54.3 crore

Castrol (Q1 CY19, YoY)

• Revenue up 5.3 percent to Rs 976.2 crore
• Ebitda up 3.2 percent to Rs 283 crore crore
• Margin 29 percent versus 29.5 percent
• Net profit up 1.8 percent to Rs 185 crore

Trent (Q4, YoY)

• Revenue up 26.5 percent to Rs 668.67 crore
• Net profit up 36.8 percent to Rs 16 crore
• Ebitda up 35.5 percent to Rs 33.75 crore
• Margin at 5 percent versus 4.7 percent

Orient Cement (Q4, YoY)

• Revenue up 21 percent to Rs 750.8 crore
• Net Profit up 383.8 percent to Rs 62 crore
• Ebitda up 105 percent to Rs 153 crore
• Margin at 20.4 percent versus 12 percent

RPG Lifesciences (Q4 YoY)

• Revenue down 17.6 percent to Rs 68.8 crore
• Net profit up 23 percent to Rs 1.5 crore
• Ebitda down 23.7 percent to Rs 6.6 crore
• Margin at 9.5 percent versus 10.3 percent
• Higher other income and lower tax expense led to higher profits

Offerings

• Neogen Chemicals IPO gets 41.1 times demand for shares offered

Bulk Deals

• Indiabulls Real Estate: Shree Naman Developer acquired 26 lakh shares or 0.58 percent equity at Rs 124.07 each
• MCX: JP Morgan Funds acquired 2.67 lakh shares or 0.52 percent equity at Rs 826.46 each
• Sterlite Technologies: BNP Paribas Arbitrage acquired 24.39 lakh shares or 0.61 percent equity at Rs 181 each

Pledge Share Details

• Apollo Tyres promoter group Motley Finance created pledge of 41.25 lakh shares and revoked pledge of 38.5 lakh shares and promoter group Apollo Finance revoked pledge of 35 lakh shares from April 22-24
• Emami promoter group Bhanu Vyapaar created pledge of 16.7 lakh shares on April 22-23
• Sun Pharma promoter group Shanghvi Finance revoked pledge of 43.75 lakh shares on April 25
• Forbes & Company promoter Shapoorji Pallonji created pledge of 33.53 lakh shares on April 25
• GATI promoter group Mahendra Kumar Agarwal and Sons HUF invoked pledge of 55,000 shares on April 23

(As reported on April 26)

Trading Tweaks

• Foods Inn ex-date for bonus issue at 2:1
• India Grid Trust record date for Income Distribution (InvIT) at Rs 3 per unit
• Arvind Fashions to move out of short term ASM Framework
• Cox & Kings Financial Service price band revised to 10 percent

Who’s Meeting Whom

• Mahindra Lifespace Developers to meet ICICI Pru and Canara Robeco from April 30-May 2
• Syngene International to meet Pari Washington Company Advisors on April 29

Insider Trading

• Thyrocare Technologies promoter group Pavilion Commercial acquired 10,000 shares on April 22

Money Market Update

• Rupee closed at 70.02/$ on Friday from 70.26/$ on Thursday

F&O Cues

Futures: May series

Nifty

• Nifty futures closed trading at 11,813.6, premium of 58.9 points versus 89points
• Nifty open interest up 2 percent, adds 3.1 lakh shares in open interest

Bank Nifty

• Bank Nifty futures closed trading at 30177.9, premium of 164 points
• Bank Nifty open interest up 11 percent, adds 1.8 lakh shares in open interest

Options

• Nifty PCR at 1.62 vs 1.61 (across all series)

Nifty Weekly Expiry May 2

• Max open interest concentration at 11,700 Put Option (19.9 lakh shares), 11,800 Call Option (19.3 lakh shares)11,600P (17.9 lakh shares)
• Max open interest addition seen at 11,700 Put Option (+10.2 lakh shares) and 11,600 Put Option (+6.4 lakh shares)

Nifty Monthly Expiry May 30

• Max open interest concentration on Put side at 11,000 (22.7 lakh shares)
• Max open interest on call side at 12,000 (12.6 lakh shares)

Brokerage Radar

On Hero MotoCorp

CLSA

• Maintained ‘Sell’; cut price target to Rs 2,375 from Rs 2,400
• Weak March quarter and lacklustre outlook
• Margins likely to be under pressure
• Success of new products key for a better outlook

Jefferies

• Maintained ‘Hold’; hiked price target to Rs 2,550 from Rs 2,530
• March quarter results were largely in line; stay cautious
• June quarter to remain weak; mgmt. hopeful of better second half
• See challenges in medium-term growth & market share due to weakness in high growth segments

On Yes Bank

Investec

• Maintained ‘Buy’; cut price target to Rs 240 from Rs 320
• Building trust even at the cost of profitability
• Believe raising equity is of utmost importance for stress recognition and transition
• Expect Rs 15,000 crore of slippages over next 2 years, bringing down RoA to sub 1 percent

Macquarie

• Downgraded to ‘Underperform’ from ‘Outperform’; cut price target to Rs 165 from Rs 270
• Underestimated risks in structured finance; cut EPS estimates by 45 percent
• Expect subdued return ratios for long time due to loan book clean-up, investments in retail business and pivoting of business model
• Catalyst: Equity capital raise, lower than expected slippages

On Biocon

CLSA

• Maintained ‘Sell’ with a price target of Rs 470
• Slow ramp-up in biologics could lead to further earnings disappointment
• Market-share gains in biologics not easy
• Cut FY20-21 EPS estimates by 2-4 percent and see downside risk to consensus earnings estimates

HSBC

• Maintained ‘Buy’; cut price target to Rs 745 from Rs 800
• Biosimilars to remain the growth engine
• Expect higher R&D, staff and other operating expenses due to scaling-up of biosimilars
• Execution crucial for biosimilar success in regulated markets

More Calls

Nomura on HDFC Standard Life

• Maintained ‘Neutral’; hiked price target to Rs 435 from Rs 390
• Protection and annuity growth strong
• Delivering well on high profitability products
• Valuations remain our only constraint

Investec on ICICI Lombard General

• Downgraded to ‘Hold’ from ‘Buy’; hiked price target to Rs 1,050 from Rs 1,000
• 2018-19 earnings better than expectations. We continue to like its fundamentals
• See headwinds in 2019-20 due to multiple reasons that are not priced-in
• Valuations are rich and leave little room for error

Investec on KPIT Tech

• Initiated ‘Buy’ with a price target of Rs 145
• KPIT plays right into the four big automotive themes
• Product engineering business has been a consistent performer
• Believe KPIT could continue to grow at 20 percent due to focus on high growth areas

HSBC on Voltas

• Maintained ‘Buy’; hiked price target to Rs 675 from Rs 640
• Expect AC industry to post decent growth in 2019-20 despite delayed summer and weak auto growth
• March quarter is likely to be unexciting, investors should focus on strong outlook over the next two years
• Expect Voltas’s earnings to grow at a CAGR of 22 percent over FY19-21