All You Need To Know Going Into Trade On April 7
Asian markets have opened with gains on Tuesday morning on optimism that the Coronavirus epidemic may be waning in some key epicenters. This is the first instance of markets seeing back to back days of gains in two weeks.
The dollar has retreated against major Emerging Market currencies while the Aussie has advanced ahead of the policy decision by the Reserve Bank of Australia.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, was flat at 8,455 as of 6:50 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’s a quick look at all that could influence equities today
- Markets in Japan and Australia have advanced over two percent while those in South Korea are up one percent.
- The S&P 500 index gained 7 percent on Monday, at the highest level in almost a month while futures are seeing modest gains in early Asian trading.
- Japanese Prime Minister Shinzo Abe is likely to announce a month-long state of emergency as early as today.
- Italy, France, Germany and Spain reported lesser Covid-19 cases on Monday while New York Governor Andrew Coumo said that deaths were showing indications of hitting a plateau.
- U.K. Prime Minister Boris Johnson, who was hospitalised on Sunday after 10 days in isolation has been moved to intensive-care after his condition worsened.
- JPMorgan Chase & Company's CEO Jamie Dimon said that the pandemic will lead to a major economic downturn and stress will mirror the meltdown that nearly brought down the U.S. Financial system in 2008.
- Yield on the 10-year treasury was flat at 0.68 percent
- West Texas Intermediate Crude was up 3.5 percent at $26.99 per barrel after an 8 percent drop on Monday.
Get your daily fix of the global markets here.
Quarterly Business Updates
- Bajaj Finance: The company in a media call stated that it has lost AUMs worth Rs 4,750 crore and 3.5 lakh customers in the last 10 days due to the Covid-19 lockdown. In its fourth-quarter update, the company stated that its Assets Under Management (AUMs) grew 27 percent year-on-year to Rs 1,47,600 crore. While deposit book grew 62 percent, the company acquired 19 lakh new customers in the March quarter. It is also considering one-time accelerated provisioning for Covid-19.
- HDFC Bank: Continues to see strong business momentum in the fourth quarter with its advances and deposits growing 21 and 24 percent year-on-year respectively. CASA ratio rose to 42 percent from 39.5 percent in the previous quarter. The lender purchased loans worth Rs 5,479 crore under the home loan agreement with HDFC as compared to Rs 4,258 crore in the December quarter.
- Kotak Mahindra Bank: The lender in its fourth quarter updated has reported a 6.7 percent growth in advances. While current deposits rose 10.5 percent, savings deposits were up 31.3 percent compared to the year-ago period. CASA ratio rose to 56.2 percent from 52.5 percent. The lender has also cut savings account interest rate to 5 percent for deposits above Rs 1 lakh while for those up to Rs 1 lakh continue to earn 4 percent.
- IndusInd Bank: The lender in its fourth quarter operational update has reported a 12.6 percent growth in advances and a 3.8 percent growth in deposits compared to last year. Retail deposits were up 34.2 percent while CASA ratio grew to 43.1 percent compared to 40.5 percent during the same period last year.
- Godrej Properties: In its quarterly update, the company said that bookings in the fourth quarter were up 10 percent year-on-year to Rs 2,380 crore. The same figure on a sequential basis was up 100 percent. The company has sold 500 homes in the second half of March. The number and value of homes sold was the highest achieved in any quarter. The company added five new projects during the quarter. Healthy balance sheet and project pipeline will help maintain operational momentum in the months ahead, according to the company.
- Sobha: The company in its March quarter update has reported a 20 percent decline in new sales volume compared to last year to 9.06 lakh square feet. The company stated that the sales volume was impacted due to the lockdown announced by the Government. Total sales value fell 25 percent to Rs 694.5 crore while share in total sales fell 22 percent to Rs 553.6 crore.
Stocks To Watch
- Lupin: Launches Mycophenolic Acid Delayed-Release Tablets USP in the U.S. The company's alliance partner Concord Biotech had received an approval from the U.S. FDA. Mycophenolic Acid Delayed-Release Tablets USP had annual sales of approximately $156 million in the U.S.
- SBI Cards: Says that the retail discretionary spends have gone down significantly with Airlines, travel agents, hotels, railways, entertainment spends going down to nil. Departnemtal and grocery spends too have fallen after an initial spike. Online grocery, utility spends, insurance premiums remain stable. Moratorium is applicable to eligible customers who have no delinquency or overdue as of March 1, 2020.
- IndusInd Bank: Moody's Investors Service has placed the lender's domestic and foreign currency issuer rating under review for a downgrade. This is due to its relatively high concentration of microfinance and vehicle finance loans. Moody's believes that IndusInd Bank's funding is weak compared to other domestic banks due to lower concentration of retail deposits.
- Larsen And Toubro: Board to meet on April 9 to seek approval for raising funds including through issue of debt securities.
- MSCI Update: Kotak Mahindra Bank’s FPI limit is updated and revised to 74 percent now. Stocks such as L&T, Britannia, and Nestle will see an increase in weightage.
- CESC: HDFC Mutual Fund increased stake to 9.09 percent from 6.66 percent on March 31.
- IDBI Bank: To consider approval of the Rupee Bond borrowing limit of Rs 7,500 crore for FY21 on April 8. Moody's has also affirmed the bank’s deposit rating at Ba2. The outlook has been revised to stable from positive.
- PNB Housing Finance: ICRA downgraded NCDs and bond worth Rs 1,675 crore to ICRA AA from ICRA AA+, with the outlook remaining negative. The revision in the rating factors in the weakening of the company’s asset quality, especially in the wholesale loan portfolio, and delays in its capital-raising program along with the lower-than-expected planned equity infusion.
- GMR Infrastructure: Airports Economic Regulatory Authority of India has issued Tariff Order for the second control period (April 2020 to March 2026) for GMR Hyderabad International Airport. Upon implementation of this Tariff Order, the user development fees on domestic and international departing passenger shall be levied at Rs 281 and Rs 393 respectively.
- Shipping Corporation of India: Has entered into a contract for transferring a vessel.
- Tata Consumer Products: Sunil D'Souza assumes the role of the company's MD and CEO
- Thyrocare Technologies: The company’s arm has suspended its PET-CT scanning operations at selective centres.
- NTPC, Power Grid Corporation: CERC has relaxed tariff regulations in order to provide relief to discoms. If the delay happens for bills presented between March 24 and June 30, for beyond 45 days, then late payment surcharge by distribution companies to power generators will be reduced to 1 percent per month, from 1.5 percent. Relief to be claimed in terms of the force majeure provisions of the respective power purchase agreements.
- Mahindra & Mahindra: The company said that it will not be able to inject any fresh equity in-unit SsangYong Motor. In a special meeting, the board authorized Mahindra’s management to consider a one-time infusion of as much as $32 million in SsangYong over the next three months to have continuity of business operations in light of the coronavirus impact.
- Century Textiles & Industries: Local authorities have permitted the company’s pulp and paper division to operate its factories in Uttarakhand in a limited manner to cater to the requirement of essential services industries.
- Nestle India: Pledges an initial Rs 15 crore towards feeding programs for less privileged sections of the society.
- Persistent Systems: To contribute Rs 25 crore to support various aspects of global responses to Covid-19.
Citi On Adani Ports
- Upgrade to buy from neutral
- Price target cut to Rs 345 from Rs 417
- Valuations largely factor in concerns on capital allocation
- Debt on balance sheet is at comfortable levels
- Acting as consolidator in Indian Port industry
Kotak On TVS Motor
- Sell rating maintained
- Price target cut to Rs 240 from Rs 350
- Near-term demand catalysts are absent
- Demand should gradually recover in H2FY21
- Unlikely to grow faster than Hero or Bajaj
- Weaker balance sheet than peers makes it more vulnerable to an economic downturn
Kotak Securities On Ashok Leyland
- Buy rating maintained
- Price target cut to Rs 90 from Rs 100
- Covid-19 may delay industry revival
- CV industry to remain under pressure in FY21 as well
- Focused on reducing debt
- To incur minimal capex over next 3-4 years
- Expect RoEs to return to 15-20% levels during next upcycle
Investec On Indian Battery Makers
- Better placed due to exposure to aftermarket, industrials and exports
- Organised players with strong balance sheet are better positioned to gain market share
- Upgrade Amara Raja to buy from hold; cut price target to Rs 560 from Rs 650
- Maintain buy rating on Exide; cut price target to Rs 200 from Rs 235
Investec On Mphasis
- Buy rating maintained
- Price target cut to Rs 990 from Rs 1,130
- Commentary suggests no visible impact in Q4FY20
- Potential impact from the crisis is imminent
- Expect revenue impact in H1FY21
- Has been able to run tight operations and maintain margins in a tight band during periods of revenue duress
Morgan Stanley On HDFC Bank
- Overweight rating maintained
- Price target of Rs 1,285
- Initial updates point to strong loan and deposit growth
- Implies an accelerated pace of market share gains
- Investor focus will be much more on FY21 outlook
Morgan Stanley On M&M
- Overweight rating maintained
- Board rejected equity infusion of $406 million in SsangYong
- Tightening its capital allocation norms
- Not been able to turn around SsangYong
- Restricting fund infusion is a positive
Morgan Stanley On Sobha
- Overweight rating maintained
- Price target of Rs 613
- Q4 volumes affected by Covid-19
- Bangalore, Gurugram remain two key markets
- Shalby: Goldman Sachs India Fund sold 25.32 lakh shares (2.34 percent) at Rs 43.03 per share.
- Embassy Parks REIT: Promoter Veeranna Reddy sold 1.56 crore units (2.02 percent) at Rs 321.5 per unit, American Balanced Fund acquired 95.15 lakh units (1.23 percent) and Capital Income Builder acquired 43.18 lakh units (0.56 percent), at Rs 321.5 per unit.
- NCC: KBC Eco Fund sold 33.65 lakh shares (0.56 percent) at Rs 17.58 per share.
Who’s Meeting Whom
- Mahindra & Mahindra to meet Franklin Templeton Asset Management, SBI MF and Pinpoint Asset Management from April 7-9
- Tata Steel to meet ARGA Investments and ICICI Prudential MF on April 7
- Price Band Revised From 20 Percent To 10 Percent: CARE Ratings, Himadri Speciality Chemicals.
- Moves Into ASM Framework: Indosolar
- Moves Out Of ASM Framework: Walchandnagar Industries
- Move Into Short-Term ASM Framework: GHCL, HT Media, LT Foods, JBM Auto, Zee Media Corporation
- Move Out Of Short-Term ASM Framework: PSP Projects, Bajaj Holdings & Investment, Finolex Cables, PNC Infratech, Sunteck Realty, Allcargo Logistics, DCB Bank, Tube Investments, Sonata Software, MT Educare.
- Graphite India: Promoter Emerald Company acquired 1.07 lakh shares on March 27
- GMR Infra: Promoter GMR Enterprises acquired 53 lakh shares on March 31
(As Reported On April 3)
Money Market Update
- The rupee ended weaker at 76.17 against the U.S. dollar on Friday versus Tuesday’s close of 75.54.
- Nifty April futures end at 8,084.5; a premium of 0.7 points versus 3.5 points
- Open Interest for Nifty April futures down 1 percent and shed 68,000 shares
- Nifty Bank April futures end at 17,175.8; a discount of 73.5 points as against 37 points
- Nifty Bank April futures add 12 percent in Open Interest and 1 lakh shares
- Nifty Put-Call Ratio at 1.18 Versus 1.25 across all series
Nifty: April 9 Expiry
- Maximum Open Interest on Call side at 9,000 strike (15 lakh shares)
- Maximum Open Interest on Put side at 8,000 strike (15.1 lakh shares)
- 7,800 Put (7.7 lakh shares), 9,000 Call (6.2 lakh shares) and 8,400 Call (6 lakh shares) see open interest addition
Nifty: April 30 Expiry
- Maximum Open Interest on Call side at 9,000 strike (16.5 lakh shares)
- Maximum OPen Interest on Put side at 8,000 strike (22.2 lakh shares)