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All You Need To Know Going Into Trade On Aug. 16

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

A man prays to a deity on display, not pictured, at the Bombay Stock Exchange (BSE) building in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)
A man prays to a deity on display, not pictured, at the Bombay Stock Exchange (BSE) building in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Stocks in Asia slipped after another tumultuous session on Wall Street and further declines in Treasury yields, on heightened trade uncertainty and fears of a slowing global economy.

Japanese shares opened lower along with South Korea. Contracts on the S&P 500 Index edged higher. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.38 percent to 10,938 as of 7 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.

  • U.S. stocks ended higher. The S&P 500 Index swung more than 1 percent for a twelfth straight day in above-average volume before finally ending the day up.
  • Treasury yields plummeted to levels unseen in years amid concerns about the prospect of a global recession. It crossed below 1.5 percent for the first time since August 2016.
  • Oil fell to the lowest level in a week as the U.S.-China trade war escalated against the backdrop of swelling American crude inventories.

Get your daily fix of global markets here.

Opinion
BlackRock’s Ex-Central Bankers Have Bold Vision to Beat Recession

Earnings Reaction To Watch

Brigade Enterprises (Q1,YoY)

  • Revenue up 1.4 percent to Rs 708.7 crore. (estimate Rs 720 crore)
  • Net profit down 34.7 percent to Rs 41.2 crore. (estimate Rs 62.1crore)
  • Ebitda up 1.6 percent to Rs 182.3 crore. (estimate Rs 190 crore)
  • Margin at 25.7 percent. (estimate 26.4 percent)
  • License fees up 2.1 times to Rs 20.2 crore.
  • Employee expenses up 26 percent to Rs 58.2 crore.

HEG (Q1, YoY)

  • Revenue down 48.6 percent to Rs 816.5 crore.
  • Net profit down 69.6 percent to Rs 234.4 crore.
  • Ebitda down 70.7 percent to Rs 347.8 crore.
  • Margin at 42.6 percent versus 74.8 percent.

Indraprastha Gas (Q1, YoY)

  • Revenue up 22.3 percent to Rs 1,576 crore.
  • Net profit up 24.2 percent to Rs 218.4 crore.
  • Ebitda up 20.7 percent to Rs 358.4 crore.
  • Margin at 22.7 percent versus 23 percent.

IDFC (Q1, YoY)

  • Net interest income up 4.2 percent to Rs 118.3 crore.
  • Net profit down 88.9 percent to Rs 5.2 crore.
  • Losses from associates at Rs 51.6 crore in current quarter.

IDBI Bank (Q1, YoY)

  • Net interest income down 11 percent to Rs 1,457.7 crore.
  • Net loss at Rs 3,800.8 crore vs net loss at Rs 2,409.9 crore.
  • Provisions at Rs 7009.5 crore versus Rs 4,602.6 crore (Rs 7,233.3 crore QoQ)
  • GNPA at 29.12 percent versus 27.47 percent. (QoQ)
  • NNPA at 8.02 percent versus 10.11 percent. (QoQ)

Johnson Controls - Hitachi Air Conditioning India (Q1, YoY)

  • Revenue up 19.9 percent to Rs 951.9 crore.
  • Net profit up 25.4 percent to Rs 63.6 crore.
  • Ebitda up 31.4 percent to Rs 110.6 crore.
  • Margin at 11.6 percent versus 10.6 percent.

Suzlon Energy (Q1, YoY)

  • Revenue down 34 percent to Rs 843 crore.
  • Net loss at Rs 335 crore versus net loss Rs 573 crore.
  • Ebitda down 20.5 percent to Rs 61.7 crore.
  • Margin at 7.3 percent versus 6.1 percent.
Opinion
Suzlon’s Auditor Bets on Potential Investor to Keep It Going

Repco Home Finance (Q1, YoY)

  • Net interest income up 8.5 percent to Rs 121.6 crore.
  • Net profit up 2.5 percent to Rs 62.4 crore.

Man Industries (Q1, YoY)

  • Revenue down 62.2 percent to Rs 238.9 crore.
  • Net profit down 85.6 percent to Rs 3.6 crore.
  • Ebitda down 62.7 percent to Rs 23.3 crore.
  • Margin at 9.8 percent versus 9.9 percent.

Brokerage Radar

On Grasim Industries

JPMorgan

  • Maintained ‘Overweight’; cut price target to Rs 1,000 from Rs 1,100.
  • Small beat on operating earnings; VSF performance commendable.
  • Caustic: cost efficiencies and mix improvement help deliver decent June quarter.
  • Capital allocation concerns remain key overhang.

BofA Securities

  • Maintained ‘Neutral’; cut price target to Rs 899 from Rs 1,068.
  • June quarter missed estimates; chemical volumes decline on weak volumes.
  • Input cost down; VSF oversupply to limit margin growth.
  • Cut FY20-22 EPS by 9-11 percent on weak caustic soda demand and higher interest cost.

On Indraprastha Gas

UBS

  • Maintained ‘Sell’ with a price target of Rs 310.
  • Volume growth in line; margin expansion drove earnings beat.
  • Net profit below consensus due to rising power & fuel expenses and repair and maintenance costs.
  • CNG volume growth has potential to settle down below double digits, going forward.

Morgan Stanley

  • Maintained ‘Overweight’ with a price target of Rs 351
  • Steady demand growth across vehicles and industrial customers despite price hikes.
  • Margins remained robust and see 12-13 percent demand growth to continue for next three years.

More Calls

CLSA on Indiabulls Real Estate

  • Maintained ‘Buy’; cut price target to Rs 120 from Rs 150.
  • Debt free plans take shape.
  • June quarter results hit by one-off tax settlement.
  • Cut price target given limited development business sales traction and pick-up visibility.

Investec on Redington India

  • Maintained ‘Buy’ with a price target of Rs 180.
  • A strong quarter despite a weak economic backdrop.
  • Two distributor framework with the largest vendor is structurally positive.
  • Cautionary commentary relevant to only part of the business.

HSBC on SBI Life

  • Maintained ‘Buy’ with a price target of Rs 826.
  • Group is focused on improving product mix and distribution.
  • SBI Life sees opportunities in the non-par savings segment including annuities.
  • SBI needs to sell a 6.6 percent stake by September 2020 to meet the 25 percent free float requirement.

HSBC on SpiceJet

  • Upgraded to ‘Hold’ from ‘Reduce’; hiked price target to Rs 130 from Rs 120.
  • Subdued yield growth in June quarter and 737Max delays hurt; Jet Airways fleet proved an expensive affair.
  • No capacity guidance due to uncertainty around 737Max.
  • Concern about competition risk remains although sliding fuel price should help.

Indian ADRs

All You Need To Know Going Into Trade On Aug. 16

Stocks To Watch

  • Bosch said that the company will be observing ‘no production days’ ranging up to 10 days per month during September quarter at its various plants belonging to Powertrain Solutions division. The move comes in order to align production with sales requirements, it said.
  • Yes Bank said that it has raised Rs 1,930 crore through qualified institutional placements. The QIP opened on Aug. 9 and closed on Aug. 14, according to its stock exchange filing.
  • SBI’s board gives in-principle approval to explore dilution of stake in SBI Cards via initial public offer, subject to necessary approvals, according to its statement on the exchanges.
  • IDFC and its arm IDFC Financial Holding entered into an agreement to sell 100 percent stake in IDFC Securities to Dharmesh Mehta-led investors.
  • Tata Motors: Crisil downgraded long-term ratings to AA- from AA with negative outlook remaining unchanged while short term rating remained unchanged at A1+.
  • Suzlon Energy defaulted in repayment of FCCBs worth Rs 1,219 crore. The said defaults gives right to the lenders who have issued Standby Letter of Credit to recall facility worth Rs 3,917 crore.
  • Cox & Kings defaulted in payment CPs worth Rs 149 crore which was due on August 14.
  • Indiabulls Real Estate’s board to embark on a path to achieve zero net debt in current financial year through strategic divestment of the company’s stakes in commercial and leasing business at a valuation of Rs 4,400-4,800 crore.
  • Brigade Enterprise’s shareholders approved share bonus issue at 1:2 and Rs 115 crore preferential warrant issue at the company’s annual general meeting.
  • DHFL defaulted on payment of NCDs interest amounting to Rs 4.48 crore which was due on Aug. 14.
  • Jindal Saw’s subsidiary—Hunting Energy Services has signed a strategic alliance with the company sharing its patented Premium Connections technology, according to a statement.
  • JSPL clarified that it has been scouting for suitable buyers for its mines and mineral assets across Australia, Africa and Asia and the company confirms that is has entered into a share purchase agreement with a potential buyer from Botswana.
  • Indiabulls House Finance was downgraded by Moody’s from Ba1 to Ba2. Foreign currency senior secured rating downgraded from Ba1 to Ba2. Outlook Changed to Negative from Stable on the back of renewed pressure due totight funding conditions.
  • Jindal Steel NCLT Ahmedabad approved the order of amalgamation of four units into the company, with appointed date set on Aug. 14.
  • SSJVN allotted two power projects by Himachal Pradesh Government.
  • Balmer Lawri’s board approved company’s exit from Kanpur Flowercycling.
  • Cox & Kings Financial Services Brickwork Ratings downgraded credit rating of company to BWR BBB-  from BWR BB with outlook changing from ‘stable’ to ‘negative’.

Bulk Deals

HDFC Life Insurance

  • Capital World Growth And Income Fund acquired 1.41 crore shares (0.7 percent) at Rs 480.38 each.
  • Standard Life (Mauritius Holdings) sold 6.71 crore shares (3.33 percent) at Rs 480.7 each.

Trading Tweaks

  • Gandhi Special Tubes record date for share buyback.
  • Hathway Cable & Datacom , Indo Count ,Max Ventures to move into short term ASM Framework.
  • CARE Ratings, Alphageo , Themis Medicare to move out of short term ASM Framework.
  • Alphageo, Nagarjuna Oil Refinery price band revised to 5 percent.
  • Ashapura Minechem to move into ASM Framework.

Who’s Meeting Whom

  • Abbott India to meet Reliance Nippon Life Asset Management and Ask India 2025 Equity Fund on Aug. 16.
  • Mahindra Holidays & Resorts to meet Keynote Cable on Aug. 16.
  • Tata Motors to meet Axis MF, Premji Investments and other investors from Aug. 19-23.

Insider Trading

  • Century Plyboards promoters acquired 86,000 shares on Aug. 13.
  • Jagran Prakashan promoter groups acquired 20,000 shares on Aug. 13.

Money Market Update

Sovereign bonds are set for their second weekly loss on concerns the government may end up borrowing more amid reports of additional stimulus to boost a slowing economy.

Also, it is the auction Friday and the government will sell Rs 17000 crore of bonds. The 10-year yield has touched a high of 6.63 percent. Today, dealers see it trading between 6.60-6.66 percent.

In the currency market, implied opening from forwards suggest the pair may start trading around 71.3925 a dollar. The closely followed South Korean won is down 0.2 percent and dealers see the pair trading in a range of 71.20-71.80 a dollar in the day.

Opinion
Rupee Becomes Asia’s Worst Performer In August Amid China Woes, Foreign Outflows

F&O Cues

August Futures

  • Nifty futures closed at 11,028, discount of 1.2 points versus 0.65 points.
  • Nifty futures OI down 1 percent, sheds 1.9 lakh shares in OI
  • Bank Nifty futures closed at 27,994, discount of 25 points versus premium of 8.7 points.
  • Bank Nifty futures OI down 5 percent, sheds 91,000 shares in OI

Options

  • Nifty PCR at 1.19 versus 0.96 (across all series)

Nifty Weekly Expiry Aug. 22

  • Max OI on call side at 11,200 (9.4 lakh shares)
  • Max OI on put side at 11,000 (9.6 lakh shares)
  • Max OI addition seen in 11,000P (+7.9 lakh shares), 10,900P (+7.8 lakh shares), 11,200C (+6 lakh shares)

Nifty Monthly Expiry Aug. 22

  • Max OI on call side at 11,500 (24.9 lakh shares)
  • Max OI on put side at 11,000 (36.9 lakh shares)

Stocks In F&O Ban

  • DHFL
All You Need To Know Going Into Trade On Aug. 16
Opinion
Why Is Mukesh Ambani Putting Reliance Industries On A Debt Diet?