All You Need To Know Going Into Trade On Aug. 26
Financial traders monitor data on computer screens at the Amsterdam Stock Exchange (Photographer: Jasper Juinen/Bloomberg)

All You Need To Know Going Into Trade On Aug. 26

Asian stocks and U.S. equity futures fell while the yen and Treasuries climbed after the latest escalation in the Sino-American trade war.

Shares fell across the region, declining more than 2 percent in Tokyo. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.57 percent to 10,886 as of 7:15 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.

  • S&P 500 contracts were down around 1% after sliding Friday when President Donald Trump announced additional levies on Chinese imports and called for American companies to pull out of Asia’s largest economy after China said it would impose retaliatory tariffs on U.S. goods.
  • Ten-year Treasury yields dropped to the lowest since August 2016 and Australian equivalents sank.
  • The yen touched a three-year high against the greenback before paring gains, while the Aussie and kiwi dollars slumped. The yuan edged back from the day’s lows after a stronger-than-forecast currency fixing.
  • Oil extended losses from Friday, when China announced tariffs on U.S. oil for the first time. Gold climbed and emerging market currencies such as the Turkish lira retreated.

Get your daily fix of global markets here.

Also read: Trump Clarifies on Trade Regrets: Tariffs Should Be Higher

Brokerage Radar

On Finance Minister Announcements

Motilal Oswal

  • Announcements will serve well to boost sentiment.
  • Intention, willingness to take feedback and act promptly may offset pessimistic market narrative.
  • Boosters came just ahead of the beginning of a long festival season and may boost consumer sentiment.
  • Expectations of more measures will likely drive a short-term bounce.
  • Sticking to fiscal prudence will ensure some easing of 10-year government-security yields.
  • Believe that durable pick-up may have to wait until earnings recover.
  • Corporate banks, housing finance companies, vehicle financiers and autos are the key beneficiaries of the measures unveiled.

Kotak

  • Several positive announcements by the government to improve sentiment.
  • Surplus liquidity and repo-linked interest rates may lead to lower interest rates.
  • Absence of any fiscal stimulus in form of GST cuts may disappoint few sections of the market.
  • Structural reforms can turn an adverse global situation into once-in-a-lifetime opportunity.

Edelweiss

  • Among all announcements, reducing surcharge on capital gains stood out.
  • Announcements likely to increase liquidity in the economy, reduce interest rates and will partially boost the animal spirit among all the strata of the economic affairs.
  • Current announcements likely to arrest the fall in equity and currency markets.
  • Coupled with fall in oil should lead to a significant bounceback in the coming days.

Elara Capital

  • Government offers a soothing balm to markets; FPI outflows to get arrested.
  • Economic recovery however some time away
  • Liquidity enhancing measures should revive demand at margin.
  • Capex-related expenditure could see sharp cuts.

Morgan Stanley

  • Measures are focused on boosting sentiment and addressing certain sector specific issue.
  • Monetary transmission should get a fillip; government’s policy response likely to be calibrated.
  • Up-front public sector banks recapitisation, removal of surcharge on foreign portfolio investors, focus on freeing up liquidity after delays in GST refunds/payments by government, and support to auto industry should improve the near-term growth outlook.

IDFC Securities

  • Government trying to shun the recent public impression that it is disregarding economic growth.
  • There is an attempt to refurbish a pro-reform image, today's measures are not reformative.
  • In the short-term rupee may gains stability from today’s measures.
  • Announcements give us the confidence to expand beyond staples to discretionary, including autos.

Equirus Securities

  • Liquidity improvement measures should help economy, markets should react positively.
  • Financials, auto and building material: Easing liquidity situation to help.
  • Infrastructure: Timely resolution of payments and benefits of lower interest rates to boost overall profitability.
  • Consumers: Nothing direct, but stability could aide demand.
  • Metals: Growth revival in auto to be positive.
  • Media: Adding some cheer to the festive season.

Nomura

  • Front-ended infusion of Rs 70,000 crore should be positive for Bank of Baroda, PNB and Union Bank.
  • Government’s push for rate cut may restrict the expected net interest rate improvement.
  • National Housing Bank refinance is a positive, but clarity needs to emerge on credit enhancement and co-lending instruments and implementation.
  • Auto sector incentives not a game changer, at the margin level this is positive for commercial vehicle financers.

Credit Suisse on Cipla

  • Maintained 'Neutral'; cut target price to Rs 445 from Rs 515.
  • High competition in gVoltaren gel a key risk in near term.
  • Could hit earnings per share by 8 percent.

Credit Suisse on Metropolis

  • Initiated 'Neutral' with target price of Rs 1,000.
  • Superior growth versus peers is priced in
  • Low entry barriers and ramp up of e-pharmacies can impact growth.

Investec on Cement

  • Cement Mills Q1 operating metrics stood at decadal highs.
  • Price increases didn’t last too long as the pricing discipline fell apart with fundamentals prevailing.
  • Ultratech: Upgraded to 'Buy' from 'Hold'; cut target price to Rs 4,756 from Rs 5,413.
  • ACC: Upgraded to 'Hold' from 'Sell'; cut target price to Rs 1,508 from Rs 1,542.
  • Ambuja Cement: Upgraded to 'Buy' from 'Hold'; cut target price to Rs 232 from Rs 242.
  • Prism Johnson: Upgraded to 'Buy' from 'Hold'; cut target price to Rs 100 from Rs 107.

Indian ADRs

All You Need To Know Going Into Trade On Aug. 26

Stocks To Watch

  • Alkem Laboratories received four Form-483 observations from U.S.FDA at manufacturing facilities in U.S. and zero form 483 observations for Baddi facility in India.
  • Lakshmi Vilas Bank to consider raising authorised share capital and funds on Aug. 28.
  • Natco Pharma increased its stake in OMRV Hospitals from 9.29 percent to 12.81 percent and 6.25 percent stake in U.S.-based AACT Inc.
  • Future Consumer completed acquisition of the balance 10 percent stake in Future Consumer Products. The target company has become a wholly-owned arm of Future Consumer.
  • Glenmark Pharma clarified that report of selling 30 percent stake in API business to PremjiInvest is speculative in nature and the company is not aware of the source of this information.
  • Ipca Laboratories: U.S. FDA conducted an inspection of its formulations manufacturing unit in Silvassa and issued three observations. (PTI)
  • DHFL defaulted on payment of NCDs interest and bond interest worth Rs 11.17 crore and Rs 51.06 crore, which were due on Aug. 22 and Aug. 23, respectively.
  • Ineos Styrolution: Promoters sets floor price of Rs 419 per share for de-listing the company’s 44 lakh shares, representing 25 percent equity stake in the company. Company had tendered a de-listing offer price at Rs 480 per share which is at a premium of 14.56 percent over the floor price.
  • Union Bank to link home and auto loan rates to repo rate. Repo-linked home loans to be priced at 8.25 percent, down 35 basis points from existing rates. Repo linked vehicle loans to be priced at 8.6 percent, down 40 bps from existing rates. Bank will also continue to offer home and vehicle loans on MCLR.
  • InterGlobe Aviation: Board approved appointment of Meleveetil Damodaran as Independent Director. AGM to be held on Aug. 27.
  • CCI approved acquisition of shares on International Paper APPM by West Coast Paper Mills (Twitter)
  • CCI approved acquisition of 51.2 percent stake of Apollo Munich by HDFC and the subsequent merger of Apollo Munich into HDFC Ergo (Twitter)
  • Gail launched supply of CNG, domestic PNG and CNG-run vehicles in Ranchi.
  • Essel Propack: Ashok Goel reduced his stake from 56.65 percent to 7.67 percent via off-market sale on Aug. 22.
  • Jet Airways: Third meeting of Committee of Creditors to be held on Aug. 26
  • HSIL: Somany Home Innovation allotted 7.23 crore shares to shareholders of the company in the ratio of 1:1.
  • IOCL, BPCL, HPCL: Air India owes Rs 5,000 crore to Oil Marketing Companies, says IOCL.
  • Cupid received orders worth Rs 5 crore from UNFPA
  • Videocon Industries: NCLT has approved for the consolidation of the CIRP of 13 Videocon Group Entities.

Also read: Fund Manager Who Beat 98% of Peers Says Stay Calm and Buy Stocks

Trading Tweaks

  • Alembic ex-date for demerger.
  • SREI Infrastructure Finance to move into ASM Framework.
  • Adlabs Entertainment, Eros International Media to move out of ASM Framework.
  • Vakrangee to move into short term ASM Framework.
  • Hathway Cable & Datacom, Indo Count Industries, Max Ventures and Industries to move out of short term ASM Framework.
  • Den Networks price band revised to 10 percent.
  • 63 Moons Technologies, GTL Infrastructure price band revised to 5 percent.

Who’s Meeting Whom

  • Tata Motors to meet Nissay Asset Management and Belcan LLC from Aug. 26-28
  • Crisil to meet Kotak MF and Walter Scott from Aug. 27-Sept. 6.
  • Kennametal to meet Banyan Advisors on Aug. 26.

Insider Trading

  • Jagran Prakashan promoter group Shailendra Mohan Gupta acquired 48,000 shares from Aug. 21-22
  • Hubtown promoter group acquired 1 lakh shares from Aug. 21-22.
  • Camlin Fine Sciences promoter and director Anagha Dandekar acquired 57,000 shares on Aug. 23.

Money Market Update

  • The rupee on Friday weakened and closed at 71.66/$ versus Thursday’s closing of 71.82/$.

F&O Cues

August Futures

  • Nifty futures closed at 10,842.7, premium of 13.4 points versus discount of 8.9 points.
  • Nifty futures open interest down 4.5 percent, sheds 8.6 lakh shares in OI.
  • Bank Nifty futures closed at 27,016, premium of 57 points versus discount of 12 points.
  • Bank Nifty futures OI down 4.5 percent, sheds 78,600 shares in open interest.

Options

  • Nifty PCR unchanged at 1.02 (across all series)
  • Nifty Monthly Expiry 29 -Aug
  • Max open interest on call side at 11,000 (45.9 lakh shares)
  • Max open interest on put side at 10,500 (25.8 lakh shares)
  • Open interest addition seen at 10,800P (+3.3 lakh shares), 10,400P (+3.3 lakh shares)
  • Open interest shedding seen at 10,900P (-3.8 lakh shares), 11.000P (-3.4 lakh shares)

Stocks In Ban

  • DHFL
  • IDBI Bank
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