All You Need To Know Going Into Trade On August 21
Asian markets have opened higher on the final trading day of the week after the Nasdaq ended at a record high overnight, led by technology shares.
The U.S. Dollar has declined while treasuries are retaining their overnight gains.
The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, rose 0.7% to 11,382 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.
Let's take a look at the factors that may influence equities in today's session:
- Markets in Japan and Australia are trading with gains while those in South Korea are outperforming.
- Futures on the Dow Jones are trading with gains of 100 points. The index ended 0.2% higher on Thursday.
- Pfizer Inc. and BioNTech SE said their coronavirus inoculation is on track for regulatory review as early as October, assuming clinical success.
- Applications for unemployment benefits unexpectedly increased, with initial jobless claims rising to more than 1.1 million.
- China confirmed plans to talk with U.S. officials soon to review progress on their preliminary deal.
- Yield on the 10-year treasury stood at 0.65%.
- West Texas Intermediate crude rose 0.2% to $42.89 per barrel while Gold too rose by a similar quantum to $1,951.53/Oz.
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Key Changes in Nifty Indices
Nifty 50 Index
- Inclusions: Divi’s Laboratories, SBI Life Insurance.
- Exclusions: Bharti Infratel, Zee Entertainment Enterprises.
Nifty Next 50
- Inclusions: Adani Green Energy, Alkem Laboratories, Bharti Infratel, L&T Infotech, Tata Consumer Products.
- Exclusions: Divi's Laboratories, NHPC, Page Industries, SBI Life Insurance, Shriram Transport Finance.
Nifty 500 Index
- Inclusions: Aarti Drugs, ABB Power Products and Systems, Adani Enterprises, Alembic, Alok Industries, Chalet Hotels, Gujarat Ambuja Exports, Huhtamaki PPL, IOL Chemicals and Pharma, Navneet Education, Polyplex Corporation, Shilpa Medicare, Solara Active Pharma Sciences, Supreme Petrochem, Suven Pharmaceuticals, Tata Chemicals, Yes Bank.
- Exclusions: Adani Power, GE T&D India, Hexaware Technologies, Himatsingka Seide, IFCI, India Tourism Development Corporation, IndoStar Capital Finance, Intellect Design Arena, Jubilant Life Sciences, KPR Mills, Mahindra CIE Automotive, Nava Bharat Ventures, Sadbhav Engineering, Shree Renuka Sugars, Take Solutions, Time Technoplast, Vesuvius India.
Nifty Midcap 100 Index
- Inclusions: Adani Enterprises, Alembic Pharmaceuticals, ICICI Securities, Navin Fluorine International, Page Industries, Sanofi India, Shriram Transport Finance, Tata Chemicals, Yes Bank, Zee Entertainment Enterprises.
- Exclusions: Adani Power, Alkem Laboratories, Hexaware Technologies, IDBI Bank, Jubilant Life Sciences, Larsen & Toubro Infotech, Mangalore Refinery & Petrochemicals, PNB Housing Finance, Quess Corp, Tata Consumer Products.
Nifty Smallcap 100 Index
- Inclusions: Alok Industries, Amber Enterprises, BASF India, Bharat Dynamics, Central Depository Services (India), Engineers India, FDC, IDBI Bank, Indian Bank, Indian Energy Exchange, JB Chemicals & Pharmaceuticals, PNB Housing Finance, Suven Pharmaceuticals, Thyrocare Technologies, Westlife Development.
- Exclusions: Ashoka Buildcon, Galaxy Surfactants, Gujarat Alkalies & Chemicals, Gujarat State Fertilizers & Chemicals, Himadri Speciality Chemical, Hindustan Copper, ITI, JM Financial, Lakshmi Machine Works, Metropolis Healthcare, MMTC, Navin Fluorine International, NCC, PNC Infratech, Raymond.
Alert: All changes in the indices will be effective from September 25.
Stocks To Watch
- Divi's Laboratories & SBI Life Insurance: To be included in the Nifty 50 index from September 25.
- Bharti Infratel & Zee Entertainment: To be excluded in the Nifty 50 index from September 25.
- Future Retail: Bloomberg News reports that the company is in talks with banks led by State Bank of India to raise cash to help pay interest worth $14 million due on its dollar notes. The company has missed the earlier deadline of July 22 and is currently in a 30-day grace period that expires today. Failure to make the payment within the grace period would constitute as a default.
- Future Enterprises: Defaulted in payment of interest on NCD’s worth Rs 12.65 crore which was due on August 16.
- GMM Pfaudler: To acquire 54% stake in the global business of the Pfaudler group for a total consideration of $27.4 million. The company will acquire 34.4% of the stake by itself and 19.6% stake through its wholly-owned subsidiary Mavag AG. The acquisition is likely to be completed in the next 4-5 months.
- Siemens: Competition Commission of India approves proposed acquisition of C&S Electric.
- Hindalco: Signs MoU with Ultratech to deliver 1.2 million tonnes of red mud per annum to Ultratech's 14 cement plants located across seven states. Red Mud is also known as Bauxite residue.
- HG Infra Engineering: To consider raising funds via equity offerings on August 25.
- Indian Bank: CRISIL revised outlook on the bank's tier-1 bonds worth Rs 2,100 crore to negative from rating watch with developing implications. The rating of CRISIL AAA has been maintained.
- Healthcare Global: Reports a decline of 28.2% in its revenue year-on-year for the June quarter. Net loss has widened to Rs 39.8 crore from Rs 18 crore. Ebitda fell 58.5% to Rs 18.3 crore while margins declined to 9.5% from 16.4% last year.
- Non-Nifty Earnings Today: Union Bank of India, Punjab National Bank, Indiabulls Housing Finance, Oil India, Kolte-Patil Developers, Rossari Biotech.
CLSA On State Bank of India
- Buy rating maintained
- Price target raised to Rs 310 from Rs 270
- A deep value opportunity as it is relatively better positioned on asset quality post Covid-19
- Able to defend / gain share versus private banks
- Subsidiaries are best in class in their segments and should remain steady compounders
- Expect RoE to normalise to over 10-11% post Covid-19
- Current valuations are undemanding
- Comfortable on asset quality disclosures
Nomura On Balkrishna Industries
- Buy rating maintained
- Price target of Rs 1,626
- Agri tyre export trends remain strong in July
- Key beneficiary of recovery in Agri tyre segment
- Valuations attractive given strong growth outlook and high double-digit return ratios
- EPS estimates for FY21/FY22F are 12% above Bloomberg consensus
Jefferies On Finolex Cables
- Buy rating maintained
- Price target of Rs 415
- Cost control measures likely to yield savings worth Rs 40-45 crore
- Has undertaken price hikes of ~10% over last two months
- Trim FY21 operating margin estimates by 100 basis points to 12%
- Like focus on margin-accretive electrical cables, strong balance sheet & inexpensive valuations
- Upside Scenario Price Target: Rs 600
- Downside Scenario Price Target: Rs 150
- Key Risks: Extended demand slowdown, weak traction in new products
PhillipCapital On Nestle India
- Upgrade to buy from neutral
- Price target of Rs 18,000
- Valuations have become more favourable on a risk-adjusted basis
- Offers a safe harbour in the current scenario with earnings resilience
- High share of essential products, aggression in innovation of existing categories, new product development, strong distribution network are some key positives
- Supply chain issues are over
- Commodity basket is turning favourable
- Value the stock at 60x CY22 EPS
Citi On L&T Finance
- Buy rating maintained
- Price target of Rs 80
- Initiate positive catalyst watch
- Looking at part monetisation of 100% stake in L&T Mutual Fund
- See improving collection efficiency in microfinance
JPMorgan On BPCL
- Overweight rating maintained
- Price target of Rs 525
- Privatisation remains very much on track
- Any treasury stake sale will signal movement on privatisation
- Would expect BPCL to distribute any proceeds from a treasury sale as dividend
- Completion of NRL refinery stake sale, clarity on BORL refinery control are some other issues that require resolution
- Would expect shares to trade towards asset-based replacement value as the privatisation process picks up
Pledged Share Details
- JSW Energy: Promoter Glebe Trading created pledge of 84 lakh shares on August 11.
- Future Enterprises: Promoter Central Departmental Stores invoked pledge of 2.23 crore shares on August 18.
- Future Retail: Promoters invoked pledge of 1 crore shares between August 17-18.
(As Reported On August 20)
Who’s Meeting Whom
- Tata Motors: To meet BFAM Partners on August 28.
- Heidelberg Cement: To meet First State Investments on August 21.
- Mahindra Logistics: To meet Aditya Birla Sun Life Mutual Fund, ICICI Securities and Kotak Securities between August 25-31.
- Prince Pipes and Fittings: To meet Mirae Asset Global Investments on August 21.
- V-Guard: SBI Mutual Fund acquired 94.97 lakh shares (2.22%) at Rs 160.25 per share and Axis Mutual Fund sold 94.97 lakh shares (2.22%) at Rs 160.25 per share,
- Future Consumer: Clix Capital Services sold 1.12 crore shares (0.58%) at Rs 11.2 per share.
- AGM Date: Aurobindo Pharma, Natco Pharma, Radico Khaitan, MCX, Bandhan Bank, Astral Poly, Navine Fluorine, TTK Prestige, Voltas, Whirlpool.
- Fund Raising: Dixon Tech.
- Listing: Max Healthcare .
- Record Date For Share Buyback: FDC.
- Ex-Date For Share Buyback: MPS.
- Ex-Date For Demerger: Fairchem Speciality.
- Price Band Revised From 10% To 5%: Everest Kanto Cylinder, HT Media, State Trading Corporation of India, Tanla Solutions.
- Price Band Revised From 20% To 10%: Aarti Drugs, IG Petrochemicals, Varroc Engineering
- Price Band Revised From 20% To 5%: Fairchem Speciality
- Move Into ASM Framework: IRB Infrastructure Developers, PG Electroplast, Megasoft.
- Move Into Short Term ASM Framework: Hi-Tech Pipes, Cimmco, Capacit'e Infraprojects, Excel Realty & Infra.
- Move Out Of Short Term ASM Framework: Himachal Futuristic Communications, HIL, GVK Power & Infrastructure, Allsec Technologies, Prince Pipes And Fittings.
- Mangalam Cement: Promoter Rambara Trading acquired 1 lakh shares on August 19.
- Tanla Solutions: Promoter D Reddy acquired 7 lakh shares between August 19-20.
- Mindtree: Promoter Akila Krishna Kumar sold 76,389 shares between August 14-17.
- Dr. Lal Pathlabs: Promoter Dr. Arvind Lal sold 1.93 lakh shares between August 18-20.
(As Reported On August 20)
Money Market Update
- The rupee ended weak for the second straight day, closing at 75.03 against the U.S. Dollar as compared to Wednesday's close of 74.82.
- The rupee was the third worst performer in Asia on Thursday.
- Nifty August futures end at 11,294; discount of 18 points from premium of 20 points
- Nifty August futures shed 2% and 1.98 lakh shares in Open Interest
- Nifty Bank August futures end at 21,915; discount of 84 points from premium of 27 points
- Nifty Bank August futures add 11% and 1.32 lakh shares in Open Interest
- Nifty Put-Call Ratio at 1.24
- Enter F&O Ban: Muthoot Finance, Nalco, RBL Bank
- Out of F&O Ban: BHEL, SAIL
- Stocks In F&O Ban: Adani Enterprises, Aurobindo, Bank of Baroda, Canara Bank, Century Textiles, Indiabulls Housing, Vodafone Idea, JSPL, Manappuram Finance, Muthoot Finance, Nalco, RBL Bank, Sun TV, Vedanta
Nifty: August 27 Expiry
- Maximum Open Interest on Call side at 11,500 strike (31.9 lakh shares)
- Maximum Open Interest on Put side at 11,000 strike (39 lakh shares)
- Active Options: 11,000 Put (-5.3 lakh shares) and 11,300 Call (9.7 lakh shares)