All You Need To Know Going Into Trade On August 25
Asian markets have opened higher on Tuesday after U.S. equities rose to a record on Monday on optimism over a potential treatment for Covid-19.
The offshore Yuan has risen after the U.S. said that it is seeing progress on the trade deal with China.
The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, was little changed at 11,494 as of 7:05 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, Australia and South Korea have opened higher at the start of trade.
- Futures on the Dow Jones are trading higher by 130 points. The index ended 1.3% higher on Monday. The Nasdaq closed at a record high for the second straight session.
- Moderna Inc. said it’s near a deal to supply at least 80 million vaccine doses to the European Union, as the spread of cases accelerates across Europe.
- U.S. Trade Representative said in a statement that both U.S. and China are committed to the success of their trade agreement.
- Yield on the 10-year treasuries was flat at 0.65%.
- West Texas Intermediate crude fell 0.3% to $42.5 per barrel.
Get your daily fix of the global markets here.
Stocks To Watch
- Axis Bank: Proposes to acquire 17.002% of the equity share capital of Max Life, resulting in a total ownership of 18% post the transaction. Definitive agreements have been executed by the parties. The earlier proposal was to acquire 29.002% stake in Max Life.
- Allcargo Logistics: Promoter group has proposed to delist the company's equity shares and acquire stake held by public shareholders. Promoters currently hold 70.01% stake in the company while the remaining is held by the public. Final offer price to be determined by a reverse book building process as per SEBI guidelines. Board to meet on August 27 to consider the delisting proposal.
- Phoenix Mills: Promoter group looks to sell 5.8% stake at a floor price of Rs 665 per share, which is an 8.3% discount to Monday's closing price. Promoters can also sell an additional 1.5% stake.
- Sun Pharma: As per the notice from the U.S. Department of Justice, the company's wholly-owned subsidiary DUSA Pharma has agreed to pay over 20 million dollars to resolve allegations pertaining to knowingly promoting an administration process for a drug that contracted product instructions approved by the U.S. FDA.
- Future Retail: Pays interest for an amount of $14 million which was due on its U.S. Dollar notes.
- JK Paper: The company's subsidiary Sirpur Paper Mills has temporarily shut down production operations at its manufacturing facility in Sirpur-Kaghaznagar in view of the current market conditions consequent to Covid-19. The company said that the frequent lockdowns in various parts of the country has weakened the demand of products of the aforesaid subsidiary company due to which its production had to be temporarily shut.
- Zydus Wellness: To consider raising funds via preferential issue/Qualified Institutional Placement of shares on August 27.
- GMR Infra: To consider raising Rs 5,000 crore via issue of securities in tranches on August 27.
- Blue Star: SBI Mutual Fund increased stake to 5.36% from 4.92% on August 20.
- CEAT: Commissioned Phase-II of its Nagpur plant to produce two-wheeler tyres for commercial purposes. The plant will be ramped up over a period of time based on market demand and the company's overall capacities.
- Security and Intelligence Services: Promoters Ravindra Kishore Sinha to sell up to 5.4 lakh shares (0.37% stake) and Rituraj Kishore Sinha to sell up to 2.75 lakh shares (0.19%) to comply with requirement of minimum public shareholding. Divestment period will be between August 26-31, or the actual date of completion of sale of all equity shares, whichever is earlier.
- Vodafone Idea: CARE ratings downgrades the company's long-term facilities and NCDs to BB- (credit watch with negative implications) from B+ (credit watch with negative implications) due to recent developments including the operational and financial performance of the company in FY20 and Q1FY21.
- JSW Energy: Jyoti Kumar Agarwal resigned as CFO and Director - Finance from September 15.
- KRBL: Clarified on media reports, saying that the Enforcement Directorate has consented to lifting its attachment of over 8 lakh tonnes of paddy is factually incorect. The company said that the paddy lying at the premises was only 80,000 tonnes and that the aforesaid paddy was never the subject matter of attachment proceedings commenced by the ED.
- Greenlam Industries : Received certification for developing laminates that kill up to 99.99% of viruses.
- Xchanging Solutions: Board to consider the decision on voluntary delisting proposal as proposed by company’s promoters on August 28.
- India Energy Exchange: Rajiv Srivastava has resigned as MD and CEO from August 24. Satyanarayan Goel ,non-executive chairman of the board has been given an additional charge of Managing Director & CEO of the Company, for an interim period with immediate effect.
- Non-Nifty Earnings Today: Atul Auto, Can Fin Homes, IRCON International, Phillips Carbon Black, P&G Hygiene and Healthcare
Earnings Reported After Market Hours
LIC Housing Finance Q1FY21
- Net Interest Income up 2.8% to Rs 1,239.2 crore
- Net profit up 33.9% to Rs 817.5 crore
- Higher impairment provisions recorded in the base quarter
- All numbers are standalone and compared on a year-on-year basis
Globus Spirits Q1FY21
- Revenue down 22.3% to Rs 230.1 crore
- Net profit up 2.6 times to Rs 18.7 crore
- Ebitda up 46.5% to Rs 39.4 crore
- Ebitda margin at 17.1% from 9.1%
- Ebitda margins improve due to lower raw material costs and other expenses
- Higher excise duty impacts revenue
- Excise duty up 3.4 times to Rs 62 crore
- All numbers are consolidated and compared on a year-on-year basis
IRB Infra Q1FY21
- Revenue down 42.3% to Rs 1,022.3 crore
- Net loss of Rs 30.1 crore from Net profit of Rs 206.6 crore
- Ebitda down 44.2% to Rs 477.6 crore
- Ebitda margin at 46.7% from 48.2%
- All numbers are consolidated and compared on a year-on-year basis
Goldman Sachs On State Bank of India
- Upgrade to buy from neutral
- Price target raised to Rs 282 from Rs 183
- One of the highest provisions on total stressed book including moratorium loans
- Expect RoA to remain at 0.5%, supported by stable margins and lower credit costs
- Raise EPS estimates by 34% post Q1 earnings on average over FY21-23E
- Current valuation makes for an attractive entry point
- Trades at a steep valuation discount to ICICI Bank / Axis Bank despite much better balance sheet management
- Stock can re-rate further if growth trajectory improves and asset quality turns out better than expectations.
Emkay On Max Financial Services
- Buy rating maintained
- Price target raised to Rs 660 from Rs 531
- Deal with Axis should not face much resistance
- Lower than expected acquisition by Axis Bank to benefit minority shareholders
- Overhang on the stock will be lifted leading to a potential re-rating
- Gradual shift towards profitable product mix
- Valuations are relatively comfortable
- Expect VNB CAGR of 14.2% over FY20-23E
Macquarie On Indian Industrials
- Media reports suggest that the Ministry of Power has sought a two-year extension to implement emission control norms at Thermal power plants
- Extension could delay at opportunity pie worth Rs 40,000 crore for power equipment OEMs
- Relaxation in implementation timelines would be detrimental for ordering prospects of BHEL and Thermax
Macquarie On Thermax
- Downgrade to underperform from neutral
- Price target of Rs 710
- Order book provides revenue visibility of one year as compared to BHEL's five
- FGD prospects crucial for the company
- Recent rally makes us even more cautious
- See no positive triggers on the Horizon
CLSA On Max Financial Services
- Upgrade to buy from outperform
- Price target raised to Rs 720 from Rs 640
- Revision of deal further reduces uncertainty of long-term distribution tie-up with Axis
- Retains higher stake in the life insurance company
- Clarity on long-term distribution and change in control to Axis Bank may further drive re-rating
Pledged Share Details
- Ajanta Pharma: Promoter Aayush Agrawal released pledge of 4.83 lakh shares between August 20-21.
- GMR Infra: Promoter GMR Enterprises released pledge of 2.36 crore shares on August 21.
- UFO Moviez: Promoter Apollo International created pledge of 22.66 lakh shares on August 22.
- Chambal Fertilisers and Chemicals: Promoter Zuari Global revoked pledge of 49.5 lakh shares on August 20.
- JSW Steel: Promoter JSW Technoprojects released pledge of 16.1 lakh shares on August 19.
- Max Financial Services: Promoter Max Ventures Investment created pledge of 7.65 lakh shares on August 20.
- Motherson Sumi Systems: Promoter Samvardhana Motherson International revoked pledge of 70 lakh shares on August 20.
- JSW Energy: Promoters revoked pledge of 62 lakh shares on August 21.
- Zuari Agrochemicals: Promoter Zuari Global created pledge of 11 lakh shares on August 20.
(As Reported On August 24)
Who’s Meeting Whom
- Cummins India: To meet Quantum, IIFL AMC and other investors on August 28.
- CG Consumer Electricals: To meet Capital Research, Aberdeen and other investors between August 27 - September 4.
- Mahindra and Mahindra: To meet Wellington Management, Fidelity International and other investors between August 25 - 28.
- Punjab National Bank: To meet SBI Mutual Fund and Franklin Templeton between August 25-26.
- Tata Steel: To meet Nippon Mutual Fund and Aditya Birla Mutual Fund between August 25-27.
- Ramco Systems: Premier Capital & Services acquired 2.04 lakh shares (0.66%) at Rs 230.39 per share and Habrok India Master sold 1.87 lakh shares (0.61%) at Rs 233.5 per share.
- India Energy Exchange: REC sold 25 lakh shares (0.83%) at Rs 190 per share and PPFAS Mutual Fund acquired 24.85 lakh shares (0.83%) at Rs 190 per share.
- Sadbhav Infaprojects: Norwest Venture Partners (Mauritius) sold 1.19 crore shares (3.38%) at Rs 15.01 per share.
- ICICI Bank: Merrril Lynch Markets Singapore acquired 90 lakh shares (0.17%) at Rs 378.6 per share and Societe General sold 90 lakh shares (0.17%) at Rs 378.6 per share.
- AGM Date: Tata Power, Polyplex, Aarti Drugs, Birla Corporation, Century Textiles, Cummins, IndusInd Bank, Sequent Scientific.
- Fund Raising: Va Tech Wabag, HG Infra Engineering
- Record Date For Share Split: Eicher Motors (From face value of Rs 10 to Rs 1 per share).
- Price Band Revised From 10% To 5%: Setco Automotive, Shiva Texyarn, Windsor Machines, Acrysil.
- Price Band Revised From 20% To 10%: GPT Infraprojects, Panama Petrochem, RSWM, Swelect Energy Systems, Andhra Petrochem, Flex Foods.
- Move Into Short Term ASM Framework: BASF India, IFGL Refractories, Mahindra Logistics, MAS Financial Services, Monnet Ispat & Energy.
- Move Out Of Short Term ASM Framework: Ashiana Housing, Edelweiss Financial Services, Electrotherm, Intellect Design Arena, Kirloskar Electric, Lemon Tree Hotels, Matrimony.com, Nandan Denim, NGL Fine-Chem, Vascon Engineers, Elgi Equipment.
- JSW Steel: Promoters JTPM Metal Traders acquired 30 lakh shares between August 19-20.
- Jamna Auto: Promoter Pradeep Singh Jauhar acquired 50,000 shares on August 20.
(As Reported On August 24)
Money Market Update
- The currency ended at a five-month high on Monday, ending at 74.32 against the U.S. Dollar as compared to Friday's close of 74.85.
- The rupee was also the best performing currency in Asia.
- Nifty August futures closed at 11,478; premium of 12 points from 11 points
- Nifty August futures shed 11% and 10 lakh shares in Open Interest
- Nifty Bank August futures closed at 22,814; discount of 19 points from premium of 7 points
- Nifty Bank August futures shed 2.5% and 33,000 shares in Open Interest
- Nifty Put-Call Ratio at 1.4
- Enter F&O Ban: Vodafone Idea, GMR Infra, Ashok Leyland, Vedanta
- Out of F&O Ban: Aurobindo, Canara Bank, Indiabulls Housing Finance, Muthoot Finance, RBL Bank
- Stocks In F&O Ban: Adani Enterprises, Ashok Leyland, BHEL, GMR Infra, Nalco, Punjab National Bank, SAIL, Vodafone Idea, Vedanta
Nifty Monthly Expiry: August 27
- Maximum Open Interest on Call side at 11,500 strike (36.2 lakh shares)
- Maximum Open Interest on Put side at 11,000 strike (39.3 lakh shares)
- Active Options: 11,400 Put (17.5 lakh shares) and 11,400 Call (-4.9 lakh shares)