All You Need To Know Going Into Trade On August 6

Asian stocks open modestly higher Monday as earnings seasons rolls on. The yuan held on to its gains after a surprise move by the central bank to make it more expensive to bet against the currency triggered a rally in China’s currency.

Equity benchmarks edged higher in Japan, Australia and South Korea, while futures signaled a higher open for Hong Kong ahead of results from regional heavyweights HSBC Holdings Plc and Softbank Group Corp.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.3 percent higher at 11,427.50 as of 7:15 am.

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Here’s a quick look at all that could influence equities today.

U.S. Market Check

• U.S. stocks closed higher Friday as positive earnings surprises lifted shares, with three-fourth of the S&P 500 companies that reported results on Friday morning beating analysts’ estimates.
• The yield on 10-year Treasuries declined three basis points to 2.95 percent.

Europe Market Check

• European equities inched higher following sharp losses in the week, aided by a rally in banking shares after Royal Bank of Scotland Group announced plans to resume payouts.

Asian Cues

• The Topix index rose 0.1 percent.
• Australia’s S&P/ASX 200 advanced 0.5 percent.
• South Korea’s Kospi index added 0.3 percent.
• Futures on Hong Kong’s Hang Seng Index rose 0.7 percent.
• FTSE China A50 futures climbed 0.8 percent.
• S&P 500 Index futures were little changed.

Commodity Cues

• West Texas Intermediate crude was at $68.58 a barrel, up 0.1 percent.
• Brent crude traded 0.1 percent higher at $73.26 a barrel.
• Gold traded at $1,214.15 an ounce.
• LME copper futures fell 0.7 percent to $6,163.50 a metric ton.

Shanghai Exchange

• Steel traded higher for second day; up 0.5 percent.
• Aluminium traded higher for second day; up 0.1 percent.
• Zinc traded higher for two days in a row; up 0.8 percent.

• Copper traded higher; up 0.6 percent.
• Rubber snapped four-day losing streak; up 0.8 percent.

Stories You Might’ve Missed

• Will quotas work at a time when jobs are shrinking, asks Nitin Gadkari.
• Foreign investors poured in over Rs 2,300 crore in the Indian capital markets in July.
• Virat Kohli tops the ICC test ranking for batsmen.
• Senior executive of a Nirav Modi-owned firm gets bail.
• The genesis of a perpetual crisis in the film industry.
• WeWork wants to double locations as it completes one year in India.
• Is it time for Facebook to consider hard limits to Zuckerberg’s power?
• Many questions and few answers on the UIDAI helpline mystery.

Here are the key events to watch out for this week:

• Earnings season includes results from: HSBC, SoftBank, Japan Post Bank, Disney, 21st Century Fox, Deutsche Telekom, China Mobile, Glencore and Adidas.
• Tuesday brings the latest Reserve Bank of Australia meeting that is likely to produce no change in either the record-low cash rate or the long-term guidance.
• The Bank of Japan releases a summary of opinions Wednesday from its July 30-31 meeting, at which it tweaked elements of its stimulus policy to make it more sustainable.
• Samsung Electronics unveils its next Galaxy Note smartphone.
• Japan announces a preliminary reading of second-quarter gross domestic product. Economists expect a solid rebound from a first-quarter contraction.
• U.S. consumer prices probably rose in July, consistent with a pickup in inflation that’s projected to keep the Federal Reserve on a path of gradual interest-rate increases, economists forecast before Friday’s release.

Nifty Earnings To Watch

• Adani Ports and Special Economic Zone

Other Earnings To Watch

• Adani Power
• Arvind
• Avanti Feeds
• Britannia Industries
• Caplin Point Laboratories
• Firstsource Solutions
• Graphite India
• Max Financial Services
• Parag Milk Foods
• Ujjivan Financial Services

Earnings Reaction To Watch

Relaxo Footwear (Q1, YoY)

• Revenue up 17.3 percent to Rs 566.5 crore.
• Net profit up 23 percent to Rs 46 crore.
• Ebitda up 17 percent to Rs 83 crore.
• Margins at 14.6 percent versus 14.7 percent.

Suzlon Energy (Q1, YoY)

• Revenue down 50.5 percent to Rs 1,277.5 crore.
• Ebitda down 83.8 percent to Rs 77 crore.
• Net Loss of Rs 572.8 crore versus Rs 49 crore profit.
• Forex gain of Rs 253.6 crore versus Rs 42.4 crore.

Wockhardt (Q1, YoY)

• Revenue up 13.1 percent to Rs 1,007.7 crore.
• Ebitda at Rs 28.8 crore versus Ebitda loss of Rs 79.3 crore.
• Margin at 2.8 percent versus -8.9 percent.
• Net loss narrows to Rs 86.2 crore versus Rs 409.7 crore.

KEC International (Q1, YoY)

• Revenue up 13.4 percent to Rs 2,104.7 crore.
• Net profit up 37.8 percent to Rs 86.8 crore.
• Ebitda up 22.6 percent to Rs 216 crore.
• Margin at 10.3 percent versus 9.5 percent.

Sical Logistics (Q1, YoY)

• Revenue up 32.1 percent to Rs 323.5 crore.
• Net profit down 64 percent to Rs 4 crore.
• Ebitda down 13 percent to Rs 38.4 crore.
• Margin at 11.9 percent versus 18 percent.

Berger Paints (Q1, YoY)

• Revenue up 18.9 percent to Rs 1,483 crore.
• Net profit up 19.5 percent to Rs 135 crore.
• Ebitda up 22.6 percent to Rs 227 crore.
• Margin at 15.3 percent versus 14.8 percent.

Waterbase (Q1, YoY)

• Revenue up 22.5 percent to Rs 154.3 crore.
• Net profit up 23 percent to Rs 17.7 crore.
• Ebitda up 3.6 percent to Rs 26 crore.
• Margin at 16.8 percent versus 19.8 percent.

Steel Authority of India (Q1, YoY)

• Revenue up 37.4 percent to Rs 15,907 crore.
• Net profit of Rs 540.4 crore versus net loss of Rs 801.4 crore.
• Ebitda at Rs 2,576.5 crore vs Ebitda loss at Rs 83.8 crore.

Indo Count Industries (Q1, YoY)

• Revenue up 10.2 percent to Rs 440.3 crore.
• Net profit down 10 percent to Rs 28.8 crore.
• Ebitda up 44.4 percent to Rs 47.5 crore.
• Margin at 10.8 percent versus 8.2 percent.

Jaiprakash Power Ventures (Q1, YoY)

• Revenue up 8.75 percent to Rs 1083.07 crore.
• Ebitda up 24.4 percent to Rs 436.8 crore.
• Margin at 40.3 percent versus 35.2 percent.
• Net profit at Rs 4.14 crore versus net loss of Rs 19.02 crore.

Laurus Labs (Q1, YoY)

• Revenue up 12.7 percent to Rs 539 crore.
• Net profit down 57.3 percent to Rs 16.6 crore.
• Ebitda down 16.6 percent to Rs 80.5 crore.
• Margin at 14.9 percent versus 20.2 percent.

Adlabs Entertainment (Q1, YoY)

• Revenue down 2.2 percent to Rs 84.7 crore.
• Net loss of Rs 20.9 crore versus net loss of Rs 22.5 crore.
• Ebitda up 5.9 percent to Rs 34.1 crore.
• Margin at 40.3 percent versus 37.2 percent.

Shipping Corporation of India (Q1, YoY)

• Revenue up 3.4 percent to Rs 894.3 crore.
• Net loss of Rs 206 crore versus net loss of Rs 6.7 crore.
• Ebitda down 98.2 percent to Rs 3 crore.
• Margin at 0.3 percent versus 19.2 percent.

Entertainment Network (India) (Q1, YoY)

• Revenue up 16.4 percent to Rs 121.6 crore.
• Net profit up 102.2 percent to Rs 9.3 crore.
• Ebitda up 65.5 percent to Rs 28.3 crore.
• Margin at 23.3 percent versus 16.4 percent.

Sandhar Tech (Q1, YoY)

• Revenue up 25 percent to Rs 493 crore.
• Net profit up 48 percent to Rs 22 crore.
• Ebitda up 15 percent to Rs 49 crore.
• Margin at 10 percent versus 10.8 percent.

PI Industries (Q1, YoY)

• Revenue up 9.5 percent to Rs 606 crore.
• Net profit down 18.4 percent to Rs 82 crore.
• Ebitda down 9.4 percent to Rs 118 crore.
• Margin at 19.5 percent versus 23.6 percent.

Stocks To Watch

• Avendus set to buy IDFC mutual funds and securities units in deal valued between Rs 5,000-6,000 crore (The Economic Times)
• Wipro to settle National Grid lawsuit for $75 million in the U.S.
• ICRA proposing a buyback of shares on Aug. 9.
• Allahabad Bank mulls raising equity capital by was preference issue to GoI on Aug. 14.
• Premier Explosives bagged orders worth Rs 68.9 crore from Coal India.
• Puravankara’s Goa arm received bookings for more than 800 units for residential project.
• Tata Group and Dabur India to bid for Kraft Heinz $1 billion sale of India business. Cadila Healthcare arm shows interest in the Kraft Heinz offer for sale. (Bloomberg)
• TCS’ board approved buyback. Record date fixed at Aug. 18.

New Listing

• HDFC AMC shares to start trading on BSE/NSE after IPO that got 83 times demand at Rs 1,100 each.

Indian ADRs

Bulk Deals

• Delta Corp: Morgan Stanley France sold 23 lakh shares, or 0.9 percent equity at Rs 266.07 each.
• PVR: Fidelity Investment Trust-Fidelity International Discovery Fund sold 4.03 lakh shares, or 0.9 percent equity at Rs 1172.59 each.

Indiabulls Housing Finance Ltd

• Jasmine Capital Investments Pte Ltd bought 22.7 lakh shares, or 0.5 percent equity at Rs 1374.6 each.
• Orient Global Cinnamon Capital Limited sold 22.7 lakh shares, or 0.5 percent equity at Rs 1374.6 each.

Tejas Networks Ltd

• Eastbridge Capital Master Fund Limited bought 19.17 lakh shares, or 2.1 percent equity at Rs 259.98 each.
• Birla Sun Life MF bought 8 lakh shares, or 0.9 percent equity at Rs 260.25 each.
• Samena Spectrum Co. sold 45 lakh shares, or 4.9 percent equity at Rs 260.27 each.

Trading Tweaks

• TVS Electronics Ltd. placed under the ASM framework.
• Venkys circuit filter revised to 10 percent.
• Music Broadcast buyback worth Rs 57 crore at a maximum Rs 385 per share starts today.

Who’s Meeting Whom

• Indian Toner’s and Developers to meet investors on Aug. 6.
• CRISIL to meet Motilal Oswal Securities and other investors from Aug. 6-20.
• Infosys to meet investors from Aug. 7-9.

Insider Trades

• JSW Steel promoter JSW Techno Projects Management Ltd. acquired 8 lakh shares from July 31–August 1.
• Singer India promoter Retail Holdings (India) B.V. sold 4,500 shares on Aug. 2.
• Cosmo Films promoter Ashok Jaipuria acquired 16,244 shares from Aug. 1–2.
• Plastiblends India promoter Jyoti V Kabra acquired 11,085 shares from July 23–Aug. 1.

As reported on Aug. 3

Rupee

• Rupee ended at 68.62/$ versus 68.71/$ on Thursday.

F&O Cues

• Nifty August Futures closed trading at 11,395.7, premium of 34.9 points versus 37 points.
• August series-Nifty Open Interest up 3 percent and Bank Nifty Open Interest up 15 percent.
• India VIX ended at 12, down 3.8 percent.
• Maximum Open Interest for August series at 11,500 Call, Open Interest at 31.4 lakh, Open Interest down 12 percent.
• Maximum Open Interest for August series at 11,000 Put Open Interest at 49.5 lakh, Open Interest up 7 percent.

F&O Ban

• In Ban: Adani Power, Jet Airways
• New In Ban: Jet Airways
• Out Of Ban: None

Put Call Ratio

• Nifty PCR at 1.72 versus 1.64.
• Nifty Bank PCR at 1.34 versus 0.86.

Stock Futures-OI Change All Series

Fund Flows

Brokerage Radar

Deutsche Bank on Berger Paints

• Initiated ‘Buy’ with a price target of Rs 375.
• Product differentiation and distribution expansion to drive double-digit volume growth.
• New niche segments a strong medium-term growth driver.
• Expect moderate margin expansion to continue.
• Expect revenue and net profit grow at a compounded annual growth rate of 17 percent and 22 percent respectively over FY18-21.

Deutsche Bank on Kansai Nerolac

• Initiated ‘Buy’ with a price target of Rs 575.
• Fastest-growing paint company and key beneficiary of a likely capex cycle revival.
• Margin expansion to continue led by premiumisation and operating leverage.
• Leveraging parents global technology for new launches.
• Capacity to increase by 50 percent over next three years.
• Expect revenue and net profit to grow at a compounded annual growth rate of 17 percent over FY18-21.

Morgan Stanley on GAIL (India)

• Maintained ‘Overweight’; cut price target to Rs 473 from Rs 511.
• Fundamentals are getting strong.
• Positives: push to lower pollution, clarity on hike in pipeline tariff.
• Weaker U.S. gas prices coupled with higher oil prices to lead to upside risks.
• Cut price target due to lower multiples across its businesses due to higher bond yields in India.

JPMorgan on HCL Tech

• Maintained ‘Overweight’ with a price target of Rs 1,050.
• Risk-reward balance delicately poised.
• Judicious course-correction can shift balance in a more favorable direction.
• Do not see HCL making disruptive moves to improve its positioning in digital.
• Maintaining margins can be difficult in the face of continued growth difficulties.

Morgan Stanley on Tata Global Beverages

• Maintained ‘Underweight’; raised price target to Rs 170 from Rs 150.
• June quarter earnings were in-line with estimates.
• Another quarter of weak operating performance.
• Low earnings visibility remains the key concern.

Citi on HDFC Bank

• Maintained ‘Buy’ with a price target of Rs 2,590.

• Capital raise to boost capital ratios and support growth.
• Accelerated growth to help net interest margins.
• See good lending opportunities across wholesale and SME space as well.

Brokerages On Hero MotoCorp

Citi

• Maintained ‘Buy’ with a price target of Rs 4,250.
• Supportive macro for two wheeler growth in India.
• Hero plans to counter opposition by product action rather than price action.
• Access and cost of finance could be big demand drivers.
• Second hand bike market could see a spurt.

Deutsche Bank

• Maintained ‘Hold’ with a price target of Rs 3,550.
• Hero to continue its strategy of "better features, higher pricing".
• Rapid growth in 125cc segment to help improve overall scooter market-share.
• Remain cautious on mass-market two wheeler companies.
• Expect several headwinds for margins.

Brokerages On Godrej Properties

JPMorgan

• Maintained ‘Neutral’ with a price target of Rs 850.
• Accounting change impacts net earnings.
• Like-to-like financials much better.
• Pre-sales come off partly on higher base.
• Real estate companies to now focus on deliveries rather than hitting revenue recognition thresholds.

Morgan Stanley

• Maintained ‘Equal-weight’; raised price target to Rs 707 from Rs 682.
• Opening net worth lower by Rs 740 crore due to IND AS.
• Management optimistic on pickup and expects consolidation to continue.
• Expect Godrej to continue to deliver on new project acquisitions.
• Expect new launch momentum in the ensuing quarter.

Brokerages On Nestle

UBS

• Maintained ‘Neutral’ with a price target of Rs 10,750.
• June quarter was a strong quarter where profit surpassed estimates and volume were in line.
• New launches continue; management warns about raw material inflation.
• Margins to come under pressure in the near term.
• Strong performance priced in; limited upside.

CLSA

• Maintained ‘Outperform’; raised price target to Rs 11,700 from Rs 10,200.
• June quarter results were ahead of estimates.
• Good growth with strong margin expansion.
• Input costs are inching up but strong pricing power allays margin concerns.
• Believe Nestle is on a good growth trajectory.

Brokerages On Titan

CLSA

• Maintained ‘Outperform’ with a price target of Rs 1,050.
• June quarter results ahead of estimates; Massive margin gains in watches.
• Jewellery: Higher Ebit, but weaker revenues.
• Management sounded positive and maintained its guidance for above 25 percent jewellery growth.
• Sustained pick-up in growth is critical for stock-price performance.

Morgan Stanley

• Maintained ‘Overweight’ with a price target of Rs 1,080.
• June quarter reported in line earnings.
• Key positive for the quarter is the watch business margin.
• Key disappointment during the quarter was the jewellery business margin.