Jung Woo Yong, a gamer of the CJ Entus professional video-game team sponsored by CJ Group South Korea. (Photographer: SeongJoon Cho/Bloomberg) 

All You Need To Know Going Into Trade On Dec. 05

Asian equities dropped in the wake of the the biggest slide in stocks on Wall Street since the mid-October downdraft, though U.S. futures advanced after China officially echoed President Donald Trump’s optimism over bilateral trade talks.

Stocks in Australia, Japan and South Korea slid less than the 3.2 percent tumble in the S&P 500 Index. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.55 percent to 10,852 as of 7:05 a.m.

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BQ Live

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

U.S. Market Check

  • U.S. stocks plunged, with the Dow Jones Industrial Average tumbling almost 800 points, as a litany of concerns wiped out the rally in risk assets.
  • The yield on 10-year Treasuries fell six basis points to 2.91 percent Tuesday.

Also read: Stock-Market Vigilantes Show Trump Who’s Boss

Asian Cues

  • The MSCI Asia Pacific Index fell 0.8 percent.
  • Japan’s Topix Index fell 1.2 percent.
  • Australia’s S&P/ASX 200 Index lost 1.3 percent.
  • Hang Seng futures lost 0.6 percent overnight and FTSE China A50 futures declined 1.4 percent early Wednesday morning.
  • Futures on the S&P 500 rose 0.3 percent.
  • The MSCI Emerging Market Index slid 0.4 percent Wednesday.

Also read: These Charts Show China's Uphill Battle With Bond Defaults

Commodity Cues

  • West Texas Intermediate crude dropped 1 percent to $52.72 a barrel.
  • Brent crude ended 0.63 percent higher at $62.08 per barrel.
  • Gold slid 0.2 percent to $1,236.14 an ounce following two days of gains.

Also read: Oil Gives Up Ground as Saudis Say OPEC+ Cut Still Up in the Air

London Metal Exchange:

  • Aluminium ended unchanged.
  • Copper ended 1.37 percent lower.
  • Zinc ended higher for the fifth day, up 0.23 percent.
  • Nickel halted a four-day rally, down 0.89 percent.
  • Lead ended 2.16 percent higher.
  • Tin ended higher for the second day, up 1.64 percent.

Indian ADRs

All You Need To Know Going Into Trade On Dec. 05

Stocks To Watch

  • Kesoram Industries board said it was demerging its tyre business. The separated business ‘Birla Tyres’ will remain listed. Jan. 1, 2019 has been fixed as appointment date for the business spin-off. Birla Tyres will issue 1:1 equity share to Kesoram Industries at nominal value of Rs 10 per share. Turnover of the de-merged business is Rs 1,453 crore which is 39 percent of the total revenues, as per the annual general report of financial year 2017-18. The rationale for this move is to revitalise the product portfolio and to leverage positive brand equity of ‘Birla’ name in for the new de-merged business.
  • Tata Motors: S&P Global Ratings cut the automaker’s long-term rating deeper into junk, the second downgrade for the company in five months, citing headwinds for the company’s Jaguar Land Rover subsidiary.
  • InterGlobe Aviation appointed Ronojoy Dutta as Principal Consultant to develop a five-year business plan for the airline company. He was the President for Air Sahara for two years, and advisor in restructuring of Air Canada and U.S. Airways.
  • Oil India commissioned Cyclic Steam Simulation Technology in it’s well in Rajasthan, for extraction of heavy crude oil for the first time in India. This technology will be implemented in two more wells followed by field scale implementation and applied to assess the potential of other similar reservoirs.
  • Lupin launched Silodosin Capsules after it received an approval from the U.S. FDA. This drug is used for treatment of benign prostatic hyperplasia.
  • Hinduja Global Solutions said it was upgrading and investing in its facility in the U.K. within a year.
  • ABB India board approved the re-appointment of Sanjeev Sharma as Managing Director of the company till January 2022.
  • Kridhan Infra arm received order worth Rs 105 crore for highway project in Maharashtra.
  • SKF India fixed Dec. 21 as record date for share buy-back.
  • Vodafone Idea: India Ratings downgraded NCDs worth Rs 6,000 crore to IND AA- from IND AA+. Outlook continues to remain negative. Commercial paper rating maintained at IND A1+.

Earnings To Watch

  • REC

Data Watch

  • 10:30am: Nikkei India Services PMI for November, prior 52.2.
  • 10:30am: Nikkei India Composite PMI for November, prior 53.
  • Dec. 05-31: India Q3 BoP Current Account Balance, Bloomberg estimates at $19.8 billion deficit, prior $15.8 billion deficit.

Offerings

  • Hinduja Leyland Finance postpones share sale to 2019: Official (Bloomberg)

RBI Decision-Day Guide

The Monetary Policy Committee’s December review comes against a dramatically different backdrop when compared to the one in October.

According to Bloomberg, 48 of the 52 economists polled, believe that the MPC will continue to maintain a status quo on the repo rate. After 50 basis points in repo rate hikes so far this financial year, the benchmark rate now stands at 6.5 percent.

Read these to get up to speed:

  • Watch for RBI Governor's views on autonomy.
  • India's weakening economy adds to case for RBI to hold rates.
  • A standalone RBI dividend payment, without a government bond buyback, is tantamount to monetising the deficit, plain and simple.

Bulk Deals

  • AVG Logistics: Sixth Sense India Opportunities Fund acquired 1.71 lakh shares at Rs 75.19 each (The company is listed in NSE Emerge).

Who’s Meeting Whom

  • Mahindra Lifepsace Developers to meet Wellington Management on Dec. 5.
  • Tata Steel to meet Abu Dhabi Investment Authority on Dec.11.
  • Astral Poly Technik to meet Edelweiss AMC, Tata AMC and other investors on Dec. 5.
  • Tata Global Beverages to meet Habrok Capital Managment, Jupiter AMC and other investors from Dec. 5-6

Insider Trading

  • Alembic promoter group Nirayu acquired 1.54 lakh shares between Nov. 30 and Dec. 3.
  • Confidence Petroleum India promoters acquired 1.07 lakh shares on Dec. 3.
  • Axis Bank promoter United India Insurance sold 60,000 shares between Nov. 28-30.
  • Skipper promoters acquired 41,000 shares between Nov. 30 and Dec. 3.
  • MEP Infra Developers promoter group AJ Tolls acquired 6 lakh shares between Nov. 30-Dec. 3.

(As reported on Dec. 4)

Trading Tweaks

  • Hotel Leela Venture price band revised to 5 percent.

Money Market Update

  • The rupee on Tuesday weakened for the second straight day and closed at 70.50/$. It closed at 70.46/$ o Monday.

F&O Cues

  • Nifty December futures closed trading at 10,908, premium of 38 points.
  • Max open interest for December series at 11,000 call option, (open interest at 27.3 lakh shares)
  • Max open interest for December series at 10,000 put option, (open interest at 39.8 lakh shares)
All You Need To Know Going Into Trade On Dec. 05

Put-Call Ratio

  • Nifty PCR at 1.7 from 1.68.
  • Nifty Bank PCR at 0.92 from 1.01.

Fund Flows

All You Need To Know Going Into Trade On Dec. 05

Brokerage Radar

UBS on Arvind

  • Maintained ‘Buy’ with a price target of Rs 130.
  • Demerger offers opportunity to ride on garmenting capacity ramp-up.
  • Success of textile lies in project execution and efficient capital allocation.
  • Advanced materials and water business can drive a rerating.

CLSA on ICICI Securities

  • Maintained ‘Buy’ with a price target of Rs 380
  • Management to focus on customer growth and engagement; Target to double customer base in 3-4 years.
  • See near-term pressure from lower mutual fund fees and competition.
  • Expect earnings to be under pressure in FY19 due to weaker markets/lower cash-broking volumes.

CLSA on ONGC

  • Maintained ‘Buy’ with a price target of Rs 225.
  • Worries on subsidy burden may not play out.
  • ONGC may be exempt from any subsidy burden in 2018-19; expect clarity on within two months.
  • Mouth-watering valuations and near-term triggers suggest ONGC is a no-brainer BUY.

CLSA on Cadila Healthcare

  • Upgraded to ‘Buy’ from ‘Outperform’; hiked price target to Rs 430 from Rs 410.
  • Complex product approval cycle remains strong.
  • Monetisation of vaccines and biosimilars in India/EMs to benefit.
  • Upgrade to Buy as risk-reward favourable.

ICICI Direct on Phoenix Mills

  • Initiated ‘Buy’ with a price target of Rs 775.
  • Phoenix to double retail portfolio over next 4-5 years.
  • Well-funded for current expansion plans through CPPIB alliance and strong internal accruals.
  • Current valuation does not value its expanded portfolio.