All You Need To Know Going Into Trade On Dec. 11
Stocks in the news, big brokerage calls of the day, complete trade setup and much more!
Asian stocks extended this week’s declines as investors shrugged off a U.S. rebound, with investors loath to “buy the dip” amid a panoply of concerns about the global outlook.
Benchmarks in Japan and South Korea fell, while stocks in Australia were little changed near a two-year low.
India’s stock futures tumbled after the surprise resignation of RBI Governor Urjit Patel. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 1.75 percent to 10,334.50 as of 6:45 a.m.
Besides, assembly election results in five states will be announced today. The counting will begin at 8:00 am. (Catch all the live updates here)
The Prime Minister Narendra Modi is facing one of the biggest challenges with exit polls suggesting a tighter-than-expected contest in five state elections, potentially hurting his momentum as he seeks re-election in the next six months.
Short on time? Well, then listen to this podcast for a quick summary of the article!
BQ Live
Here’s a quick look at all that could influence equities today.
U.S. Market Check
- Gut-wrenching volatility extended into a 12th week Monday as U.S. equities plunged and recovered, with the Dow Jones Industrial Average reversing a 508-point decline as tech shares bounced.
- The yield on 10-year Treasuries fell one basis point to 2.84 percent.
Asian Cues
- The MSCI Asia Pacific fell 0.6 percent as of 10:00 a.m. in Tokyo.
- Japan’s Topix index fell 1 percent.
- Australia’s S&P/ASX 200 Index was little changed after reaching a two-year low.
- Hong Kong’s Hang Seng Index contracts fell 0.8 percent overnight.
- S&P 500 futures fell 0.4 percent.
Commodity Cues
- West Texas Intermediate was steady at $51.01 a barrel. It slid 3.1 percent Monday.
- Brent crude traded 0.4 percent higher at $60.21 per barrel.
- Gold traded little changed at $1,244.22 an ounce.
London Metal Exchange
- Aluminium ended 0.87 percent lower.
- Copper ended 0.91 percent lower.
- Zinc ended lower for the third day, down 0.46 percent.
- Nickel ended 1.01 percent lower.
- Lead ended 2.23 percent lower.
- Tin ended 0.26 percent lower.
Indian ADRs
Urjit Patel Resigns!
Reserve Bank of India Governor Urjit Patel has resigned from his post, making him the first governor since 1990 to step down before his term ends. Patel’s three-year term was to end in September 2019.
“We will see a knee-jerk selloff," said Lakshmi Iyer, head of fixed income at Kotak Mahindra Asset Management Co. “And if the declines come with a bad poll outcome for the BJP, we may see a big drop.”
Stories you should read
Stocks To Watch
- Titagarh Wagons has been awarded a contract to manufacture and supply 5,058 wagons to Indian Railways for Rs 1,560 crore. The wagons will be designed to carry coal, steel and stones. One -third quantity, comprising of 1,686 wagons is to be supplied in next six months and the remaining orders to be supplied by February 2020, as stated in the contract.
- Lupin received tentative U.S. FDA approval for Apibaxan Tablets, which is used for reducing risk of stroke and deep vein thromobosis.
- Zensar Technologies selected as IT infrastructure partner by European Bank for reconstruction and development.
- GMR Infrastructure arm raised Rs 225.6 crore through compulsory convertible debentures for investment in its 180MW hydro-project in Himachal Pradesh.
- Cox & Kings’ arm’s Education division received requisite approvals from respective authorities including the anti-trust approval for its sale to U.K. based Midlothian Capital Partners for 467 million pounds. The arm is now awaiting final approval from the travel regulator, Civil Aviation Authority. The company expects the transaction to conclude in 2018 itself.
- KDDL to acquire Swiss Watch Hands manufacturing Company named “Estima AG” for CHF 4,00,000 current turnover of Estima AG is CHF 1.8-2 million. The cut-off date for acquisition by new management is Jan. 07
- SBI To consider raising upto $1.25 billion in Dec. 12 meeting.
- ICICI Bank approved proposal for raising funds via bond sale.
Data Watch
- 5:31am: India Q1 Manpower Survey, prior 13.0 percent.
Trading Tweaks
- Capital Trust price band revised to 5 percent
- Navkar Corporation, Electrosteel Steels to move into ASM Framework
Who’s Meeting Whom
- TCI Express to meet Motilal MF, Invesco MF and other investors from Dec. 11-12
- Cipla to meet JP Morgan, Centrum Broking and other investors from Dec. 17-24
Insider Trading
- Aster DM Healthcare promoter Azad Moopen acquired 1.47 lakh shares from Nov. 30-Dec. 7.
- Dabur India promoter Ratna Commercial Enterprises acquired 70,000 shares on Dec. 6.
- Nava Bharat Ventures promoter group acquired 30,000 shares from Dec. 6-7.
- Mangalore Chemicals and Fertilizers promoter McDowell Holdings sold 45,000 shares on Dec. 5.
- Quess Corp promoter Ajit Isaac acquired 48,000 shares on Dec. 7.
Rupee
The Indian rupee closed at 71.34/$ versus 70.81/$ on Friday.
F&O Cues
- Nifty December futures closed trading at 10,515, at a premium of 27 points
- Max open interest for December series at 11,000 Call (open interest at 47.6 lakh shares)
- Max open interest for December series at 10,000 Put (open interest at 45.4 lakh shares)
Stocks In F&O Ban
- Adani Enterprises
- Adani Power
Put-Call Ratio
- Nifty PCR at 1.30 from 1.47
- Nifty Bank PCR at 1.00 from 1.26
Brokerage Radar
Citi on Container Corp
- Maintained ‘Buy’ with a price target of Rs 806.
- Indian railway container volume growth slows.
- Longer-term prospects remain intact.
- Capex/capacity expansion plans remain on track.
UBS on Avenue Supermarts
- Initiated ‘Sell’ with a price target of Rs 950.
- Revenue growth could disappoint; margins likely to be flattish.
- Believe the stock could react negatively to any result disappointments.
- Premiumisation in modern retail could impact discount retailers.
Brokerages On RBI Governor Resignation
Macquarie
- Event will lead to lot of speculation on reasons for this move
- Market reaction will be swift regarding both Governor resignation and elections results
- Fiscal/monetary policy outcomes now get intertwined
- Will wait for the government to react before altering our view
UBS
- Any risk to central bank's credibility is negative for Indian assets
- Bond yields may gap higher by 10-15 basis points.
- Recommended being long 10y IGBs vs. Indian equities as top trade for the emerging markets in 2019.
Nomura
- Sudden resignation will lead to questions whether government is trying to stifle institutions.
- Lack of policy coordination between RBI and government, will mean higher India risk premium.