All You Need To Know Going Into Trade On Dec. 28
Wall Street’s wild afternoon rebound failed to carry through to Asia on Friday, with Japanese shares dropping at the open and U.S. futures sliding.
Equity benchmarks fell in Tokyo, and saw modest gains in Sydney and Seoul after the S&P 500 Index erased a drop of almost 3 percent in its afternoon rebound -- the biggest upward reversal since 2010.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.18 percent to 10,780 as of 7:10 a.m.
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Here’s a quick look at all that could influence equities today.
U.S. Market Check
- Volatility returned to U.S. markets, with stocks roaring back from the lows of the day to close higher after flirting with a bear market.
- The yield on 10-year Treasuries was at 2.77 percent after dropping about four basis points Thursday.
- The MSCI Asia Pacific Index dipped 0.3 percent.
- Japan’s Topix dropped 0.7 percent and the Nikkei 225 slipped 0.3 percent.
- Australia’s S&P/ASX 200 rose 0.3 percent.
- Kospi advanced 0.6 percent.
- Futures on the S&P 500 Index fell 0.3 percent.
- West Texas Intermediate crude advanced 2 percent to $45.48 a barrel.
- Brent crude rose 2.3 percent to $53.37 per barrel after falling 4.24 percent yesterday.
- Gold was at $1,274.55 an ounce, reaching the highest in more than six months.
London Metal Exchange:
- Aluminium ended 2.2 percent lower.
- Copper hated a three-day decline, down 0.52 percent.
- Nickel ended 1.15 percent lower.
- Zinc halted a three-day decline, up 0.85 percent.
- Tin ended higher for the second day, up 2.2 percent.
- Lead ended higher for the second day, up 2.2 percent.
Stocks To Watch
- Lemon Tree Hotels entered into a joint venture with private equity firm-Warburg Pincus affiliate ‘Magnolia Grove Investment’ with a primary focus on co-living. This joint venture marks the entry of the company into a new business segment for rental housing accommodation for students and working professionals. The Joint Venture partners will initially invest Rs 1,500 crore in equity over a period of time, with an option to invest another Rs 1,500 crore. Warburg Pincus will hold 68 percent stake while Lemon Tree Hotels will hold 30 percent stake and the balance stake will be held by Patanjali Keswani.
- United Bank of India: Government said it would infuse Rs 2,159 crore in the equity capital via preferential allotment. (Here’s how much other banks are expected to get)
- Kansai Nerolac entered in to share-purchase agreement with Perma Construction Aids for Rs 29.1 crores. The target company belongs to construction chemicals industry and the paint company says the acquisition will be completed by Jan. 28.
- Hindustan Construction Company raised Rs 498 crore via rights issue. The promoter stake in the company has increased from 27.8 percent to 33.12 percent.
- Majesco’s U.S. Insurance arm announced Jan. 7 as record date for rights offering to its shareholders at $7.1 per share. The company says it will use the net proceeds from this offering to fund the remainder of the Exaxe acquisition, pay off debt and accelerate cloud growth.
- Ashoka Buildcon’s board approved raising Rs 150 crore via non-convertible debentures.
- WABCO India clarified that the news of Wabco signing $950 million supply pact with commercial vehicle maker is for its parent company and not for the Indian arm.
- Corporation Bank appointed Canara Bank’s Executive Director PV Bharathi as its Managing Director and Chief Executive Officer till March 2020.
Who’s Meeting Whom
- Mahindra Holidays & Resorts to meet HDFC Securities on Dec. 28.
- Container Corporation of India to meet Morgan Stanley on Dec. 28.
- Grasim Industries promoter Pilani Investment and Industries acquired 7.6 thousand shares on Dec. 26.
- Jindal Stainless promoter Abhuday Jindal acquired 48.5 thousand shares from Dec. 24 to Dec. 26.
- Coal India ex-date for interim dividend at Rs 7.25 per share.
- Rites record date for interim dividend at Rs 4.75 per share.
- Sayaji Industries record date for stock split from Rs 10 to Rs 5.
- Triveni Turbine record date for share buyback.
- Ruchi Soya Industries price band revised to 5 percent.
Money Market Update
- Rupee closed at 70.35/$ on Thursday, its lowest level since Dec. 19, versus Wednesday’s close of 70.07/$.
Also read: When the Dollar Talks, the Fed Should Listen
- Nifty January futures closed trading at 10,810, premium of 30 points.
- Maximum open interest for January series call at 11,000 strike price, open interest at 23.9 lakh shares.
- Maximum open interest for January series put at 10,500 strike price, open interest at 29.1 lakh shares.
Stocks In F&O Ban
- Adani Power
- Nifty PCR at 1.54 from 1.39.
- Nifty Bank PCR at 0.89 from 1.16.
Nomura on Banks
- PSU banks require Rs 1 lakh crore of capital versus Rs 83,000 crore of government plans.
- Planned capital infusion should broadly be enough to cover capital needs of PSU banks.
- Latest capital infusion of Rs 28,000 crore to address 50 percent capital needs of PCA banks.
- Continue to prefer corporate private banks followed by SBI.
HSBC on Tata Motors
- Maintained ‘Hold’; cut price target to Rs 200 from Rs 210.
- JLR’s weakness looks set to bottom out in 2019; absolute valuations appear undemanding.
- Upside triggers are missing with multiple worries over long-term business outlook.
- Cash flows to remain stretched for the foreseeable future.
Edelweiss on Hero MotoCorp
- Maintained ‘Hold’ with a price target of Rs 3,162.
- Management says availability of liquidity is not concerning for two wheelers, but channel inventory is high.
- Management to focus on features over pricing as a sustainable business strategy.
- Stock re-rating likely to be driven by success of recent as well as upcoming launches.
Emkay on Two-Wheelers
- Subdued festive season behind; two wheeler volumes to recover gradually
- Volume growth seen at 11 percent and 5 percent for the next two financial years respectively.
- Eicher Motors: Upgraded to ‘Buy’ from ‘Accumulate’; hiked price target to Rs 27,700 from Rs 25,700.
- Hero Moto: Downgraded to ‘Hold’ from ‘Buy’; cut price target to Rs 3,350 from Rs 3,560.
- TVS: Maintained ‘Accumulate’; hiked price target to Rs 595 from Rs 590.
- Bajaj Auto: Maintained ‘Accumulate’; hiked price target to Rs 2,910 from Rs 2,870
On Ashok Leyland
Stewart & Mackertich
- Initiated ‘Accumulate’ with a price target of Rs 113.
- See limited market share gains due to Tata Motor’s aggressive pricing strategy.
- See pre-buy of commercial vehicles in the next financial year in due to BS-VI; volume de-growth in 2020-21 highly expected.
- Scrappage policy to create additional demand, but still no clarity on the same.
- Downgraded to ‘Hold’ from ‘Buy’; cut price target to Rs 113 from Rs 152.
- Channel check indicate a reversal in MHCV sales cycle driven by surplus capacity, increasing cost of ownership, selective financing by NBFCs and high base.
- Product mix turned adverse after implementation of new axle-load norms.
- Competitive intensity increased due to subdued volumes and aggressive marketing by Tata Motors.