All You Need To Know Going Into Trade On Dec. 5

Stocks in Asia opened higher Thursday after a report the U.S. and China are getting closer to a deal that would avoid tariffs due to kick in later this month.

Shares opened higher in Sydney, Tokyo and Seoul, while equity futures in Hong Kong were higher. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, unchanged at 12,094 as of 6:48 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.

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

• The S&P 500 Index halted a three-day slide after Bloomberg News reported negotiators are getting near an agreement on the amount of tariff relief in a phase-one accord between the world’s two largest economies.
• Oil surged the most in more than two months amid growing optimism for a U.S.-China trade deal and as OPEC and its allies prepared to discuss extending or possibly deepening output limits.
• The pound touched the highest level against the euro in more than two-and-a-half years as traders stepped up bets for a Conservative victory in next week’s election.

Get your daily fix of global markets here.

Indian ADRs

Stocks To Watch

• Bharti Airtel planned to raise $3 billion or Rs 21,500 crore via debt and equity shares or convertible instruments. Via debt, the company will raise $1 billion or Rs 7,200 crore and via equity shares or convertible instruments $2 billion or Rs 14,300 crore. Equity issuance can lead to 6 percent dilution.
• InterGlobe Aviation: IndiGo said it expects its capacity to grow by 22-23 percent for fiscal year 2020 as against earlier stated guidance of 25 percent announced during September quarter earnings. The company lowered its capacity growth guidance for the second time in last 45 days. During the second-quarter earnings, IndiGo had lowered its capacity growth guidance to 25 percent from 30 percent for 2019-20. Despite expected MTM forex losses, IndiGo expects profits in the third quarter to be similar to last year. RASK and CASK are expected to increase by about 4-5 percent in the ongoing quarter. It also expects capacity growth of 15-20 percent in March quarter.
• Reliance Industries: Telecom unit Reliance Jio launched new all-in-one plans. The company it is offering up to 300 percent more benefits than earlier all-in-one plans. Plans to be available from Dec. 6.
• SBI: Board approved divestment of the Bank’s stake in UTI AMC by up to 1.05 crore shares or 8.25 percent equity through initial public offering via offer for sale. The bank’s stake in UTI AMC will fall to almost 10 percent post the OFS.
• Tata Power’s joint venture Renascent Power Ventures acquired 75.01 percent stake and 27 lakh preference shares of Prayagraj Power Generation. Tata Power has 26 percent stake in JV and the balance 74 percent is held by ICICI Bank and other global investors.
• Bharti Infratel to consider declaring dividend on Dec. 10.
• Hudco said that two borrowing agencies of the company have defaulted in repayment of their dues with a default amount of Rs 87.46 crore against principal outstanding of Rs 869.4 crore and has been classified as non-performing assets with an impact of 1.14 percent on Gross NPA.
• Gayatri Projects arm offered to sell 6 percent stake in Sembcorp Energy to Sebcorp Utilities for Rs 406 crore. Both the parties have signed a non-binding Term Sheet with each other.
• SH Kelkar’s arm plans filing an appeal against Tax Tribunal’s order regarding disallowance of depreciation of goodwill. The arm expects a refund of Rs 7.7 crore.
• IFB Industries said that fire broke out in its warehouse in Haryana. Estimation of loss is yet to be ascertained.
• Vedanta approved raising up to Rs 3,000 crore via debentures.
• Allcargo Logistics clarified on the news of company acquiring stake in Gati stating that it is exploring various business opportunities of organic and inorganic growth and would not like to comment on the news item.
• CSB Bank has re-appointed CV Rajendran as the managing director and chief executive officer of the Bank for a period of three years till Dec. 2022.
• Karnataka Bank reported a fraud of Rs 40.39 crore in credit facilities extended to the borrowing account of Hanung Toys & Textiles to Reserve Bank of India.
• IL&FS Group 2018-19 Update: Net Loss was at Rs 22,527 crore versus net profit of Rs 333 crore. Total revenue fell 52 percent to Rs 824 crore. Total assets declined 82 percent to Rs 4,148 crore, according to company’s statement.
• Canara Bank allotted 27.69 crore shares at Rs 237.23 per share aggregating to Rs 6,570 crore to Government of India.
• Vaibhav Global has completed buyback of its equity shares. Company brought back 8.66 lakh shares at an average price of Rs 831.72 per share.
• Arshiya to consider raising capital via preference shares on Dec. 7.

Monetary Policy Day Guide

• India’s Monetary Policy Committee will likely cut rates for the sixth consecutive time.
• Economists polled by Bloomberg are forecasting a 25 basis point cut in the repo rate to 4.9 percent.
• This would take the benchmark policy rate down to its lowest level since after the global financial crisis.

Read to get up to speed:

• Here’s how low India rates can go after five cuts in a row.
• Monetary Policy: Are calls for an ‘operation twist’ justified?
• With growth this bad, India needs more than luck.

Offerings

• Ujjivan Small Finance IPO got 166 times demand for shares offered..
• HDFC AMC offer-for-sale received 123.86 pecent on the first day.

Brokerage Radar

On Bharti Airtel

Citi

• Maintained ‘Buy’ with a price target of Rs 525.
• Capital raise likely aimed at increasing preparedness to preempt no relief on AGR front.
• Fund raise arguably reflects uncertainty on monetization of Infratel stake.
• Await further clarity on exact mode of capital raise and on promoter participation.

Morgan Stanley

• Maintained ‘Overweight’ with a price target of Rs 530.
• Fund raise to take care of worst outcome in AGR case.
• If part of AGR dues waived off, then company to use funds to repay debt.

Credit Suisse

• Maintained ‘Outperform’ with a price target of Rs 550.
• Fund raise to aid in any potential regulatory payments.
• Remain constructive on Airtel as it remains well positioned to capitalise on pricing recovery.
• Tariff hike along with capital raise to bring down leverage from 4.3 times to 2.9 times by March 2021.

On Telecom Sector

Goldman Sachs

• Jio’s tariff changes broadly inline.
• Tariff saw an average increase of 27 percent for monthly plans and 36 percent for three-m.onth plans.
• Expect Rs 37 incremental ARPU for Jio; Rs 24-27 for Vodafone Idea and Bharti Airtel

Morgan Stanley

• Tariff plans with an average increase of 32 percent over its previous prepaid plans not including the additional top-up for IUC on off-net outgoing calls.
• For some of the key plans, the premium of Airtel and VIL over Jio has come off now.

More Calls

JPMorgan on Reliance Industries

• Maintained ‘Neutral’ with a price target of Rs 1,565.
• New tariff plans are 7-13 percent lower than incumbents.
• Hikes may not flow through the March quarter give implementation if from Dec. 6.
• Expect multi-simming to reduce; subscriber addition growth could slow down for Jio.

BofAML on L&T

• Maintained ‘Buy’; cut price target to Rs 1,505 from Rs 1,595.
• See weak order inflow growth over the next four quarters.
• Maharashtra and Andhra Pradesh cut order backlog by Rs 38,000 crore.
• Projects under review poses execution risk.

CLSA on Hotels

• Channel checks suggest third quarter has been strong for hotels.
• Occupancies improving even with demand moderation.
• Expect a slow but steady ADR improvement.
• Hotel industry seems to be consolidating in favour of the top five players.
• For Lemon Tree, the share of lucrative markets like Mumbai is expected to increase, which should aid ADR growth further.

JMFinancial on Essel Propack

• Initiated ‘Buy’ with a price target of Rs 190.
• Revamped board and access to Blackstone’s global expert network would help drive strong value creation in the coming years.
• Blackstone’s past investment decisions have seen strong value generation.
• Expect accelerated growth in personal care, continued leadership in oral care, prudent capital allocation and innovation and sustainability solutions.

Credit Suisse on Sun Pharma

• Maintained ‘Neutral’ with a price target of Rs 450.
• Cequa peak sales likely to miss high consensus expectations.
• Cequa likely to be less than $100 million peak sales
• CS EPS estimates are 12 percent and 15 percent for the next to financial years respectively, below consensus due to tepid ramp-up of Ilumya and a relatively muted outlook on Cequa.

Trading Tweaks

• Thomas Cook ex-date for demerger.
• HCL Tech ex-date for bonus issue (1:1).
• Mahamaya Steel, Jaiprakash Associates, KSK Energy Ventures, Jaiprakash Power Ventures to move into short term ASM Framework.
• TIPS Industries to move out of short term ASM Framework.
• Adhunik Industries price band revised to 10 percent.

Who’s Meeting Whom

• Mahindra & Mahindra to meet Lazard Asset Management on Dec. 5.
• Brigade Enterprises to meet IIFL Securities on Dec. 5.
• AstraZeneca Pharma to meet Emkay Global Financial Services and Lucky Investment Managers on Dec. 6.

Insider Trading

• Alembic promoter Nirayu acquired 1.14 lakh shares from Dec. 2-3.
• Nava Bharat Ventures promoter Ashwin Devineni acquired 81,000 shares from Dec. 2-3.
• Infibeam Avenues promoter Infinium Auto Mall sold 17 lakh shares on Dec. 3.

Money Market Update

• The rupee closed at 71.53/$ versus 71.69/$ on Tuesday.

F&O Cues

Index Futures

• Nifty December futures closed at 12,089.8, premium of 46.6 points versus 52 points
• Nifty December futures series open interest shed 4.5k shares in open interest
• Nifty Bank December futures closed at 32,080.9, premium of 101.6 points versus 97.9 points
• Nifty Bank December futures series open interest up 5 percent, adds 86,000 shares in open interest

Options

• Nifty PCR at 1.44 versus 1.30 (across all series)

Nifty Weekly Expiry: Dec. 5

• Max open interest on call side at 12,100 (23.8 lakh shares).
• Max open interest on put side at 12,000 (23.9 lakh).
• open interest addition seen in 12,050P (+5.9 lakh shares), 11,900P (+4.5 lakh shares), 12,000P (+3 lakh shares).
• Open interest shedding seen at 12,100C (-7.3 lakh shares), 12,000C (4.4 lakh shares).

Nifty Monthly Expiry: Dec. 26

• Max open interest on call side at 12,500 (18.7 lakh shares)
• Max open interest on put side at 12,000 (31.3 lakh shares)