All You Need To Know Going Into Trade On Feb. 27
Asian stocks edged higher Wednesday, with positive sentiment kept in check after a Wall Street advance fizzled as investors found little in Federal Reserve Chairman Jerome Powell’s Congress testimony to extend the recent rally.
Equities posted modest gains in Sydney, Seoul and Tokyo. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.35 percent to 10,861 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
- U.S. stocks pushed lower in the final hour of trading to close in the red as investors struggled to put an optimistic spin on Federal Reserve Chairman Jerome Powell’s testimony before Congress.
- The yield on 10-year Treasuries remained at 2.64 percent.
- Japan’s Topix index rose 0.2 percent.
- Australia’s S&P/ASX 200 Index gained 0.2 percent.
- South Korea’s Kospi added 0.2 percent.
- Hong Kong’s Hang Seng Index futures earlier added 0.4 percent.
- The S&P 500 Index fell about 0.1 percent. Futures were flat.
- Brent crude ended 0.7 percent higher at $65.21 per barrel.
- West Texas Intermediate rose 1 percent to $56.03 a barrel.
- Gold held at $1,329.43 an ounce.
London Metal Exchange
- Nickel ended 0.12 percent lower for the second day.
- Copper ended higher for the third day, up 0.2 percent.
- Aluminium resumed rally after a one-day blip, ended 0.26 percent higher.
- Lead ended higher for the fifth day, up 0.24 percent.
- Tin halted a five-day rally, ended 0.6 percent lower.
- Zinc ended 0.77 percent higher.
Key Events To Watch This Week
- Feb. 28: India eight infrastructure industries data for January.
- Feb. 28: India Q4 GDP data. (Bloomberg estimates at 6.7 percent; prior 7.1 percent)
- Feb. 28: India Q4 GVA data. (Bloomberg estimates at 6.5 percent; prior 6.9 percent)
- Feb. 28: India fiscal deficit data for January.
- March 1: Nikkei India Manufacturing PMI for January. (Prior 53.9)
- March 1: Automakers to announce monthly sales data for January.
- Powell delivers the second half of his semiannual testimony on monetary policy and the state of the economy to a House committee Wednesday.
- President Donald Trump and North Korea leader Kim Jong Un meet for a second summit on Wednesday.
- Thursday brings fourth quarter U.S. GDP.
Stocks To Watch
- Max India approved the divestment of entire stake of 51 percent in Max Bupa Health Insurance to True North Fund for Rs 511 crore. The proposed transaction has valued Max Bupa at an enterprise value of Rs 1001 crore. Transaction is subject to approval from both parties, IRDAI and shareholders of the company.
- The Reserve Bank of India removed Allahabad Bank, Corporation Bank and Dhanlaxmi Bank from the Prompt Corrective Action Framework subject to certain conditions. Allahabad Bank and Corporation Bank apprised RBI of structural and systemic improvements while Dhanlaxmi Bank found to not be breaching any risk threshold under PCA framework. (Source: RBI)
- ONGC’s foreign arm, along with its joint venture partners of Mozambique Project, has entered into a long term LNG Sale and Purchase Agreement with four international players and BPCL arm. The company says these deals will take the long-term sales to more than 9.5 MMTPA of Liquified Natural Gas.
- Fitch affirmed JSW Steel’s long-term issuer default rating at ‘BB’ with a stable outlook. The affirmation follows an improvement in the company’s Ebitda and leverage in the first nine months of the financial year 2019. (Bloomberg News)
- Reliance Industries clarified on the news that company is a front-runner to take over Garden Vareli Brand as merely speculation in the media space.
- Tata Steel board approved raising Rs 4,000 crore via NCDs (with greenshoe option of up to Rs 1,000 crore).
- CG Power and Industrial Solutions clarified on the news of promoters in talks to selling their stake that they are just rumors and the company has no information on the aforementioned issue.
- MRF said that the strike has been called off in its Chennai plant. The company had stated that a large number of workmen had gone on a strike with effect from Feb. 9 and the strike was of illegal in nature.
- Unichem Lab said it will appeal against General Court’s judgement before the European Court of Justice stating that company did not conclude an anti-competitive settlement agreement with Servier. In July 2014 the commission had imposed a fine of 14 million euros.
- Time Technoplast entered into an agreement with Confidence Group to retail blast proof LPG cylinders.
- HDFC AMC board approved interim dividend of Rs 12 per share.
- NALCO said it will consider payment of interim dividend for financial year 2019 on March 1. The record date has been fixed at March 12.
- MCX recommended PS Reddy as CMD of the exchange. He will take the place of Mrugank Paranjape who will not continue his second term as the CMD of MCX and the appointment will be effective subjected to approval from the SEBI.
- IDBI Bank board appointed Hemant Bhargava as non-executive, non-wholetime chairman of the bank for a period of three years or till he continues as the CMD of LIC.
- S Chand and Company acquired remaining 26 percent stake in Chhaya Prakashani for Rs 64.24 crore. In December 2016 the company had acquired 74 percent stake in the aforementioned target company for Rs 170 crore. The company said that the rational for this investment is to expand its presence in Eastern India.
- Bharat Financial Inclusion completed eight direct assignment transaction of Rs 1,217.8 crore. With this transaction, the company has completed direct assignment transactions worth Rs 6,666.2 crore in financial year 2019.
- Panacea Biotech board approved a one-time settlement with consortium of lenders and raising Rs 864 crore via NCDs. The company also announced that it will demerge its real estate operations.
- GMR Infra arm became the highest bidder for Greenfield Airport at Bhogapuram in Andhra Pradesh on a private-public partnership basis. The initial capacity of the airport will be to operate for six million passengers per annum with the initial investment pegged at Rs 2,300 crore.
Earnings To Watch
- Merck India
- Rain Industries
- Vesuvius India
Earnings Reaction To Watch
Sanofi India (Q4CY18, YoY)
- Revenue up 8.4 percent to Rs 726.4 crore.
- Net profit up 4.3 percent to Rs 79.3 crore.
- Ebitda up 2.2 percent to Rs 137.3 crore.
- Margin at 18.97 percent versus 20 percent.
- Declares dividend of Rs 66 per share.
- Indiabulls Integrated Services price band revised to 5 percent.
Stocks Moving Into Shot-Term ASM Framework
- G Petrochemicals
- Zee Media Corporation
- IFB Agro Industries
- IIFL Holdings
- JBF Industries
- AXISCADES Engineering Technologies
- MT Educare
- Manpasand Beverages
- Spencer's Retail
- GVK Power & Infrastructure
Who’s Meeting Whom
- Ambuja Cement to meet GIC Singapore on Feb. 27.
- Cummins India to meet ICICI Pru MF, Axis MF and other investors on Feb. 28.
- Allcargo Logistics to meet Enam AMC on Feb. 27.
- Mahindra Logistics to meet Ashoka India Equity Investment Trust on March 12.
- Hindustan Construction Company promoter group Arya Capital Management acquired 3.46 lakh shares on Feb. 21.
- La Opala RG promoter Genesis Exports acquired 3.4 lakh shares on Feb. 25.
- Mukand promoter group Baroda Industries acquired 48,000 shares from Feb. 20-21.
- Apollo Tyres promoter group PTL Enterprises acquired 70,000 shares on Feb. 22
- UPL promoter Shilpa Sagar sold 40,000 shares from Feb. 21-22.
Money Market Update
- The rupee on Tuesday was at its lowest in the past three trading sessions and ended at 71.07/$ versus Monday’s closing of 70.98/$.
- Nifty February futures closed trading at 10828, discount of 7 points.
- Max open interest for Feb. 28 series at 11,000 Call, open interest at 43 lakh shares.
- Max open interest for Feb. 28 series at 10,400 Put, open interest at 29.2 lakh shares.
Stocks In F&O Ban
- Adani Enterprises
- Adani Power
- IDBI Bank
- Jet Airways
- Reliance Power
Out of Ban:
- Allahabad Bank
- Nifty PCR at 1.4 versus 1.46.
- Bank Nifty PCR at 1.18 versus 1.37.
Credit Suisse on Wipro
- Downgraded to ‘Underperform’ from ‘Neutral’; cut price target to Rs 320 from Rs 370.
- Recent rally captures margin improvement story; Margins to remain a bit of volatile.
- Slowest growing IT company for the last ten years.
- Wipro deserves to trade at reasonable discount to peers given slower growth and lower margins.
Motilal Oswal on Sanofi India
- Maintained ‘Buy’; hiked price target to Rs 7,000 from Rs 6,850.
- Revenue blip a function of high base; traction in key therapies intact.
- Secondary sales reflect strong outperformance in anti-diabetic portfolio.
- Remain positive on the back of volume-led better-than-industry growth.
HSBC on Kajaria
- Maintained ‘Buy’; hiked price target to Rs 630 from Rs 600.
- Market share gains to continue as unorganised players face liquidity issues.
- Expect strong performance to continue.
- Softer gas prices should be a tailwind on margins from March quarter.
Edelweiss on Jindal Steel and Power
- Maintained ‘Buy’ with a price target of Rs 200.
- Spotted clear difference in the operating environment in Angul plant.
- Cost efficiencies likely to result in savings of up to Rs 2,000 per tonne in 2019-20.
- Expect JSPL to fare better than peers on the back of volume growth.
Deutsche Bank Research on TVS Motor
- Upgraded to ‘Hold’ from ‘Sell’; cut price target to Rs 455 from Rs 485.
- Upgrade rating on underperformance; Cut EPS estimates to factor change in accounting standards.
- Believe TVS is approaching a sweet spot which could lead to margin expansion.
- Stronger market share is the key to margin expansion.
Deutsche Bank on Cement Makers
- Ramco Cements: Upgraded to ‘Buy’ from ‘Hold’, hiked price target to Rs 750 from Rs 630.
- Ramco the preferred play on South India followed by ACC.
- Margin cycle turning favorable in South India.
- High stress levels for South Indian capacities to drive up prices.
- Outlook for other regions is subdued near term, positive longer term.
Antique on Oberoi Realty
- Initiated ‘Buy’ with a price target of Rs 630
- Dominant Player in Mumbai, with healthy rental income and strong balance sheet.
- Diversified product portfolio; good mix of residential/annuity assets in pipeline.
- Debt can easily be serviced; cost of debt is quite low.
- See significant upside with NAV of Rs 525 per share and potential volume growth.