All You Need To Know Going Into Trade On Feb. 3

Asian stocks retreated ahead of the reopen of mainland Chinese markets as a deadly virus outbreak showed no signs of slowing.

Shares opened lower in Tokyo, Sydney and Seoul, while traders braced for China’s onshore currency and equities to begin trading later on Monday after a holiday. S&P 500 Index futures rose about 0.2 percent. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded at 11,642.50 as of 6:53 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 NSE Nifty 50 Index clocked its worst Budget-day returns in at least 11 years after the Budget failed to impress investors. The Bombay Stock Exchange and the National Stock Exchange, which are otherwise closed on a Saturday, were open to trading on Feb. 1 as Finance Minister Nirmala Sitharaman presented Union Budget 2020-21 in Parliament.
• Brent crude fell for the third consecutive trading session. Asia’s crude benchmark fell as much as 4.7 percent to $55.42 a barrel.

Get your daily fix of global markets here.

Datawatch

• 10:30 a.m.: Markit India Manufacturing PMI for January, prior 52.7.

Earnings Reaction To Watch

Sobha (Q3, YoY)

• Revenue rose 12.1 percent to Rs 883.2 crore. (Estimate: Rs 869.9 crore)
• Net profit rose 4.9 percent to Rs 73.2 crore. (Estimate: 75.9 crore)
• Ebitda rose 80.3 percent to Rs 286.6 crore. (Estimate:Rs 196.5 crore)
• Margin stood at 32.5 percent versus 20.2 percent.

Garden Reach Shipbuilders & Engineers (Q3, YoY)

• Revenue fell 24.4 percent to Rs 369.6 crore.
• Net profit fell 37.6 percent to Rs 29.5 crore.
• Ebitda loss at Rs 1.2 crore versus Ebitda profit of Rs 41.1 crore.

Relaxo Footwears (Q3, YoY)

• Revenue rose 8.8 percent to Rs 599.9 crore.
• Net profit rose 52.2 percent to Rs 54.2 crore.
• Ebitda rose 40.1 percent to Rs 101.7 crore.
• Margin stood at 17 percent versus 13.2 percent.

Mahindra Holidays & Resorts (Q3, YoY)

• Revenue fell 1.8 percent to Rs 588.3 crore.
• Net profit fell 84.1 percent to Rs 4.9 crore.
• Ebitda rose 47.6 percent to Rs 88.1 crore.
• Margin stood at 15 percent versus 10 percent.

Thyrocare Technologies (Q3, YoY)

• Revenue rose 9.9 percent to Rs 105.8 crore.
• Net profit rose 36.1 percent to Rs 27.5 crore.
• Ebitda rose 23 percent to Rs 43.8 crore.
• Margin stood at 41.4 percent versus 37 percent.

Earnings To Watch

• Tata Chemicals
• Ujjivan Financial Services
• Godrej Properties
• GlaxoSmithKline Pharmaceuticals
• Affle (India)
• Century Plyboards
• Shalby
• Shriram Transport Finance
• Welspun Corp
• Speciality Restaurants
• SREI Infrastructure Finance
• SRF
• Srikalahasthi Pipes
• Deepak Nitrite
• Dhampur Sugar Mills
• Dr. Lal Path Labs
• Fortis Malar Hospitals
• Galaxy Surfactants
• AstraZeneca Pharma
• Bayer Cropscience
• BF Utilities
• Borosil Glass Works
• Garware Technical Fibres
• Gujarat Borosil
• Hawkins Cookers
• Honeywell Automation
• Housing & Urban Development Corporation
• HSIL
• IG Petrochemicals
• JBM Auto
• Mangalore Refinery and Petrochemicals
• Orient Abrasives
• Saksoft, Savita Oil Technologies
• Triveni Turbine
• Unichem Laboratories
• White Organic Agro

Stocks To Watch

• Coal India: January production rose 10.3 percent at 63.11 MT versus 57.21 MT. Offtake rose 6.9 percent at 56.05 MT versus 52.44 MT.
• Infoedge: IE Venture Fund to invest Rs 25.2 crore in Qyuki Digital Media.
• Maharashtra Seamless: Sanjiv Goyal resigned as chief financial officer of the company with effect from Jan. 31.
• Muthoot Capital Services completed securitisation of Rs 173.24 crore.
• Indian Bank revised MCLR across various tenors with effect from Feb. 3. One-month MCLR at 7.95 percent and one-year MCLR at 8.25 percent.

January Auto Sales

Tata Motors

• Domestic sales fell 18 percent to 45,242 units.
• Commercial vehicles sales fell 16 percent to 33,860 units.
• Passenger vehicle sales fell 22 percent to 13,894 units.

Hero MotoCorp

• Two-Wheeler Sales fell 14 percent to 501,622 units.

Eicher Motors

• Motorcycle sales fell 13 percent to 63,520 units.
• VECV sales fell 6.1 percent to 5,544 units.

SML Isuzu

• Sales rose 11.5 percent to 1,112 units.

Brokerage Radar

PhillipCapital on Capital Goods

• Allocation across major government schemes raised by 16 percent.
• Railway capex is muted at over 3 percent with focus new lines and safety spending.
• Defence outlay up 2 percent; but to benefit defence PSUs as payments to foreign vendors decline.
• Investments by PSUs likely to remain muted

Investec on Life Insurers

• Simplification of income tax structure, limited impact in the short run.
• impact in the long run could be significant.
• Abolition of DDT should have limited impact.
• Quantification of the impact is difficult.
• HDFC Life: Maintained ‘Hold’; cut price target to Rs 565 from Rs 610.
• ICICI Prudential Life: Maintained ‘Buy’; cut price target to Rs 550 from Rs 600.
• Max Financial: Maintained ‘Buy’; cut price target to Rs 600 from Rs 680.
• SBI Life: Maintained ‘Hold’; cut price target to Rs 915 from Rs 1,050.

On ITC:

Edelweiss

• Downgraded to ‘Hold’ From ‘Buy’; cut price target to Rs 250 from Rs 315.
• Increase in NCCD will lead to a tax hike of approx. 11 percent, which would lead to MRP hikes of 6–7 percnet.
• Hike comes after a span of almost two years; expect cigarette volumes to decline 3 percent in 2020-21.
• Prices hikes may lead to better GST collections, but its impact on volumes needs to be seen.

Emkay

• Maintained ‘Hold’; cut price target to Rs 245 from Rs 274.
• Tax increase reduces earnings visibility.
• Price increases do not seem to be substantial, but given reduced affordability and demand slowdown it could impact cigarette volume and profitability.
• Impact could be higher for key brands moving out of the popular price points.

Investec

• Maintained ‘Buy’; cut price target to Rs 259 from Rs 290.
• First sizeable increase in taxes on cigarettes since July 2017.
• Expect ITC to raise prices by over 6-7 percent to pass on the impact of the same.
• Overhang not completely gone for the year.

Trading Tweaks

• Precot Meridian to move into ASM Framework
• Karda Constructions, Premier Polyfilm, K.M.Sugar Mills, Mahindra EPC Irrigation to move out of short term ASM Framework
• JBF Industries to move into short term ASM Framework
• Suven Life Sciences price band revised to 10 percent
• Sadhana Nitro Chem, Inditrade Capital price band revised to 5 percent

Money Market Update

• The rupee closed at 71.35/$ on Friday versus 71.49/$ on Thursday.

F&O Cues

• Index Futures
• Nifty February futures closed at 11,654.9, discount of 6.9 points versus premium of 32 points.
• Nifty February futures OI up 22 percent, adds 25.5 lakh shares in OI.
• Nifty Bank February futures closed at 29,873.4, premium of 52 points versus 103.7 points.
• Nifty Bank futures OI up 33 percent, adds 3.5 lakh shares in OI.

Options

• Nifty PCR at 0.85 versus 1.04 (across all series)

Nifty Weekly Expiry: Feb 6

• Max OI on call side at 12,200 (31.6 lakh shares)
• Max OI on put side at 11,500 (14.9 lakh shares)
• OI addition seen at 12,000C (+18.2 lakh shares), 11,900C (+15.2 lakh shares), 11,800C (+12.4 lakh shares)

Nifty Monthly Expiry: Feb. 27

• Max OI on call side at 12,500 (20.2 lakh shares)
• Max OI on put side at 12,000 (25.9 lakh shares)