Employees walk through the atrium of the National Stock Exchange of India Ltd. (NSE) building in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

All You Need To Know Going Into Trade On Feb. 7

Stocks in Asia traded mixed Thursday after U.S. shares slipped amid disappointing earnings in the technology sector.

Japanese shares fell amid a raft of corporate earnings, while Australian shares rose for a fourth day, pushing the benchmark index further into what is technically termed as overbought territory. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.16 percent to 11,085 as of 7:05 a.m.

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

  • U.S. stocks fell in thin trading as investors weighed corporate earnings against persistent concerns over trade and another government shutdown.
  • The yield on 10-year Treasuries was steady at 2.69 percent.

Also read: Big Drop in U.S.-China Trade Gap Fails to Alter Widening Trend

Asian Cues

  • Japan’s Topix index slid 0.5 percent.
  • Australia’s S&P/ASX 200 Index added 0.9 percent.
  • S&P 500 Index futures were flat.

Also read: Budget 2019: New Stamp Duty Proposal May Land A Hard Blow To Proprietary Trading 

Commodity Cues

  • Brent crude halted a two-day decline, ended 1.15 percent lower at $62.69 per barrel.
  • West Texas Intermediate crude slid 0.2 percent to $53.90 a barrel.
  • Gold added less than 0.1 percent to $1,307 an ounce.

Also read: Gold Is One Wealth Fund's Refuge in World Gripped by Turmoil

London Metal Exchange

  • Aluminium ended lower after a two-day rally, down 0.78 percent.
  • Nickel ended lower for the second day, down 0.88 percent.
  • Zinc ended lower for the second day, down 1.35 percent.
  • Copper ended higher for the third day, up 0.74 percent.
  • Lead ended lower for the second day, down 0.57 percent.
  • Tin ended higher for the second day, up 0.72 percent.

Also read: Stock Buybacks Aren’t Bad. They’re a Symptom of a Larger Problem

Key Events To Watch This Week

  • The Bank of England sets policy.
  • China, Taiwan, Hong Kong, Vietnam are closed.

Also read: Essar Steel’s Insolvency: Are Ruias Back In The Game?

RBI Decision Day Guide

The Monetary Policy Committee will announce its decision today, amid expectations that the panel will soften its view on inflation risks in the economy.

The changed view could either result in a reversal of stance from ‘calibrated tightening’ to ‘neutral’ or a cut in interest rates, though most economists expect rates to remain unchanged.

The Indian government has its thumb on the side of the scale with the minority of analysts who anticipate a 25 basis point cut. Eight of 38 economists polled by Bloomberg expect a 25 basis point cut in rates to 6.25 percent. Most believe that a change in stance is more likely.

The policy meet is Shaktikanta Das’ maiden meeting after he took change as the RBI governor in December.

Read these to get up to speed:

  • If not cut now, when?
  • Why the RBI should bite the rate cut bullet
  • Did India pick the right inflation target?
  • The mismatch between what MPC says and what RBI does

Indian ADRs

All You Need To Know Going Into Trade On Feb. 7

Also read: Nifty Rally Leaves India Stock Investors Low in Two-Faced Market

Stocks To Watch

  • GAIL offloaded pipeline laying contract of Bokaro-Durgapur Section from IL&FS due to poor project progress. The contract has been retendered and awarded to three contractors.
  • Andhra Bank reduced its base rate and BMPLR by 5 basis points with effect from February. Base rate is now at 9.5 percent and BMPLR is at 13.9 percent.
  • Jubilant Group said that all three listed companies will not pay brand royalty to promoter company Jubilant Enpro. They state that the decision for payment of brand royalty was taken to protect, maintain, promote and enhance the corporate brand name ‘Jubilant’ which is owned by Jubilant Enpro.
  • DHFL: American based Prudential Financial said it will seek local partner for India life insurance venture. The company will also work and facilitate stake sale in DHFL in DHFL Pramerica.
  • Seamec withdrew from demerger of EPC and Vessel Division of HAL Offshore into the company citing that intended synergies on which the demerger was planned have been diluted. The company also stated that it will move this application to NCLT.
  • Prabhat Dairy: Board rescheduled to Feb 13 to consider December quarter earnings and other matters.

Also read: DLF To Launch QIP When Market Conditions Are Conducive

New Listing

  • Chalet Hotels’ shares to start trading on BSE/NSE after IPO got 157 percent demand.

Nifty Earnings To Watch

  • Grasim Industries
  • Tata Motors

Other Earnings To Watch

  • 20 Microns
  • Adani Enterprises
  • Adani Green Energy
  • Apex Frozen Foods
  • Arvind
  • Aurobindo Pharma
  • Bajaj Electricals
  • Balmer Lawrie & Company
  • Borosil Glass Works
  • Britannia Industries
  • Cadila Healthcare
  • Coffee Day Enterprises
  • Elecon Engineering
  • Elgi Rubber
  • Endurance Technologies
  • Eros International Media
  • Esab
  • Gammon
  • Gillette
  • Gravita
  • Gujarat Borosil
  • Healthcare Global Enterprises
  • Hinduja Global Solutions
  • Hindustan Construction Company
  • IG Petrochemicals
  • Indo Tech Transformers
  • Ircon International
  • JSW Holdings
  • Khadim India
  • Majesco
  • Mangalam Cement
  • Minda Corporation
  • MRF
  • NR Agarwal Industries
  • Nava Bharat Ventures
  • Odisha Cement
  • Pitti Engineering
  • Precision Camshafts
  • Pricol
  • Procter & Gamble Hygiene and Health Care
  • Rane Holdings
  • Sanghvi Movers
  • Shipping Corporation Of India
  • Shree Pushkar Chemicals & Fertilisers
  • Shreyas Shipping & Logistics
  • Shriram EPC
  • Steel Authority of India
  • Sterling Tools
  • The Phoenix Mills
  • Timex Group
  • Timken
  • Tourism Finance Corporation of India
  • TVS Electronics
  • Sandur Manganese & Iron Ores
  • Hinduja Ventures
  • Gallantt Metal
  • Andhra Petrochemicals

Also read: Banks Need Rs 25 Lakh Crore In Deposits Over Next Two Years To Meet Credit Demand

Earnings Reaction To Watch

Vodafone Idea (Q3,QoQ)

  • Revenue down 2.2 percent at Rs 11,765 crore.
  • Net loss at Rs 5,005 crore versus net loss at Rs 4,974 crore.
  • Ebitda up 16.3 percent at Rs 1,137 crore.
  • Margins at 9.66 percent versus 8.13 percent,
  • ARPU down 1.14 percent at Rs 89

Q3 is the first full quarter of Vodafone Idea, post-merger completion. Q2 numbers are restated for comparison purpose

Also read: Vodafone Idea Posts a Loss Again as Jio Continues to Rampage

Taro Pharma (Sun Pharma’s subsidiary) (Q3, YoY)

  • Net sales at $176.4 million, up 13 percent.
  • Net profit at $93.5 million, up 422 percent.
  • Operating profit at $78.9 million, up 29 percent.
  • Operating margins at 44.7 percent versus 39.7 percent.

IGL (Q3, YoY)

  • Revenue up 27.4 percent at Rs 1,508 crore.
  • Net profit up 19.3 percent at Rs 198 crore.
  • Ebitda up 20.8 percent at Rs 318 crore.
  • Margin at 21.1 percent versus 22.2 percent.
  • EBIDTA/scm up 7.7 percent at Rs 5.85.

Entertainment Network (Q3, YoY)

  • Revenue up 35.8 percent at Rs 200.9 crore.
  • Net profit up 22 percent at Rs 16.1 crore.
  • Ebitda up 13.5 percent at Rs 40.4 crore.
  • Margins at 20.1 percent versus 24.1 percent.
  • Production expenses up 75 percent at Rs 80.7 crore.
  • Other income of Rs 4.4 crore.

AstraZeneca Pharma (Q3, YoY)

  • Revenue up 67.5 percent at Rs 215.2 crore.
  • Net profit at Rs 29.9 crore versus net loss of Rs 10.34 crore.
  • Ebitda at Rs 41.8 crore versus Ebitda loss of Rs 10.4 crore.
  • Inventory write off Rs 42.6 crore in base quarter.

Cummins (Q3, YoY)

  • Revenue up 11 percent at Rs 1,503.8 crore.
  • Net profit up 8.7 percent at Rs 187.1 crore.
  • Ebitda up 15.3 percent at Rs 226.7 crore.
  • Margins at 15.1 percent versus 14.5 percent.
  • Declares dividend of Rs 7 per share.

Bulk Deals

Xelpmoc Design and Tech

  • Trust Investment Advisors acquired 1.7 lakh shares at Rs 65.9 each.
  • Ram Fund acquired 1.76 lakh shares at Rd 64.75 each.
  • GP Emerging Markets Strategies LP sold 8.75 lakh shares at Rs 65.9 each.
  • University of Notre Dame DU LAC sold 2.66 lakh shares at Rs 65.9 each.

Who’s Meeting Whom

  • TVS Motor to meet Cartica Capital, Alquity and other investors from Feb.7 to March 11.
  • Mahindra Holidays and Resorts to meet Edelweiss and Axis Capital on Feb. 8.

Insider Trading

  • Chambal Fertiliser & Chemicals promoter The Hindustan Times acquired 15,000 shares on Feb. 5.
  • Vipul promoter Punit Beriwala acquired 18,000 shares between Feb 4 and 5.
  • Voltamp Transformers promoters acquired 1.4 lakh shares on Feb. 4.
  • Apollo Tricoat Tubes promoter Saket Agarwal sold 5 lakh shares between Jan. 29 and Jan. 31.

(As reported on Feb. 6)

Trading Tweaks

  • HEG, Shanthi Gears ex-date for share buyback

In ASM Framework:

  • Religare Enterprises
  • Leel Electricals
  • Vipul
  • Everest Organics
  • IL&FS Transportation Networks
  • Mishtann Foods
  • Navkar Corporation
  • Shankara Building Products
  • Vikas Proppant & Granite

Price Band Revision

(From Feb. 7)

From 10 percent to 20 percent:

  • Adani Gas
  • Adani Green Energy,
  • Adani Transmission
  • Monnet Ispat & Energy
  • Avadh Sugar & Energy
  • TVS Electronics
  • V-Mart Retail
  • Butterfly Gandhimathi Appliances
  • Central Bank of India
  • Cerebra Integrated Technologies
  • Edelweiss Financial Services
  • EIH Associated Hotels
  • Hindusthan National Glass & Industries
  • Indiabulls Real Estate
  • Ind-Swift Laboratories
  • Jubilant Industries
  • Kingfa Science & Technology
  • Merck
  • Mahanagar Telephone Nigam
  • NRB Industrial Bearings
  • Nitco
  • Opto Circuits
  • Praxis Home Retail
  • Shree Renuka Sugars
  • RattanIndia Infrastructure
  • Solara Active Pharma Sciences
  • Talwalkars Better Value Fitness

From 5 percent to 20 percent

  • Bombay Dyeing
  • Bharat Road Network
  • Excel Industries

From 10 percent to 5 percent

  • Siti Networks

From 20 percent to 10 percent

  • Reliance Naval and Engineering

From 5 percent to 10 percent

  • 5Paisa Capital
  • Dhanlaxmi Bank
  • Dwarikesh Sugar Industries
  • Goa Carbon
  • Indiabulls Integrated Services
  • Jaiprakash Power Ventures Limited
  • Rain Industries
  • Vakrangee

Money Market Update

  • The rupee on Wednesday ended at 71.55/$ versus Tuesday’s closing of 71.56/$.

F&O Cues

  • Nifty February futures closed trading at 11,090, premium of 28 points.
  • Max open interest for February series at 11,000 Call (open interest at 33.7 lakh shares)
  • Max open interest for February series at 10,700 Put (open interest at 34.5 lakh shares)

Stocks In F&O Ban

In Ban

  • IDBI
  • DHFL
  • Jet Airways
  • Reliance Capital

New in Ban

  • Reliance Infrastructure

Put-Call Ratio

  • Nifty PCR at 1.82 versus 1.68.
  • Nifty Bank PCR at 1.1 versus 1.04.
All You Need To Know Going Into Trade On Feb. 7

Brokerage Radar

HSBC on Siemens India

  • Maintained ‘Hold’; hiked price target to Rs 1,040 from Rs 1,020.
  • December quarter’s execution as well as profitability was strong; order inflows muted.
  • Large orders continue to be elusive.
  • Focus remains on energy efficiency and digitisation driven base orders.

UBS on Vodafone Idea

  • Maintained ‘Neutral’ with a price target of Rs 38
  • Better than expected December quarter.
  • Saw improvement in 4G subs, but lower compared to Bharti.
  • EBITDA beat driven by lower than expected opex.

On Cipla

Morgan Stanley

  • Maintained ‘Equal-weight’ with a price target of Rs 548.
  • December quarter was a miss; expect gradual recovery.
  • U.S. sales to improve sequentially in March quarter; domestic business to grow double digits.
  • Cost and forex pressure could hurt overall profit growth this year.

Edelweiss

  • Maintained ‘Reduce’ with a price target of Rs 490.
  • December quarter’s numbers missed estimate; top-line growth will remain challenge.
  • Progress in the U.S. offsets stagnant domestic, tender businesses.
  • Investments to rise; margin expansion levers exhausted.

On IGL

UBS

  • Maintained ‘Neutral’ with a price target of Rs 300.
  • In-line quarter; Ebitda/scm higher due to price hikes.
  • Expect margin to recover to Rs 6.1/scm in 2019-20.
  • Stock already run up and leaves limited upside potential.

Prabhudas Lilladher

  • Maintained ‘Buy’ with a price target of Rs 360.
  • Volume traction remain intact; remains play on rising pollution concerns.
  • Expanding reach and increased vehicle conversion and addition to drive earnings.
  • Expect spreads to remain healthy supported by benign domestic gas prices.

On Adani Ports

Jefferies

  • Maintained ‘Buy’; hiked price target to Rs 425 from Rs 370.
  • Operational results in-line, net profit beat due to lower tax rate.
  • Believe management delivering on promises of reducing group deposits.
  • Generating free cash flow and divesting LNG terminal by March 2019 were key highlights.

HSBC

  • Maintained ‘Buy’ with a price target of Rs 446.
  • Ports Ebitda was higher led by growth in all cargoes; profit growth fuelled by forex.
  • Mgmt. sounded confident to exceed FY19 guidance; Expect Dhamra port to lead growth in the next financial year.
  • Stock attractively valued at low end of historical range

On Lupin

Edelweiss

  • Maintained ‘Buy’ with a price target of Rs 1,050.
  • One-offs dent in-line numbers; outlook strong.
  • US erosion stabilises; performance improves sequentially.
  • Investments in specialty, respiratory and biosimilars to bear fruits.

UBS

  • Maintained ‘Buy’ with a price target of Rs 1,010.
  • Operating earnings tad above estimates, one-offs impacted reported numbers.
  • India business growth improved in Q3, Japan picked up sequentially.
  • Cost-cutting and niche launches to aid margins; Operating earnings to improve from March quarter.

On JSW Steel

Prabhudas Lilladher

  • Maintained ‘Buy’ with a price target of Rs 360.
  • Beat on domestic operations; Margins to rebound in First quarter of the next financial year.
  • Weaker than expected volumes offset by better than expected realisations and lower costs.
  • Aggressive acquisition strategy could delay stock returns in the near term.

Investec

  • Maintained ‘Buy’; cut price target to Rs 300 from Rs 349.
  • Strong operational performance.
  • Bhushan Power and balance sheet to take centre stage.
  • Cut Ebitda estimates for the current and the next financial year by 3-12 percent to factor spread contraction and overseas losses.

On Cummins India

Nomura

  • Maintained ‘Buy’ with a price target of Rs 890.
  • December quarter review: Domestic execution remains strong, exports weakened seasonally and margins weaker.
  • Management remains optimistic on domestic growth but cautions on election related volatility.
  • Clarity on gross margin and export demand trend are key to monitor.

Morgan Stanley

  • Maintained ‘Underweight’ with a price target of Rs 620.
  • December quarter review: Ebitda missed estimates; Revenue beats but margins disappoint.
  • Commentary on margins and revenue growth key to watch.