All You Need To Know Going Into Trade On February 23
Asian equities have inched lower this morning. Australian markets are fluctuating while those in South Korea trade lower. Japanese markets are shut on account of a holiday.
The Bloomberg Commodity Spot Index rose to its highest since March 2013. Oil prices held on to gains while the gap between the five-year and 30-year yoelds touched the highest in more than six years.
The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, rose 0.4% to 14,740 as of 7:20 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.
Let’s take a look at the factors that may influence equities in today’s session:
- Futures on the Dow Jones are flat this morning. The index also ended little changed on Monday.
- The S&P 500 fell for the fifth straight day, its longest losing streak in a year. The Nasdaq fell to a three-week low.
- Concerns are rising that central banks may eventually start reconsidering emergency programs that supported the global markets to an all-time high.
- “I wouldn’t be surprised if market returns are more volatile in the coming months. My approach to fixed income would be to look for opportunities to start to buy the long end again,” Chris Iggo of AXA Investment Managers said.
- Bitcoin is down for the second straight day, after declining as much as 17% on Monday post Elon Musk's tweet that prices of the cryptocurrency had risen too high and too fast.
- Yield on the 10-year treasuries rose to 1.37% on Monday.
- West Texas Intermediate crude rose 0.6% to $62.11 per barrel.
Stocks To Watch
- Reliance Industries: Says it has begun the process of carving out the O2C business into an independent subsidiary. The process for seeking approvals is likely to be completed by Q2FY22. The reorganisation of the O2C business will result in no change in the company's shareholding. The company also aims to achieve net Carbon Zero by 2035.
- Hindalco: Is targeting a $2.9 billion reduction in its debt load between June 2020 and end of 2022. The group's gross debt is estimated to be $9.2 billion, or 3x its Ebitda, as of March 31, 2021. The company aims to achieve a net debt/Ebitda ratio of 2.5x in less than two years. The company's Novelis unit plans to repay a $1.1 billion bridge loan by March. Further, the company will refinance $540 million of $810 million INR bonds due in 2022 and repay the balance $270 million. Further the company expects to generate $1 billion to $1.2 billion cash flow a year after normal working capital and maintenance capex. Allocation toward growth capex seen at $2.5 billion to $3 billion over the next five years. The company will also focus on higher shareholder returns which it plans to achieve through increase in earnings, lower leverage and higher dividends.
- Bharti Airtel: Will meet global fixed income investors on or after February 23, post which the company will take a final decision on the issuance of foreign currency bonds, subject to market conditions. The company’s board had earlier this month approved a fundraising plan of up to Rs 7,500 crore via debt instruments such as debentures and bonds, in one or more tranches.
- Bharat Forge: Has announced a pact with Paramount Group for production of armoured vehicles in India. The agreement was signed by both companies during the International Defence Expo (IDEX 2021) held in Abu Dhabi.
- IndiaMART InterMESH: Announced closure of its QIP issue on Monday. To issue 12.42 lakh shares at Rs 8,615 per share, which is a 4.97% discount to the QIP floor price of Rs 9,065.6 per shares. The company has raised Rs 1,070 crore through the issue.
- Info Edge (India): Zomato closed primary fundraise of $250 million from five different investors. The transactions value Zomato at a post-money valuation of $5.4 billion. Info Edge's stake in Zomato now stands at 18.4% on a fully converted and diluted basis. Zomato had earlier raised $253 million from four investors in December last year.
- Zuari Agro Chemicals: To sell its fertilizer plant in Goa and associated businesses to Paradeep Phosphates for an enterprise value of $280 million. The sale is subject to agreed adjustments for capex, cash, debt and working changes. Paradeep Phosphates plans to fund the acquisition partly from a public issue and balance from loans and internal accruals.
- IRB Infrastructure Developers: Has approved the allotment of Secured NCDs aggregating to Rs 2,184.55 crore on a private placement basis to India Toll Roads for a tenure of 7 years at a coupon rate of 9.927% per annum.
- Page Industries: Has approved the appointment of VS Ganesh as Executive Director & Chief Executive Officer of the Company for a period of 5 years effective June 1, 2021.
- Vedanta: GR Arun Kumar has resigned from the post of Whole-Time Director & Chief Financial Officer of the company to pursue a career outside of the Group.
Motilal Oswal On Oil & Gas Sector
- Marketing margins continue to offset the pain of poor refining margins
- Refining margins continue to record gradual uptick
- While debt has reduced considerably year-on-year for OMCs, HPCL's balance sheet remains debt ridden
- Indian Oil remains the preferred pick among OMCs on the back of a diversified Ebitda mix and best free cash flow generation profile over FY22-23E
- Upgrade BPCL to buy from neutral; price target raised to Rs 520 from Rs 419
- Downgrade HPCL to neutral from buy on concerns over project execution risks and rising debt; price target cut to Rs 277 from Rs 301
- Reiterate buy rating on Indian Oil with a price target of Rs 142
Prabhudas Lilladher's India Strategy
- Q3FY21 saw a broad-based earnings beat
- Estimate Nifty EPS growth of 11.7% in FY21, 32.7% in FY22 and 17.4% for FY23
- Base-case Nifty target for March 2022 at 16,075 from 15,137 earlier
- Bull-case Nifty target for March 2022 at 19,137 from 18,921 earlier
- Auto, capital goods, infra, cement and metals have entered a cyclical uptick and should outperform in the medium term
- Replace UltraTech with Ambuja among top picks given improved visibility on capacity expansion
- Including Kalpataru Power among top picks given positive outlook on T&D, deleveraging and improvement in operational performance of subsidiaries
- Retail L&T, ICICI Bank, Polycab and Dalmia Bharat among top picks given the long-term rerating potential
Emkay On Tata Motors
- Maintains buy rating
- Price target of Rs 355
- Targeting to reach almost zero consolidated net-automotive debt by FY24 on positive free cash flow, divestments and equity infusion
- Remain positive on sales cycle recovery in JLR and India business, strong profitability growth on better scale / cost savings and deleveraging
- Remains high conviction buy
Pledge Share Details
- Solara Active Pharma Sciences: Promoters Pronomz Ventures LLP, Chayadeep Ventures LLP and Chayadeep Properties revoked pledge of 7.22 lakh shares between February 16-19.
- Wockhardt: Promoter Themisto Trustee Company created a pledge of 39 lakh shares on February 19.
- Jindal Steel & Power: Promoter OPJ Trading revoked pledge of 66.10 lakh shares on February 16.
- Deepak Fertilisers: Promoter Robust Marketing Services created a pledge of 20.20 lakh shares on February 18.
- Steel Strips Wheels: Promoter Dheeraj Garg revoked pledge of 24,839 shares on February 22.
As Reported On February 22.
- Muthoot Capital Services: Saif India VI FII Holdings bought 4 lakh shares (2.43%) at Rs 397.5 per share.
- Gabriel India: Asia Investments bought 30.30 lakh shares (2.11%) at Rs 111.97 per share.
Who’s Meeting Whom
- Brigade Enterprises: To meet Axis Mutual Fund on February 23.
- UltraTech Cement: To meet Capital World Investors on February 23.
- UTI AMC: To meet Yes Securities on February 23 and Centrum Finance on February 25.
- TVS Motor Company: To meet Life Insurance Corporation of India on February 23.
- Manappuram Finance: To meet CLSA on February 23.
- PSP Projects: To meet Spark Capital Advisors (India) on February 23.
- Cipla: To meet Emkay Global Financial Services on February 23 and Capital Research Global Investors on February 26.
- IRCTC: To meet Motilal Oswal Asset Management Company, Dolat Capital Market and Oaktree Capital Management on February 23. To meet Fred Alger Management on February 24.
- GMM Pfaudler: To meet Duro Capital and Malabar Capital on February 24.
- Advanced Enzyme Technologies: To meet Nalanda India Equity Fund on February 24.
- Tata Steel: To meet Ishana Capital on February 24, Ambit Capital on February 25, and UBS Securities and ICICI Securities on February 26.
- Price Band Revised From 10% To 5%: Suzlon Energy
- Ex-Date Buyback: NIIT
- Ex-Date Rights Issue: Arvind Fashions
- Ex-Date Income Distribution: Tower Infrastructure Trust
- Ex-Date Interim Dividend: United Drilling Tools, Ircon International, Cochin Shipyard, Zuari Global, SJVN, Precision Wires India, Oil India
- Record Date Interim Dividend: Aurobindo Pharma, Goldiam International, ITC, Mercury Laboratories, Mazagon Dock Shipbuilders, NHPC, Natco Pharma, Selan Exploration Technology, Panchsheel Organics, Tube Investments of India, Shanthi Gears
- Move Into ASM Framework: Karda Constructions
- Move Out Of ASM Framework: Dewan Housing Finance Corporation
- Move Into Short-term ASM Framework: Tejas Networks, Dewan Housing Finance Corporation, TCNS Clothing
- Move Out Of Short-term ASM Framework: Affle (India), Arvind
- Pidilite Industries: Promoter Anuja Ankur Shah sold 40,000 shares on February 19.
- Alembic: Promoter Nirayu acquired 4.71 lakh shares on February 19.
- APL Apollo Tubes: Promoters Veera Gupta and Romi Sehgal sold 27,800 shares between February 16-17.
- Godrej Agrovet: Promoter Godrej Industries acquired 8,910 on February 16.
As Reported On February 22.
Money Market Update
- The currency ended at 72.49 against the U.S. Dollar as compared to Thursday's close of 72.64.
- Nifty February futures ended at 14,642; discount of 33 points
- Nifty February futures shed 15.7% and 22,219 shares in Open Interest
- Nifty Rollovers at 28.53%
- Nifty Bank February futures ended at 35,168; discount of 91 points
- Nifty Bank February futures shed 17% and 10,400 shares in Open Interest
- Nifty Bank Rollovers at 29.47%
- Nifty Put-Call Ratio at 0.68
- Stocks In F&O Ban: BHEL, Canara Bank, SAIL, Vodafone Idea