Traders monitor data on banks of desktop computer monitors on a trading floor in Essen, Germany. (Photographer: Jasper Juinen/Bloomberg)

All You Need To Know Going Into Trade On Jan. 07

Stocks across Asia kicked off the week with strong gains after soothing Federal Reserve comments and an easing of monetary policy in China triggered a renewed appetite for risk assets.

Shares in Japan, South Korea and Australia gained and futures pointed to advances for equities in China and Hong Kong. U.S. futures climbed, signaling Friday’s rally in U.S. stocks could continue. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose over 1 percent to 10,887 as of 6:50 a.m.

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BQ Live

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

U.S. Market Check

  • U.S. stocks surged, the dollar weakened and Treasuries tumbled with gold as a risk-on tone gripped financial markets after investors got good news on the economy, Federal Reserve policy and trade tensions.
All You Need To Know Going Into Trade On Jan. 07

Also read: Fed to Weigh on Dollar, U.S.-China Talks, Jobs Report: Eco Day

Asian Cues

  • Japan’s Topix index rose 3.3 percent.
  • Australia’s S&P/ASX 200 Index gained 1.4 percent.
  • South Korea’s Kospi index added 1.3 percent.
  • Hong Kong’s Hang Seng Index futures rose 1.4 percent.
  • Futures on the S&P 500 gained 0.6 percent.

Also read: Seven Key Issues to Determine Success of U.S.-China Trade Talks

Commodity Cues

  • West Texas Intermediate crude climbed 1.9 percent to $48.86 a barrel.
  • Brent crude traded higher for the sixth day, up 1.33 percent to $57.82 per barrel.
  • Gold was at $1,284.41 an ounce, down 0.1 percent.

London Metal Exchange

  • Aluminium ended higher for the second day, up 1.63 percent.
  • Copper halted a three-day decline, up 3.17 percent.
  • Lead halted a three-day decline, up 0.88 percent.
  • Tin halted a two-day rally, down 0.1 percent.
  • Nickel ended 2.16 percent higher.
  • Zinc halted a two-day decline, up 2.48 percent.

Key Events To Watch This Week

  • 5:30 p.m.: India annual GDP estimate for year ending March 2019; estimates at 7.2 percent, (prior 6.7 percent).
  • A U.S. delegation is in Beijing for trade talks with Chinese officials, the first face-to-face encounter since Trump and Xi agreed to a temporary truce on Dec. 1.
  • Wednesday sees the release of minutes from the Fed’s Dec. 18-19 policy meeting. Powell will speak to the Economic Club of Washington D.C. on Thursday.
  • U.K. Parliament resumes a debate on the Brexit withdrawal bill, with Prime Minister Theresa May seeking to avoid defeat in a vote set for the week of Jan. 14.

Indian ADRs

All You Need To Know Going Into Trade On Jan. 07

Stocks To Watch

  • Titan Q3 update: Company said good growth momentum seen across all its businesses in seasonally strong third quarter. For the jewellery division strong same sales growth continues to occur, expected growth for full year stands at 22 percent and the customer demand remained buoyant in the festive season. The Watches segment will have a subdued EBIT margins due to higher advertising spends. Overall retail network crossed two million square feet mark.
  • Reliance Industries received a nod from the Reserve Bank of India for the merger of U.S. arm-Reliance Holding USA Inc with wholly owned arm Reliance Energy Generation and Distribution Ltd. The company said that the board will consider the said proposal for amalgamation at a meeting.
  • NHPC said that its 390 MW Power Station in Jammu and Kashmir is under complete shutdown from Jan. 01-12 for replacement work. The company also stated the above shutdown will cause tentative loss of 21.4 MU and 0.55 percent in PAF.
  • GMR Infrastructure said the reason for contract termination from Malaysian Airports Holdings Berhad in its airport arm was that long stop date of Dec. 31 for meeting various conditions could not be extended. The company said that discussions are underway to enter into updated agreement.
  • IDBI Bank: S&P revised its credit rating to BB/Stable from BB/Watch Negative. The rationale for this move given by the rating agency is that they expect the bank to meet regulatory capital requirement following a capital infusion from LIC.
  • Sobha Q3 Update: During the third quarter the real estate company had achieved new sales volume of 908,824 square feet valued at Rs 698.8 crore .The Company’s share of sales value has decreased by 2 percent from Rs 610.5 crore to Rs 600.2 crore on a year on year basis and the price realisation marginally increased by 1 percent to Rs 6,604 per square feet, for the same period. The developer also stated that in next two-to-three quarters they will be launching one more affordable housing project in Gujarat’s GIFT City along with other projects in Southern India and Pune.
  • Responsive Industries launched luxury flooring tiles, which will be the company’s first foray in the B2C segment.
  • Future Lifestyles Fashions increased its foreign portfolio investment limit in the company from 24 percent to 49 percent. The company said that this action has been noted by the National Securities Depository Ltd..
  • Bharat Road Networks: Chairman and Director Brahm Dutt resigned from his post with immediate effect, citing personal reasons.
  • The board of Shalimar Paints approved a rights issue with an allotment of 3.1 crore shares at Rs 64.5 per share, aggregating to Rs 201 crore.
  • BHEL has commissioned a 800 MW thermal plant in Telangana.
  • Kirloskar Electric will sell 1.065 acre of land situated at  Bangalore to Brigade Enterprises for Rs 55 crore.
  • Sagar Cements’ December cement sales rose 28.3 percent year-on-year to 326,272 MT.
  • ONGC Videsh Ltd., the overseas arm of ONGC, reported a significant discovery of oil in its offshore block in Columbia. OVL, which is Operator, holds 70 percent stake in the block along with its Partner Petrodorado South America S.A. Sucursal (PDSA), Colombia (30 percent)
  • Spentex Industries said that both Indian Bank and SBI have assigned their respective debts due and payable to them by the company in favour of Asset Reconstruction Company (ARCIL) under SARFAESI Act.
  • The central government ordered an amalgamation of Punjab Gramin Bank, Malwa Gramin Bank and Sutlej Gramin Bank into single rural bank w.e.f. Jan. 1, 2019. NABARD, the Government of Punjab and Punjab National Bank, State Bank of India and Punjab and Sind Bank are sponsors of these regional rural banks.

Media Reports

  • Bandhan, HDFC-led Gruh set to merge (Times of India)

Trading Tweaks

  • Odisha Cement price band revised to 10 percent.

Whos’s Meeting Whom

  • Tata Motors to meet Premji Invest, SBI Life Insurance and Antique from Jan. 7-9
  • Mahindra & Mahindra to meet LIC MF and Birla Sunlife Insurance from Jan. 8-9
  • BSE to meet Tata AMC and Tata Investment Corporation from January 8-9

Insider Trading

  • Greaves Cotton promoter Karun Carpets Private acquired 75,000 shares on Jan. 03.
  • Crest Ventures promoter acquired 85k shares from Jan. 01-03.
  • Aster DM Healthcare promoter Dr. Azad Moopen acquired 14,200 shares on Jan. 03.
  • Greaves Cotton promoter Karun Carpets Private acquired 75,000 shares on Jan. 03.

(As reported on Jan. 4)

Money Market Update

  • Rupee gained for the third week, ended at 69.73/$ on Friday versus 70.19/$ on Thursday.

F&O Cues

  • Nifty January Futures closed trading at 10778, premium of 51 points.
  • Max OI for January series at 11,000 Call, OI at 38.9 lakh shares.
  • Max OI for January series at 10,500 Put, OI at 40.5 lakh shares.
All You Need To Know Going Into Trade On Jan. 07

Stocks In F&O Ban

  • Adani Power
  • Jet Airways

Put-Call Ratio

  • Nifty PCR unchanged at 1.34.
  • Nifty Bank PCR at 1.12 versus 0.83.

Fund Flows

All You Need To Know Going Into Trade On Jan. 07

Brokerage Radar

Citi on India Infrastructure

  • New project announcements decline 55 percent on a yearly basis in December quarter.
  • Project completions also witness a decline.
  • Stalled projects reduce but continue to remain high.
  • General Elections will likely to have a negative impact.
  • A steady Government post general elections important.

Citi on Container Corp

  • Maintained ‘Buy’ with a price target of Rs 806.
  • December quarter’s volume growth decelerates as expected.
  • Volume de-growth to weigh on stock price in short run.
  • Continues to enjoy structural advantages in India’s logistics sector.

Citi on Voltas

  • Maintained ‘Buy’ with a price target of Rs 615.
  • December quarter witnessed strong UCP performance; Industry headwinds not abated.
  • Industry checks suggest Voltas is unable to effect price hikes.
  • Long-term prospects intact despite weak December quarter.

UBS on PVR

  • Maintained ‘Buy’; hiked price target to Rs 1,905 from Rs 1,560.
  • Screen additions to fuel higher growth; GST rate cut is positive.
  • PVR will be valued richly due to high earnings expectations and content risk diversification.
  • Overhang: capital raising and pending verdict on outside F&B.

Axis Capital on Tube Investments

  • Initiated ‘Buy’ with a price target of Rs 470.
  • Expect stock to double in three years; 10 percent profit before tax margins with possible upside surprises.
  • Growth areas: improving export revenue, capturing product adjacencies and inorganic opportunities.
  • Positives: operating leverage, lower fixed cost, efficiency gains, higher realisations and lower finance cost.

CLSA on Auto

  • Testing times in 2019-20 given subdued demand and large regulatory cost push ahead
  • Passenger vehicle growth to outpace two-wheelers and trucks in the next two financial years.
  • Competition high in two-wheelers and trucks, but benign in passenger vehicles.
  • Bajaj Auto: Downgraded to ‘Sell’ from ‘Outperform’; cut price target to Rs 2,450 from Rs 2,850.
  • Bharat Forge: Downgraded to ‘Sell’ from ‘Outperform’; cut price target to Rs 420 from Rs 680.
  • Eicher Motors: Downgraded to ‘Outperform’ from ‘Buy’; cut price target to Rs 22,300 from Rs 30,000.
  • Ashok Leyland: Maintained ‘Sell’; cut price target to Rs 85 from Rs 100.
  • M&M: Maintained ‘Buy’; cut price target to Rs 900 from Rs 1,020.
  • Tata Motors: Maintained ‘Sell’; cut price target to Rs 150 from Rs 170.

On Sobha

Morgan Stanley

  • Maintained ‘Overweight’ with a price target of Rs 605.
  • New launch momentum picked up during the December quarter.
  • Temporary dip in market weakened Gurgaon sales.
  • Expect presales to remain steady driven by both ongoing and new projects.

JMFinancial

  • Muted December quarter sales; Affordable housing launch to improve March quarter’s operations.
  • Well placed to benefit from macro changes; demand revival key for improvement in land bank valuation.
  • Key monitorable remains affordable housing launch and commercial segment foray.

On Titan

Citi

  • Maintained ‘Buy’ with a price target of Rs 1020
  • December quarter updates suggests healthy growth trends have continued driven by market share gains.
  • Expect overall revenue, EBIT and net profit to grow 25 percent, 19 percent and 18 percent respectively on a yearly basis.
  • Expect solid jewellery business led by festive season, increase in gold price and steady margins.

PhillipCapital

  • Maintained ‘Buy’ with a price target of Rs 1,075.
  • Expect EBITDA margin to see 130 basis points improvement led by jewellery business and operating leverage.
  • Watch segment are likely to remain subdued on account of higher ad spends.
  • Expect Titan Eyeplus to report more than 15 percent revenue growth in December quarter as well.

Macquarie

  • Maintained ‘Outperform’ with a price target of Rs 1,186.
  • December quarter updates highlight continued strong growth in jewellery division.
  • Implied growth run rate for jewellery in the second half is 30 percent on a yearly basis.
  • Remains top pick and a Macquarie Marquee idea.