Employees monitor financial information on computer screens on the trading floor. (Photographer: Jason Alden/Bloomberg)

All You Need To Know Going Into Trade On Jan. 08

Asian stocks opened higher, tracking a rise in the U.S., where equities rallied on optimism fresh talks on trade will be productive.

Stocks advanced in Japan, Australia and South Korea, while futures suggested shares will rise in China and Hong Kong. U.S. futures ticked higher after stocks climbed Monday as small-caps and technology shares paced advances.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, was little changed at 10,804 as of 7:01 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 rallied on Monday but gave back some early gains as small-caps and technology shares led the way amid the resumption of trade talks with China.
  • The yield on 10-year Treasuries held around 2.69 percent.

Also read: Amazon Becomes Most Valuable Company, Inching Past Microsoft

Asian Cues

  • Japan’s Topix index added 0.5 percent.
  • Australia’s S&P/ASX 200 Index rose 0.2 percent.
  • South Korea’s Kospi index was little changed.
  • FTSE China A50 futures gained 0.2 percent.
  • Hong Kong’s Hang Seng Index futures added 0.1 percent.
  • S&P 500 futures rose 0.2 percent.

Also read: Samsung Feels Apple's Pain as Technology Slowdown Hits Sales

Commodity Cues

  • West Texas Intermediate crude advanced 0.5 percent to $48.76 a barrel.
  • Brent crude ended higher for the sixth day, up 0.47 percent to $57.33 per barrel.
  • Gold fell 0.1 percent to $1,288.08 an ounce.

London Metal Exchange

  • Aluminium ended higher for the third day, up 0.7 percent.
  • Copper ended higher for the second day, up 0.1 percent.
  • Lead ended higher for the second day, up 0.15 percent.
  • Tin resumed rally after a one-day blip, up 1.02 percent.
  • Nickel ended higher for the second day, up 0.4 percent.
  • Zinc ended higher for the second day, up 2.46 percent.

Key Events To Watch This Week

  • 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.
  • North Korea’s Kim Jong Un is visiting China ahead of a potential summit with President Donald Trump.
  • 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.
  • Britain’s 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. 08

Stocks To Watch

  • Gruh Finance is set to merge with Bandhan Bank in a share-swap deal. Shareholders of Gruh Finance will receive 568 shares of Bandhan Bank for every 1,000 shares of the housing finance company.
  • Prabhat Diary entered in to animal nutrition business. The company stated that it has taken preliminary steps by executing agreement with Denmark based DLG for developing two products to increase milk productivity and quality of cattle. The pilot phase will be for 4-6 months. Post the success of this pilot project, commercial launch of these products will be planned by the company.
  • Southern Petrochemicals said that its plants have been shut down from Jan. 07 due to urgent need to carry out repairs to critical equipment and essential job shut down. They also stated that they expect to resume operations by early February.
  • ICICI Prudential Life Insurance investor update: Annualised Premium Equivalent for the 9 months till Dec. 31, 2018 fell 4.2 percent to Rs 5,343 crore year-to-year basis. Retail weighted received premium declined 10.8 percent to Rs 48.15 crore.
  • Steel Authority of India expects to supply 1 million tonne of steel in 2018-19 and 1.2 MT in 2019-20 for doubling rail lines and track renewal works, according to Minister of Steel Vishnu Deo Sai.
  • Endurance Technologies Italian arm acquired aluminium die casting company Fonpresmetal. This company has a capacity of 6,500 tonnes, out of which 50 percent is dedicated for supplies to Endurance Group companies in Italy. The acquisition was for 8.16 million euros.
  • Exide Industries to invest up to 30 percent equity stake in Cleantech aggregating to Rs 20.05 crore for setting up captive solar power projects for various manufacturing facilities. This arrangement will help in reduction of overall production costs.
  • Himachal Futuristic Communications board approved expansion of existing manufacturing facility of optical fibre manufacturing plant at Hyderabad from 7 million fibre km to 10.5 million fibre km for Rs 35 crores.
  • Goa Carbon December coke production at 6289 MT.
  • Sadbhav Infra Projects Q3 update: Toll revenue from operational Special Purpose Vehicles (apart from NSEL) up 6.2 percent at Rs 275.8 crore versus Rs 259.8 crore on a year on year basis.
  • Omaxe: CARE Ratings revised its credit rating from BBB: Stable to BBB- with a Negative Outlook on loan facilities worth Rs 1,500 crore.
  • Mahindra & Mahindra received Initial Determination Order from U.S. Trade Commission. On Aug. 29 Fiat Chrysler along with the trade commission filed a complaint against the company alleging that certain design features of Mahindra ROXOR infringe the intellectual property rights of Fiat’s Jeep design. In response the company and its North American arm filed a public interest statement with commission and commenced proceedings in a U.S. Federal District Court to seek an injunction against Fiat from proceedings with the Trade Commission.
  • National Peroxide: CFO Sailesh Chauhan resigns as Conrad David Fernandes is appointed in his place.
  • TCS said that their flagship banking operations platform is now operational for Central Bank of Kuwait.
  • Syndicate Bank board approved issue of equity shares via preferential allotment to Government of India for Rs 1,632 crores.
  • Reliance Communications said the Supreme Court has given the company four weeks to file its response to the contempt petition filed by Ericsson. The company has also deposited a partial payment of Rs 131 crore to Ericsson with Supreme Court Registry, from the operational funds available with the company.
  • ONGC and Oil India: Oil minister Dharmendra Pradhan said that the government will allow state-owned ONGC and Oil India to induct private and foreign partners in oilfields to raise output and give special incentive to make their discoveries in difficult areas viable: PTI
  • SpiceJet and InterGlobe Aviation: Central Government received bids for 111 routes from 15 airlines under the third round of auction for the UDAN scheme. SpiceJet has bid for 37 routes and InterGlobe Aviation’s IndiGo bid for 20 routes.
  • NMDC board meet to consider buyback.
  • IDBI Bank: CRISIL changes the outlook on bank’s hybrid instruments to Stable from watch with developing implications. Change in outlook was due to fund infusion by LIC.

Also read: Jet Air Said to Seek to Rework Vendor Contracts to Cut Costs

Earnings To Watch

  • Tata Elxsi

Trading Tweaks

  • AGC Networks price band revised to 10 percent

Who’s Meeting Whom

  • Jindal Steel & Power to meet Goldman Sachs. Kotak AMC and other investors on Jan. 8
  • Future Lifestyle Fashions to meet DSP MF. HDFC MF and other investors from Jan. 8-9
  • DCM Shriram to meet Reliance MF on Jan. 09.

Insider Trading

  • Gulshan Polyols promoter Anubha Gupta acquired 16,300 shares from Dec. 20 to Jan. 02

(As reported on Jan. 07)

Bulk Deals

Vishal Fabrics

  • Ray Urja Infra LLP acquired 2.77 lakh shares or 0.63 percent equity at Rs 325 each
  • Asia Investment Corporation Mauritius sold 2.77 lakh shares or 0.63 percent equity at Rs 325 each

TPL Plastech

  • Bridge India Fund sold 70,000 shares or 0.89 percent equity at Rs 150 each.

Money Market Update

  • Rupee closed at 69.69/$ on Monday versus 69.73/$ on Friday.

Also read: Bonds Rally May Have Run Its Course, India’s Oldest Fund Says

F&O Cues

  • Nifty January futures closed trading at 10,803, premium of 30 points.
  • Max open interest for January series at 11,000 Call (open interest at 40 lakh shares).
  • Max open interest for January series at 10,500 Put (open interest at 38.5 lakh shares).
All You Need To Know Going Into Trade On Jan. 08

Stocks In F&O Ban

  • Adani Power
  • Jet Airways

Put-Call Ratio

  • Nifty PCR at 1.36 versus 1.34.
  • Nifty Bank PCR at 1.11 versus 1.12.
All You Need To Know Going Into Trade On Jan. 08

Brokerage Radar

Centrum on Federal Bank

  • Initiated ‘Buy’ with a price target of Rs 135.
  • Expect asset growth driven by quality and increasing pan India presence.
  • Network distribution to boost operating efficiency.
  • Lower incremental stress expected; Drivers in place for NIM expansion.

Morgan Stanley on ICICI Prudential

  • Maintained ‘Overweight’ with a price target of Rs 425.
  • ICICI Pru Life reported premium growth of 3 percent for December.
  • Expect muted premium CAGR of 6 percent over FY18-21, but a higher VNB CAGR of 20 percent.

CLSA on Pharma

  • Expect Indian pharma sector to build on the earnings growth revival in 2018-19.
  • Expect challenges to drive further consolidation in the U.S..
  • Like Torrent for its strong positioning in the chronic space in India.
  • Aurobindo Pharma: Upgraded to ‘Outperform’ from ‘Underperform’; cut price target to Rs 820 from Rs 840.
  • Sun Pharma: Maintained ‘Buy’; cut price target to Rs 560 from Rs 700.

CLSA on Cement

  • Cement price hikes a must for stock price performance.
  • Lower energy prices are a relief, but cement prices are the key, and uncertainty prevails here.
  • Yet again trim FY19-21 EPS estimates for the major players by 3-15 percent.
  • Turn more cautious on the sector.
  • India Cement: Downgraded to ‘Sell’ from ‘Buy’; cut price target to Rs 75 from Rs 200.
  • Dalmia Bharat: Downgraded to ‘Underperform’ from ‘Buy’; cut price target to Rs 2,450 from Rs 2,550.
  • Shree Cement: Downgraded to ‘Outperform’ from ‘Buy’; cut price target to Rs 18,275 from Rs 20,100.
  • Ambuja: Downgraded to ‘Outperform’ from ‘Buy’; cut price target to Rs 250 from Rs 255.
  • ACC: Maintained ‘Buy’; cut price target to Rs 1,800 from Rs 1,900.
  • Ramco: Maintained ‘Buy’; cut price target to Rs 775 from Rs 850.
  • Grasim: Maintained ‘Sell’; cut price target to Rs 700 from Rs 790.
  • Ultratech: Maintained ‘Sell’; cut price target to Rs 3,150 from Rs 3,200.

On Bandhan Bank

Macquarie

  • Maintained ‘Neutral’ with a price target of Rs 540.
  • Acquisition of Gruh from minority shareholders’ point of view is wrong decision.
  • Shareholders will be paying 13 times for Gruh as against 4.5 times paid for Bandhan.
  • Minority shareholders get short-changed with 26 percent dilution.
  • Do not deny Gruh’s excellent franchise and growth story, but cannot ignore the price paid.

JPMorgan

  • Maintained ‘Neutral’ with a price target of Rs 525.
  • An expensive buy; merger synergies may be hard to come by.
  • Merger allows a path for reduction of promoter shareholding, but more needs to be done.
  • Combined entity will be leader in micro finance and rural housing and should attract higher valuation.