All You Need To Know Going Into Trade On Jan. 11

Asian equities climbed Friday and were on course for the strongest week since early November that’s been driven in part by optimism over U.S.-China trade negotiations.

Shares in Tokyo rose and futures pointed to a higher start in Hong Kong. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.48 percent to 10,913.50 as of 6:40 a.m.

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

U.S. Market Check

• U.S. stocks rose Thursday after dipping briefly following Federal Reserve Chairman Jerome Powell’s remarks about shrinking the central bank’s balance sheet.
• The yield on 10-year Treasuries dipped one basis points to 2.73 percent.

Asian Cues

• Japan’s Topix index rose 0.8 percent.
• Australia’s S&P/ASX 200 Index added 0.1 percent.
• Hang Seng futures rose 0.8 percent.

Commodity Cues

• The Bloomberg Commodity Index dropped 0.5 percent on Thursday.
• West Texas Intermediate crude fell 0.5 percent to $52.34 a barrel after entering a bull market on Wednesday.
• Brent crude posted its first eight-day rally since July 2017, closed 0.39 percent higher at $61.68 a barrel.
• Gold rose 0.1 percent to $1,288.23 an ounce.

London Metal Exchange

• Aluminium halted a two-day decline, ended 0.46 percent higher.
• Copper ended 0.47 percent lower.
• Lead clocked its longest gaining streak since Aug. 24, ended 0.25 percent higher.
• Zinc ended 1.24 percent lower.
• Tin posted its first four-day rally since Dec. 24, ended 0.37 percent higher.
• Nickel ended unchanged after rallying for four days.

Key Events/Data To Watch This Week

• 5:30 p.m.: India Nov. industrial production (YoY); estimate of 3.6 percent (prior 8.1 percent).

Indian ADRs

Stocks To Watch

• Jet Airways is said to weigh re-starting bailout talks with Tata Group, Bloomberg reported quoting people with knowledge of the matter.
• Tata Motors’ JLR December sales were down 6.4 percent to 56,120 units on a year-on-year basis. The company said retail sales were down due to growing trade tension between the U.S. and China. JLR added that its going to reduce 4,500 jobs from its global workforce says as a part of its cost reduction program. It will launch a voluntary redundancy program in the U.K. first.
• Reliance Industries will shut down one of its crude distillation units and coker unit at the Jamnagar refinery for maintenance and inspection for four weeks starting Jan. 16. The company also stated that other crude distillation and secondary processing units are expected to operate normally.
• Himachal Futuristic Communication won optical fibre cable orders worth Rs 500 crore for BharatNet Phase II project from Larsen and Toubro and ITI-led consortium.
• Container Corporation of India commenced its coastal operations from Jan. 10. The company will deploy two vessels carrying a minimum of load of 700 containers and will provide transportation and handling services between Kandla Port to Tuticorin port via the ports of Mangalore and Cochin.
• Praj Industries expanded its bio-energy basket by adding compressed bio-gas technology in its portfolio. The company says it is on track with execution of three bio-refinery projects based on proprietary 2G technology.
• Lemon Tree Hotels signed a licensing agreement for 50-room resort property in Andhra Pradesh.
• Shriram EPC clarified on the news that PNB-led consortium has taken possession of its arm, stating that company has just 1.04 percent stake in the shareholding of the mentioned joint venture.
• Shakti Pumps said that there was a dispute between their Labour contractor and some workers resulting in the contractor to cancel the agreement. This led to the company shutting its operations between Jan. 9-10.
• KNR Constructions arm received financial closure from NHAI for Telangana Project worth Rs 12,340 crore.
• NBCC India secured total business worth Rs 188 crore for December.
• Mukand received no adverse letter from the exchanges for the proposed merger of its three arms with self, as to enable the company to file the scheme with NCLT.
• Welspun Enterprises arm executed an agreement with Maharashtra Public Works Department to upgrade roads in the state at a bid project cost of Rs 1,460 crore and for the first year’s operation and maintenance cost for Rs 31.5 crore.
• ICICI Securities loses its spot to Zerodha as India’s largest broker.

Media Reports

• BM Khaitan rolls out sale plan for flagship Eveready (Times of India)

Nifty Earnings To Watch

• Infosys

Other Earnings To Watch

• Reliance Industrial Infrastructure
• Karnataka Bank

Earnings Reaction To Watch

Tata Consultancy Services (Q3 QoQ,)

• Dollar revenue up 0.7 percent at $5,250 million.
• Revenue up 1.3 percent at Rs 37,338 crore.
• Net Profit up 2.6 percent at Rs 8,105 crore.
• EBIT down 2.2 percent at Rs 9,559 crore.
• Margins at 25.6 percent versus 26.5 percent.

Bulk Deals

• Bliss GVS Pharma: Kotak Mahindra Investments sold 5.5 lakh shares or 0.53 percent equity at Rs 171.59 each.
• CL Educate: ICICI Lombard General Insurance sold 1.03 lakh shares or 0.73 percent equity at Rs 114.98 each.

Trading Tweaks

• Tata Investment Corporation record date for share buy-back.
• Acrysil record date for share split from Rs 10 to Rs 2 per share.
• Gruh Finance, 5paisa Capital to move into Short Term ASM Framework.

Who’s Meeting Whom

• Dixon Technologies to meet Kotak MF, Philip Capital and UBS from Jan. 11-15.
• Great Eastern Shipping to meet Philip Capital on Jan. 15.

Insider Trading

• Omax Autos promoter and director Jatendar Kumar Mehta acquired 65,800 shares from Jan. 8-9
• Simplex Infra promoter JMS Mining acquired 6.02 lakh shares on Jan. 5
• Welspun Corp promoter group Intech Metals S.A. sold 1.85 lakh shares from Jan. 7-9
• Astra Microwave Products promoter group Prathap Reddy sold 62,000 shares from Dec. 12 -Jan. 7
• Nandan Denim promoter group Chirpal Exim LLP acquired 50,000 shares on Jan. 8.
• Man Infra promoter and director Parag Shah acquired 50,000 shares on Jan. 9.

(As reported on Jan. 10)

Money Market Update

• The rupee on Thursday ended at 70.41/$ versus Wednesday’s closing of 70.46/$.

F&O Cues

• Nifty January futures closed trading at 10,858, premium of 36 points.
• Max open interest for January series at 11,000 strike value call (open interest at 40.9 lakh shares).
• Max open interest for January series at 10,500 strike value put (open interest at 41.6 lakh shares).

Stocks In F&O Ban

• Adani Power
• Jet Airways

Put-Call Ratio

• Nifty PCR at 1.46 versus 1.43.
• Nifty Bank PCR at 0.92 versus 1.4.

Brokerage Radar

On TCS

CLSA

• Maintained ‘Buy’; cut price target to Rs 2,460 from Rs 2,500.
• Margin miss driven by apposite trade-off in a red-hot talent market.
• Cut margin estimates by 60-70 basis points to reflect growth-margin trade-off.
• Expect TCS to fully exploit strong demand and gain share from its unique position.

Macquarie

• Maintained ‘Outperform’; cut price target Rs 2,291 from Rs 2,345.
• Results a mixed bag, with revenue meeting estimates but missing margins by 100 basis points.
• Lowering our FY19–21 EBIT margin estimates 30–50 basis points.
• Expect double digit growth in FY20 on strong growth in order book and positive commentary.

Morgan Stanley

• Maintained ‘Overweight’ with a price target of Rs 2,260.
• Q3: small beat on revenues more than offset by miss on margins.
• See downside risks to margin expectations given dismal performance in Q3.
• Margin levers will take time and could face headwinds in interim.

More Calls

Macquarie on Bandhan Bank

• Downgraded to ‘Underperform’ from ‘Neutral’; cut price target to Rs 400 from Rs 560.
• Introduce 20 percent capital allocation discount to target multiple due to overhang.
• Post Gruh acquisition, risk of another expensive or ill-conceived merger an overhang.
• Expect the stock to underperform despite strong fundamentals.

UBS on IGL

• Upgraded to ‘Neutral’ from ‘Sell’; hiked price target to Rs 300 from Rs 235.
• Upgrade on strong volume growth outlook and improving margins.
• Expect 11 percent volume growth in FY18-21 due to expansion in adjacent areas.
• With increase in gas costs passed through, margins could recover from the second half of the current financial year.

UBS on GAIL

• Downgraded to ‘Sell’ from ‘Buy’; cut price target to Rs 335 from Rs 460.
• Earnings peaked; see downside risk from oil fall and the U.S. LNG concerns.
• Risk of losses from contracted U.S. LNG to re-emerge if Brent remains lower.
• Transmission business is benefiting from tariff hikes; volume growth to follow.

Morgan Stanley on Marico

• Maintain ‘Equal-weight’ with a price target of Rs 320.
• Copra prices for December risen 10 percent (MoM); see near term implication on Marico.
• If current copra prices sustain, 2019 prices will lower versus 2018.

Axis Securities on City Union Bank

• Initiated ‘Buy’ with a price target of Rs 228.
• Conservative lending approach to growth a key strength.
• MSME/Trader/Retail to drive loan book growth.
• Credit cost to decline with focus on lower slippages and recovery.