All You Need To Know Going Into Trade On Jan. 15

Asian stocks built on the strong start to his year and headed for a fresh record high amid optimism in global growth. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.4 percent at 10,729 as of 7:05 a.m.

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DayBreak

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

Global Cues

• U.S. stocks rose to records as retail sales sparked optimism in the economy and JPMorgan Chase & Co. signaled tax cuts will bolster profits.
• Treasuries pared losses that sent the two-year yield over 2 percent for the first time since 2008 as investors assessed an unexpected acceleration in core inflation that likely boosts the Federal Reserve’s case for higher rates.
• The underlying pace of U.S. inflation unexpectedly accelerated in December amid increased housing costs, reinforcing the outlook for the Fed to raise interest rates several times in 2018.

Europe Check

• Euro hit a three-year high and the pound to its strongest since June 2016, after the dollar weakened the most since March.
• Reports that German policymakers are set to resolve a months-long political stalemate added to news yesterday that the European Central Bank is open to tweaking its policy guidance soon to align it with a strengthening economy.
• The Stoxx Europe 600 Index advanced 0.3 percent to cap a gain in the the five days.

Asian Cues

• Japan’s Topix index rose 0.6 percent.
• Australia’s S&P/ASX 200 Index added 0.3 percent.
• Futures on Hong Kong’s Hang Seng Index advanced 0.5 percent.
• Futures on the S&P 500 climbed 0.2 percent.
• The MSCI Asia Pacific Index climbed 0.6 percent, extending this year’s surge to 4.7 percent, on course to close at a fresh all-time high.

Here are some of the key events scheduled for this week:

• Earnings season ramps up: Taiwan Semiconductor Manufacturing Co., ASML Holdings NV, Bank of America Corp. and Goldman Sachs Group Inc. are among some notable releases.
• Industrial production in the U.S. probably increased in December, a report may show Wednesday, completing a solid year for manufacturing. U.S. housing starts probably slipped in December for the first time in three months as frigid winter weather impeded work, forecasts show ahead of Thursday’s release.
• The Bank of Canada’s interest-rate decision comes Wednesday. Monetary policy announcements are also due in South Korea, South Africa and Turkey.
• China releases fourth quarter GDP, December industrial production and retail sales Thursday.

Commodity Cues

• Gold futures were flat at $1,337.31 an ounce, following five weeks of gains.
• West Texas Intermediate crude was little changed at $64.25 a barrel.
• Brent crude ended higher for fifth day at $69.87 per barrel, up 0.9 percent.
• Sugar ended flat at 14.18 cents per pound.

Shanghai Exchange

• Steel extends decline for the second day; down 0.5 percent.
• Aluminium trades 0.4 percent higher.
• Zinc trades flat.
• Copper extends decline for the second day; down 0.5 percent.
• Rubber snaps four-day winning streak; down 0.4 percent.

Indian ADRs

Earnings To Watch

Federal Bank

• Net interest income seen 18.5 percent higher at Rs 938 crore
• Net profit seen up 25.5 percent at Rs 258 crore
• NIM to remain stable QoQ at around 3.3 percent

Other Factors:

• Other income growth is likely to moderate due to drop in treasury gains
• Loan growth will continue to maintain traction (seen at around 22-25 percent growth)
• GNPA expected at around 2.2-2.3 percent levels.
• Slippages should be at normalised level
• Management expects credit cost in second half of FY18 to be better than first
• Expect limited impact of RBI's second watch list.

Key Things To Watch:

• Outlook on asset quality, especially in SME segment and movement in the corporate and MSME segment
• Strategy on balance sheet growth, particularly corporate growth.
• Update on stake sale in IDBI Federal Life Insurance

Other Earnings To Watch

• ABC Bearings
• Delta Corp
• India Grid Trust
• Zee Learn

Earnings Reaction To Watch

Infosys Q3 (QoQ)

• Net Sales up 1.3 percent at Rs 17,794 crore.
• Net profit up 37.7 percent at Rs 5,129 crore.
• EBIT up 1.7 percent at Rs 4,319 crore.
• Margins at 24.3 percent versus 24.2 percent.

TGV Sraac Q3 (YoY)

• Revenue up 22 percent at Rs 273 crore.
• Net profit up 221 percent at Rs 10.6 crore.
• Ebitda up 58 percent at Rs 50.5 crore.
• Margin at 18.5 percent versus 14.3 percent.

RIIL Q3 (YoY)

• Revenue down 8 percent at Rs 21.1 crore.
• Net profit down 1 percent at Rs 2.67 crore.
• Ebitda down 30.6 percent at Rs 3.4 crore.
• Margin at 16.1 percent versus 21.3 percent.

Sintex Industries Q3 (YoY)

• Revenue up 44 percent at Rs 840 crore.
• Net profit down 50 percent at Rs 21 crore.
• Ebitda down 32 percent at Rs 57 crore.
• Margin at 6.8 percent versus 14.3 percent.

Muthoot Capital Services (YoY)

• Net profit up 143 percent at Rs 15.7 crore
• Revenue from operations up 50.4 percent at Rs 105.14 crore
• Provisions at Rs 7 crore versus Rs 6.8 crore QoQ and Rs 5.7 crore YoY

Stocks To Watch

• HDFC’s board approved to raise Rs 13,000 crore by selling shares to institutional investors and QIP.
• HDIL board approves allotment of 2 crore warrants to promoter at Rs 70.5 per each.
• Boards of the IDFC Bank Ltd. and Capital First Ltd. approved a merger between the two entities.
• RBI Approves to hike FPI limit in Granules India to 49 percent from 24 percent earlier.
• TRAI cuts international interconnect charges to 30 paise per minute.
• Southern Petrochemicals to shut down its plants for maintenance.
• Religare Enterprises revises value of health insurance operations over delayed sale to Rs 1,350 crore.
• Eclerx to consider details of share buyback on Jan. 23.
• Lasa Supergenerics to consider conversion of unsecured loans into equity at EGM on Feb. 7.
• Filatex India’s expansion project at Dahej commences trial production.
• Trigyn Technologies receives multiyear IT services contract worth $1.5 million from IFAD, Rome, Italy.
• REC transfers entire stake in wholly owned subsidiary REC Transmission To Power Grid.
• 3i Infotech’s U.S. subsidiaries merge together.
• EXIM Bank declares Venus Remedies and its directors as “wilful defaulters”.

Bulk Deals

Butterfly Gandhimathi Appliances

• IDFC MF bought 1 lakh shares or 0.6 percent equity at Rs 580 each.
• Ashish Kacholia bought 1.52 lakh shares or 0.9 percent equity at Rs 580 each.
• Standard Chartered MF bought 3 lakh shares or 1.7 percent equity at Rs 579.99 each.
• Reliance Alternative Invest Fund sold 8.5 lakh shares or 4.8 percent equity at Rs 580.67 each.

APL Apollo Tubes

• Emblem FII sold 2 lakh shares or 0.8 percent equity at Rs 2,228.23 each.

Hathway Cable

• Small cap World Fund Inc sold 44.6 lakh shares or 0.5 percent equity at Rs 40.4 each.

Gayatri Projects

• Socite Generale bought 25 lakh shares or 1.4 percent equity at Rs 217.35 each.
• UBS CH Equity Fund-Emerging Markets bought 70 lakh shares or 3.9 percent equity at Rs 208 each.
• Afrin Dia sold 70 lakh shares or 3.9 percent equity at Rs 208 each.

Greenlam Industries

• Sundaram Rural India Fund bought 3.57 lakh shares or 1.5 percent equity at Rs 1,315 each.
• Jwalamukhi Investment Holdings sold 3.56 lakh shares or 1.5 percent equity at Rs 1,315 each.

Menon Bearings

• Astute Investments sold 7.75 lakh shares or 1.4 percent equity at Rs 110.2 each.

Emami Papers

• Ganpati Industrial Private Ltd. bought 9.04 lakh shares or 1.5 percent equity at Rs 226.29 each.

Trading Tweaks

• TeamLease Services and Healthcare Global’s foreign institutional investor limit reached 24 percent, no further buying allowed.
• Granules India’s foreign institutional investor limit increased to 49 percent from 24 percent.
• Hindustan Motors revised its circuit filter to 10 percent.

Who’s Meeting Whom?

• Filatex India to meet Stewart & Mackertich, Mentor Capital and HNI Kirit Gogri on Jan. 15.
• Virinchi to meet investors on Jan. 15
• Mahanagar Gas to meet sevel fund houses including Goldman Sachs, Kotak Mahindra, UBS, Morgan Stanley etc between Jan. 15 - 22.
• Vakrangee to meet investors on Jan. 15-16 in Singapore.

Insider Trades (As Reported On January 12)

• BNK Capital Markets promoter BNK securities buys 81,000 shares on Jan. 11.
• Pennar Industries promoter Aditya Rao buys 5,000 shares on Jan. 11.
• Omax Auto promoters sold 18,712 shares on Jan. 5-9.
• Chembond chemicals promoters sold 1.48 lakh shares on Jan. 9.
• Teamlease Services promoter Dhana Mgmt Consultancy LLP sold 1,300 shares on Jan. 1.

IPO

• Apollo Micro Systems IPO subscribed 248 times on final day.

Rupee

• Rupee ended at Rs 63.63 per U.S. dollar versus Rs 63.67 per U.S. dollar on Thursday.

Top Gainers And Losers

Index Trends

F&O Cues

• Nifty January futures trading at 10,686, premium of 5 points versus 3 points.
• January Series: Nifty open interest up 1 percent; Bank Nifty open interest up 12 percent.
• India VIX ended at 13.7, down 2 percent.
• Max open interest for January series at 11,000 Call (open interest up 5 percent at 47.3 lakh).
• Max open interest for January series at 10,500 Put (open interest at 81.5 lakh, down 1 percent).

F&O Ban

• In ban: Dish TV, Jain Irrigation, Kaveri Seed, Fortis Healthcare, GMR Infrastructure, HDIL, Jet Airways, Jindal Steel, JP Associates, Reliance Communication, Reliance Capital, Reliance Power, Wockhardt.
• New in ban: Dish TV, Jain Irrigation, Kaveri Seed.
• Out of ban:NIL

Only intraday positions can be taken in stocks which are in F&O ban. There is a penalty in case of a rollover of these intraday positions.

Put-Call Ratio

• Nifty PCR unchanged at 1.74.
• Nifty Bank PCR at 1.06 from 1.04.

Stocks Seeing High Open Interest Change

Fund Flows

Brokerage Radar

Geojit ICICI Pru Life

• Initiated ‘Buy’ with price target of Rs 450.
• Outlook on Indian life insurance sector remains bright.
• Indian life insurance industry is at the cusp of enormous growth.
• ICICI Life is well-positioned to capture the strong growth.
• Best play on life insurance sector.
• Expect ICICI Life to deliver 22 percent and 15 percent in return on equity and return on enterprise value in the next financial year.
• Expect new business premium to grow at a compounded rate of 20 percent over the financial years through March 2019.
• Strong brand and parentage; Well placed on distribution.
• Remains outperformer in private life insurance despite challenging business environment.
• Diversified multi-channel distribution network gives a competitive edge.
• Under-penetrated market provides significant growth opportunity.

HSBC on Guajarat Pipavav

• Upgraded to ‘Buy’ from ‘Hold’; raised price target to Rs 174 from Rs 144.
• Pipavav is set to receive another two weekly services.
• Rebound in India-China EXIM trade bodes well given exposure to Far East.
• Earnings momentum to resume an upward trend in the near future.
• These service wins along with improved trade outlook raised earnings estimate.

Equirus on Whirlpool

• Initiated ‘Add’ with a price target of Rs 1,717.
• With favorable industry dynamics Whirlpool is well-poised for growth.
• Plugging portfolio gaps to drive incremental volumes, improve brand image.
• Distribution network expansion, new product launches to drive growth.
• Revenue growth to be powered by refrigerators, WM and ACs.
• Expect revenue, operating income and net profit to grow at a compounded rate of 19 percent, 21 percent and 20 percent respectively over the financial years through March 2020.
• Stock trades at reasonable valuations.
• Refrigerator segment – penetration levels to increase to 43 percent by March 2022.
• Washing machines – Growth to be driven by fully-automatic machines.
• Air conditioning segment – Split ACs to lead the way.
• Focus on profitable growth to shore up operating income and net profit.

ICICI Direct on Himadri Speciality

• Initiated ‘Buy’ with price target of Rs 245.
• Growth visibility is healthy with impressive capex and firm financing plans amid robust product demand.
• Debt at controlled level; debt-to-equity steadily on decline.
• Expect revenue, operating income and net profit to grow at a compounded rate of 22.7 percent, 29.3 percent and 38 percent respectively over the financial years through March 2020.
• Expect Himadri to command premium valuations among its peers.
• Coal tar pitch: Dominance to sustain; cash cow.
• SNF a construction chemical is big opportunity.
• Carbon black: Industry in sweet spot, Himadri a key beneficiary.
• Advance carbon material to fetch high margins and boost earnings from March 2020.
• Himadri is one of the only few listed players with exposure to Electric Vehicle.

Brokerages On Capital First-IDFC Bank Merger

Edelweiss

• Capital First: Maintained ‘Buy’, Raised price target to Rs 1,033 from Rs 927.
• IDFC Bank: Maintained ‘Hold’, raised price target to Rs 74 from Rs 67.
• Merger is a step in right direction to achieve stated intentions of both entities.
• Merger will be synergistic, value accretive and provide an opportunity to build a robust banking franchise.
• Immediate term benefits flow more to Capital First.
• Value combined entity at Rs 36,400 crore, i.e., 1.75 times next financial year’s book
• All regulatory approvals (RBI, CCI, SEBI, etc) to take almost 9-12 months.
• Ramp up of liability franchise will be a key monitorable.

Antique

• Lower borrowing costs is one of the potential benefit of merger.
• Increased provisioning costs to offset benefits from lower borrowing costs.
• Capital First huge SME book to witness higher provisions in banking.
• Combined entity to trade between 2-2.2x during integration phase, translating to Rs 70-75.
• Further upside contingent upon successful integration and re-alignment of bank strategy.
• Expect 10-12 percent price upside to Capital First; No significant upside to IDFC Bank.

Brokerage On Infosys Earnings

Credit Suisse on Infosys

• Maintained ‘Neutral’; raised price target to Rs 1,100 from Rs 1,000.
• Previous quarer results were in line; Guidance maintained.
• U.S. and financial services soft, but management outlook is positive.
• Decent growth recovery in retail; No significant pick-up in large deals.
• Update on the new CEO's strategy only in April.
• Revise estimates to slightly lower tax rate and adjusting for recent buyback.
• Valuations are reasonable as stock underperformed in 2017.
• Do not see any near-term trigger.

CLSA on Infosys

• Maintained ‘Buy’; raised price target to Rs 1,300 from Rs 1,230.
• Previous quarter remained in line in revenue growth and steady margins.
• Tax cuts drive up next two financial year’s earnings per share estimates by 2 percent.
• Client mining stayed strong with solid growth in top client.
• Impressive margin performance continues despite hikes and variable pay.
• New CEO is yet to fully sponsor the strategic direction.
• Limited gap with peers, stability and improving execution deserves a rerating.

Edelweiss on Infosys

• Upgraded to ‘Buy’ from ‘Hold’; raised price target to Rs 1,265 from Rs 1,010.
• With new CEO in place expect highest margin levers, high dividend yield and undemanding valuations.
• Barring BFSI, all other businesses posted modest numbers in a weak quarter.
• BFSI, retail and digital look strong for 2018.
• BFSI, retail, digital and Europe all look promising.
• Downgraded earlier due to management instability.