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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Here’s a quick look at all that could influence equities on Monday.
- 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.
- 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.
- 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.
- 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.
- 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.
Earnings To Watch
- 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 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.
- 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”.
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.
- Small cap World Fund Inc sold 44.6 lakh shares or 0.5 percent equity at Rs 40.4 each.
- 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.
- 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.
- Astute Investments sold 7.75 lakh shares or 1.4 percent equity at Rs 110.2 each.
- Ganpati Industrial Private Ltd. bought 9.04 lakh shares or 1.5 percent equity at Rs 226.29 each.
- 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.
- Apollo Micro Systems IPO subscribed 248 times on final day.
- Rupee ended at Rs 63.63 per U.S. dollar versus Rs 63.67 per U.S. dollar on Thursday.
Top Gainers And Losers
- 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).
- 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.
- Nifty PCR unchanged at 1.74.
- Nifty Bank PCR at 1.06 from 1.04.
Stocks Seeing High Open Interest Change
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
- 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.
- 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.