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

U.S. stock futures declined and Japanese shares opened lower after Reuters reported the Trump administration is drafting rules that would allow blocking more sales to Huawei, a sign that tensions between the two powers remain high despite the upcoming trade deal due to be signed later Wednesday.

Japan’s Topix index slipped along with equities in Seoul, while gains eased for Australian shares. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.13 percent to 12,372.50 as of 7:05 a.m.

Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell.

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

• U.S. stocks retreated from all-time highs after Bloomberg reported that tariffs on billions of dollars of Chinese goods will likely stay in place until after the presidential election.
• Oil was steady in Asian trading, with a calmer geopolitical scene offset by lingering worries on the U.S.-China trade war and on the supply outlook.

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Key Data To Watch

• India to release trade data for December

Earnings Reaction To Watch

Wipro (Q3, QoQ)

• IT services revenue rose 2.2 percent at $2,095 million.
• Revenue rose 2.3 percent to Rs 15,470.5 crore. (Estimate: Rs 15,434 crore)
• Net profit fell 3.8 percent to Rs 2,455.9 crore. (Estimate: Rs 2,451 crore)
• EBIT was up 1.4 percent to Rs 2,650.7 crore. (Estimate: Rs 2,682 crore)
• Margin stood at 17.1 percent versus 17.3 percent (Estimate: 17.4 percent)

Mindtree (Q3, QoQ)

• $ Revenue rose 1.5 percent to $275.2 million.
• Revenue increased 2.7 percent to Rs 1,965.3 crore. (Estimate: Rs 1,971 crore)
• Net profit rose 45.9 percent to Rs 197 crore. (Estimate: Rs 163 crore)
• Ebitda rose 23 percent to Rs 306 crore. (Estimate: Rs 278cr)
• Margin stood at 15.6 percent versus 13 percent. (Estimate: 14.1 percent)

Tata Steel BSL (Q3, YoY)

• Revenue rose 3.1 percent to Rs 5,038.1 crore.
• Net loss was at Rs 501.5 crore versus Net loss of Rs 239.7 crore.
• Ebitda fell 72.4 percent to Rs 277.8 crore.
• Margin was at 5.5 percent versus 20.6 percent.

Earnings To Watch

• Larsen & Toubro Infotech
• Sterlite Technologies
• Reliance Industrial Infrastructure
• Tinplate
• Den Networks
• Plastiblends

Indian ADRs

Stocks To Watch

• Canara Bank called off the divestment process of its entire stake in Can Fin Homes, which was under the progress. The bank has 30 percent stake in Can Fin Homes.
• CSB Bank said that the regulatory restrictions imposed by the Reserve Bank of India on the opening of new branches, in view of the delayed initial public offering of shares of the Bank, have been lifted, with effect from Jan. 10. The Bank can now open new branches subject to approval from RBI.
• National Peroxide stated that expansion of its plant at Kalyan, Maharashtra is under progress and is expected to be commissioned around last week of January.
• Yes Bank will seek shareholder’s nod for increasing authorised share capital from Rs 800 crore to Rs 1,100 crore, and to authorise this capital raising via issue of equity or other convertible securities, on Feb. 7. The Bank also acquired 30 percent stake in Reliance Power’s wholly-owned arm Rosa Power Supply through invocation of a pledge of 12.73 crore shares.
• Lemon Tree Hotels launched a 65-room hotel in Rishikesh.
• Reliance Power’s promoters stake fell from 36.71 percent to 32.79 percent after an invocation of 11 crore shares (3.92 percent) made by promoter Reliance Infrastructure on Jan. 13.
• Adani Gas appointed Total SA’s India head Alexis Thelemaque as an additional director in the board.
• Godawari Power & Ispat: Tribunal dismissed a claim of Rs 94 crore made by Lauren Jyoti (EPC Contractor) against the company’s arm.
• Corporation Bank revised marginal cost of funds based lending rate across various tenors with effect from Jan. 15. One-month MCLR at 7.75 percent and one- year MCLR at 8.5 percent.
• Pidilite Industries incorporated a joint venture to carry on the business of manufacturing, processing and distribution of technical mortars and other materials used in construction.

Brokerage Radar

Credit Suisse on Gas

• IGL: Initiated ‘Neutral’ with a price target of Rs 410.
• Gujarat Gas: Initiated ‘Neutral’ with a price target of Rs 240.
• MGL: Initiated ‘Outperform’ with a price target of Rs 1,280.
• GAIL: Initiated ‘Outperform’ with a price target of Rs 171.
• India Gas demand to double over the next 10 years.
• LNG imports to be strong with domestic supply back-ended.

On IndusInd Bank

HSBC

• Maintained ‘Buy’ with a price target of Rs 2,000.
• Q3: Operating profit up 30 percent YoY, supported by NIM expanding to 4.2 percent.
• Slippages increase in Q3; expect moderation over coming quarters.
• Valuations undemanding; moderation in credit cost key catalyst.

IDFC Securities

• Downgraded to ‘Neutral’ from ‘Outperformer’; maintained price target at Rs 1,380.
• Corporate stress played out in slippages and credit cost for the third quarter.
• Believe uncertainties on the corporate portfolio remain high.
• Cut rating to Neutral on higher corporate risks.
• Strong capital adequacy and retail book are key strengths.

UBS

• Maintained ‘Sell’ with a price target of Rs 1,210.
• Quality of earnings deteriorates further.
• Growth and margins weaker than expected, fees were inline.
• Asset quality pressures showing up; mgmt. gives strong guidance for FY21 despite missing it in FY20

On Bandhan Bank

Kotak Securities

• Maintained ‘Reduce’; cut price target to Rs 540 from Rs 550.
• Business performance was softer than normalised trends led by slower growth in MFI.
• NIM was impacted QoQ by few one-offs such as interest income de-recognition and excess liquidity.
• The benefit of the diversification would take time to fructify.

Axis Capital

• Maintained ‘Buy’; cut price target to Rs 625 from Rs 690.
• Core robust; provisioning slightly up.
• Cut FY21 estimate by 6 percent to factor in slightly higher provisioning.
• Expect growth rate to remain over 25 percent with RoA of 4.4 percent and limited asset quality challenges.

On Mindtree

UBS

• Maintained ‘Sell’ with a price target of Rs 590.
• Q3 revenue miss; margins drive earnings beat.
• The decline in other customers and contract wins are likely to keep 2020-21 forecasts in check.
• The company remains confident of margin expansion in the next few quarters.

Morgan Stanley

• Maintained ‘Underweight’; hiked price target to Rs 820 from Rs 725.
• Q3 revenue marginally softer, but margins were significantly ahead of expectations.
• Hike FY20-22 EPS estimates by up to 9% due to strong margin display in the third quarter.
• The stock is already discounting this improvement; future outperformance to be driven by an uptick in revenue growth.

On Wipro

Morgan Stanley

• Maintained ‘Underweight’; hiked price target to Rs 240 from Rs 230.
• IT services revenue and margins were largely in line.
• Mgmt. seemed confident about 2020-21 growth prospects due to a strong deal pipeline.
• We still expect growth rates to be lower than peers.

HSBC

• Maintained ‘Hold’ with a price target of Rs 270.
• Q3 results were in line, but Q4 guidance misses street estimates.
• Commentary on a strong deal funnels a positive.
• FY21 revenue growth is still unlikely to converge with the industry.

Trading Tweaks

• Security & Intelligence Services ex-date for share split at 2:1.
• Bharat Road Network, Emami Paper Mills, N R Agarwal Industries, Patel Engineering to move into short term ASM Framework.
• Gallantt Metal, Gallantt Ispat, Suzlon Energy, Zuari Global, Jaiprakash Power Ventures, Supreme Infrastructure to move out of short term ASM Framework.
• Patel Engineering price band revised to 10 percent.

Who’s Meeting Whom

• Dixon Technologies to meet Max Life Insurance and Quantum Advisors on Jan. 16.
• Mahindra Logistics to meet Ocean Dial AMC, Axis Capital and other investors on Jan. 16.
• Tata Steel to meet Ambit Capital on Jan. 16.

Money Market Update

• The rupee closed at 70.88/$ versus 70.86/$ on Monday.

F&O Cues

Index Futures

• Nifty January futures closed at 12,397, premium of 34.7 points versus 32.6 points.
• Nifty January futures open interest up 2 percent, adds 2.7 lakh shares in open interest.
• Nifty Bank January futures closed at 32,169, premium of 97.4 points versus 64.6 points.
• Nifty Bank January futures open interest down 3 percent, sheds 41,000 shares in open interest.

Options

• Nifty PCR at 1.67 versus 1.63 (across all series).

Nifty Weekly Expiry: Jan. 16

• Max open interest on call side at 12,400 (17.1 lakh shares).
• Max open interest on put side at 12,300 (31.6 lakh shares).
• open interest addition seen at 12,300P (+12 lakh shares), 12,350P (+8.8 lakh shares), 12,400C (+2.2 lakh shares).
• Open interest shedding seen in 12,300C (-2.1 lakh shares).

Nifty Monthly Expiry: Jan. 30

• Max open interest on call side at 12,500 (26.8 lakh shares).
• Max open interest on put side at 12,000 (44.3 lakh shares).