All You Need To Know Going Into Trade On Jan. 17

Asian stocks climbed and the global record-setting rally showed little sign of letting up amid signs of strong American consumer demand.

Shares opened higher in Japan, South Korea and Australia. Futures on the S&P 500 nudged up. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.07 percent to 12,363.50 as of 6:50 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.

• All three main U.S. stock benchmarks surged to all-time highs after setting multiple records earlier this week, with technology and financial shares leading the surge.
• Oil posted its largest gain in almost two weeks, swept along in a broader equities rally as the preliminary U.S.-China trade truce and an accord between America, Canada and Mexico fueled optimism about economic growth.

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Earnings Reaction To Watch

Cyient (Q3, QoQ)

• Dollar revenue fell 5.5 percent to $165.1 million.
• Revenue fell 4.6 percent to Rs 1,105.9 crore. (Estimate Rs 1,120 crore)
• Net profit rose 9.9 percent to Rs 108.3 crore. (Estimate Rs 95.9 crore)
• EBIT fell 5.6 percent to Rs 105.3 crore. (Estimate Rs 105 crore)
• Margin was at 9.5 percent versus 9.6 percent.

Tata Metaliks (Q3, YoY)

• Revenue fell 5.1 percent to Rs 518.6 crore.
• Net profit rose 15.9 percent to Rs 45.9 crore.
• Ebitda rose 4.7 percent to Rs 78.2 crore.
• Margin was at 15.1 percent versus 13.7 percent.

Hathway Cable & Datacom (Q3, YoY)

• Revenue rose 12.3 percent to Rs 450.8 crore.
• Net profit was at Rs 67.2 crore versus net loss of Rs 57.9 crore.
• Ebitda rose 47.2 percent to Rs 116.5 crore.
• Margin was at 25.8 percent versus 19.7 percent.
• Other Income rose 4.2 times to Rs 61.7 crore.

Rallis India (Q3, YoY)

• Revenue rose 27.8 percent to Rs 533.6 crore.
• Net profit rose 2.7 times to Rs 38.1 crore.
• Ebtda rose 2 times to Rs 55.8 crore.
• Margin was at 10.5 percent versus 6.6 percent.

South Indian Bank (Q3, YoY)

• Net interest income rose 15.8 percent to Rs 601.8 crore.
• Net profit rose 7.9 percent to Rs 90.5 crore versus Rs 83.9 crore.
• Provisions at Rs 260.9 crore versus Rs 203.1 crore.
• GNPA at 4.96 percent versus 4.92 percent.
• NNPA at 3.44 percent versus 3.48 percent.

Karnataka Bank (Q3, YoY)

• Net interest income rose 4.1 percent to Rs 507.8 crore.
• Net profit fell 12.3 percent to Rs 123.1 crore.
• Provisions at Rs 314.7 crore versus Rs 209 crore.
• GNPA at 4.99 percent versus 4.78 percent QoQ.
• NNPA at 3.75 percent versus 3.48 percent QoQ.

Nifty Earnings To Watch

• HCL Tech
• Reliance Industries
• TCS

Other Earnings To Watch

• Blue Dart Express
• Fertilizers and Chemicals Travancore
• ICICI Lombard General Insurance
• L&T Finance Holdings
• L&T Technology Services

Indian ADRs

Stocks To Watch

• Bharti Airtel, Vodafone Idea and Reliance Industries: The Supreme Court dismissed petitions of telecom operators seeking review of the definition of ‘adjusted gross revenue’ that makes them liable to pay thousands of crores in pending dues.
• Bharti Airtel said that long-standing disputed on AGR are bonafide and genuine and the company is evaluating filing a curative petition. The telco also stated that the telecom industry continues to face severe financial stress and the court order could further erode the viability of the industry, in a media statement.
• Vodafone Idea is exploring further options, including the filing of a curative petition on the AGR Matter.
• Zee Group Stocks: The Securities and Exchange Board of India imposed a fine totalling Rs 9 lakh on Zee Media Corporation and its promoter entity 25FPS Media for shareholding disclosure lapses, according to Bloomberg report.
• Yes Bank: Moody’s placed the lender’s rating under review, according to Bloomberg report.
• Dishman Carbogen Amcis: Board approved share buyback up to a maximum of 48 lakh shares or 2.97 percent equity at Rs 150 apiece, aggregating to Rs 72 crore. The buyback price is at a premium of 69 percent to closing prices as Jan. 16. Post the share buyback, the promoters stake expected to increase to 63.28 percent from 61.4 percent, while public shareholders stake to fall to 36.72 percent from 38.6 percent.
• Rallis said that production is expected to commence for Dahej chemical plant in 2020-21. Metribuzin Phase II expansion of 500 MTPA is expected to be commercialised by February. The board also approved setting rose of R&D Facility in Bengaluru.
• UCO Bank: Board approved a proposal for a preferential issue to the Government against a capital infusion of Rs 2142 crore. EGM to seek shareholders nod on Feb. 14 for the above proposal.
• Wipro has announced a $150 million fund to invest in early to mid-stage companies.
• CEAT will consider issuance of non-convertible debentures on Jan. 22.
• Music Broadcast will consider bonus issue on Jan. 27.
• Shriram Transport Finance completed allotment senior secured notes worth $500 million.
• Premier Explosives stated that there was a fire incident on Jan. 15 at company's Peddakandukuru Factory. The fire has resulted in damage to building and equipment in one of the curing facilities.
• Metropolis Healthcare acquired 51 percent stake in Shraddha Diagnostic Centre in Gujarat for Rs 9.36 crore.
• Unitech clarified that it has not received any notice from the office of Enforcement Directorate, regarding the alleged siphoning of Rs 1,600 crore from the company’s promoters.
• HIL: Board approved the sale of company’s calcium silicate insulation products division operated under the brand "HYSIL" to Calderys India Refractories through a slump sale for Rs 80 crore.
• South Indian Bank: Board approved raising rose to Rs 500 crore via bonds.
• CG Power: Belgium’s Commercial Court has appointed to two interim directors on the Board of the company’s two arms in Belgium to act as their provisional administrators.
• Nilkamal’s Sri Lankan arm has repurchased equity shares from other existing shareholders. The company’s stake in the Sri Lankan arm has increased to 96.28 percent from 76 percent.

Brokerage Radar

On Telecom

Morgan Stanley

• Airtel’s recent fundraising gives it the liquidity to meet AGR liability, it will be critical to see the way forward for Vodafone Idea.
• There is a possibility that the telecom industry could further consolidate into two players.

Edelweiss

• Odds of relief after filing a curative petition is low.
• The onus of ensuring the market structure does not move to a duopoly lies with the government.
• Bharti Infratel too cannot escape the repercussions of the potential change in market structure.
• Maintain a positive stance on Airtel and Jio, given their ability to fund liabilities and gain market share.

UBS

• The decision is clearly negative for Vodafone Idea as the company’s faces meaningfully large liability.
• Will closely monitor the outcome of a curative petition if any.

IIFL

• Chances of a relief from a curative petition before the Jan. 23 deadline look remote.
• Government is likely to spread out payment over a long period to avoid pushing Vodafone Idea into NCLT.
• Spread out payments plus tariff increases are a feasible combination.

More Calls

Emkay on Rallis India

• Maintained ‘Buy’ with a price target of Rs 215.
• All-round beat in the third quarter on the back of 35 percent YoY growth in the domestic business.
• Best performance in the last six years albeit on a low base.
• Initiative to fill portfolio gaps coupled with new trade terms is paying off.

UBS on Banks

• Latest AGR judgment increases the risks from the telecom sector.
• IndusInd Bank, Yes Bank, SBI appears to have relatively high exposure to Vodafone Idea.
• Continue to prefer Axis Bank, ICICI Bank and HDFC Bank.

IIFL on Maruti Suzuki

• Maintained ‘Buy’ with a price target of Rs 9,000.
• Sharp earnings growth in an up-cycle would be magnified by margin expansion.
• Competitive intensity benign, but slight market-share loss possible in the near-term.
• Premium multiples to uphold.

Nomura on Balkrishna Industries

• Maintained ‘Buy’ with a price target of Rs 1,148.
• Backward integration at Bhuj plant through an in-house carbon black plant and lower power costs are favourable cost levers.
• Wide variety of tyres, good customer feedback/loyalty, and lower cost of operations alleviate the threat from competition and lead to the sustainable moat.
• Valuation is not expensive given the company’s growth outlook.

UBS on Max Financial Services

• Maintained ‘Buy’; hiked price target to Rs 640 from Rs 550.
• The stock has been volatile but the sentiment could improve.
• Axis open architecture may not be negative for Max from current levels.
• Premium growth likely in the teens.

HSBC on Indian Pharmaceuticals

• Execution of major the U.S. launches and FDA quality compliance will be key in 2020.
• Upgrade Dr Reddy’s to Buy from Hold on its improving outlook; price target hiked to Rs 3,230 from Rs 2,760.
• Prefer Biocon and Aurobindo.

Trading Tweaks

• Century Extrusions, Vipul, price band revised to 10 percent.
• Websol Energy System, Shyam Century Ferrous price band revised to 5 percent.
• Indiabulls Integrated Services, Mishtann Foods to move into ASM Framework.
• Ashima, Inditrade Capital, Century Extrusions, Inox Wind to move into short term ASM Framework.
• Centrum Capital, Saurashtra Cement to move out of short term ASM Framework.

Who’s Meeting Whom

• Great Eastern Shipping to meet Birla Sun Life on Jan. 17.

F&O Cues

Index Futures

• Nifty January futures closed at 12,374, premium of 18.8 points versus 34.7 points.
• Nifty January futures open interest up 2.5 percent, adds 3.1 lakh shares in open interest.
• Nifty Bank January futures closed at 31,935.7, premium of 81.8 points versus 118.9 points.
• Nifty Bank January futures open interest down 4 percent, sheds 5,38,000 shares in open interest.

Options

• Nifty PCR at 1.51 versus 1.56 (across all series).

Nifty Weekly Expiry: Jan. 16

• Max open interest on call side at 12,400 (11.7 lakh shares).
• Max open interest on put side at 12,300 (17 lakh shares).
• Open interest addition seen at 11,500P (+10.1 lakh shares), 12,300P (+9.7 lakh shares), 12,400C (+6.7 lakh shares).

Nifty Monthly Expiry: Jan. 30

• Max open interest on call side at 12,500 (30.3 lakh shares).
• Max open interest on put side at 12,000 (42 lakh shares).