All You Need To Know Going Into Trade On Jan. 21
Asian stocks kicked off the week on positive footing amid optimism steps are being taken toward a U.S.-China trade truce.
Shares in Sydney and Tokyo climbed after the S&P 500 Index advanced to the highest level since Dec. 6, and futures pointed to a higher start in Hong Kong. American markets are closed Monday due to the Martin Luther King Jr. holiday.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.32 percent to 10,969.50 as of 6:40 a.m.
Short on time? well, then listen to this podcast for a quick summary of the article!
Here’s a quick look at all that could influence equities today.
U.S. Market Check
- Stocks rallied to the highest level in six weeks as signs the U.S. and China are closing in on a trade truce and stronger factory numbers boosted investor confidence in the global economy.
- The yield on 10-year Treasuries rose three basis points to 2.78 percent Friday.
- Japan’s Topix index advanced 0.8 percent.
- Hang Seng futures rose 1 percent.
- Australia’s S&P/ASX 200 Index advanced 0.3 percent.
- Futures on the S&P 500 edged down 0.1 percent.
- The Bloomberg Commodity Index gained 1.2 percent Friday to a five-week high.
- Brent crude traded 0.43 percent lower at $62.43 per barrel.
- West Texas Intermediate crude slipped 0.8 percent to $53.39 a barrel.
London Metal Exchange
- Aluminium ended 0.65 percent higher.
- Tin ended higher for the second day, up 0.19 percent.
- Nickel halted a two-day blip, up 1.98 percent.
- Copper ended higher for the fourth day, up 1 percent.
- Lead ended 1.78 percent higher.
- Zinc ended higher for the third day, up 1.3 percent.
Stocks To Watch
- JSW Steel and the U.S.-based diversified Harsco Corporation entered into a 10-year agreement to provide a range of mill services. Under the contract, Harsco will provide on site slag handling services to JSW plant in Maharashtra’s Dovili. (Bloomberg News)
- The Securities and Exchange Board of India adviced L&T against Rs 9,000 crore buyback offer since the debt ratio after buyback would be more than twice capital & reserves. The company had proposed to buyback 610 lakh shares at price of Rs 1,475 apiece.
- Welspun Enterprises said that it has achieved financial closure for a four-lane road project in Maharashtra for bid cost of Rs 1,048 crore. The company said that NHAI has declared the appointed date for this project as Jan, 16.
- MOIL signed a memorandum of understanding with the Gujarat Mineral Development to take up joint exploration of manganese bearing area and to conduct mining operations in Gujarat. The company also plans to set up a value addition plant in Gujarat with proposed investment of Rs 250 crore.
- Vascon Engineers’ board approved to raise Rs 110 crore via non-convertible debentures which will be used to retire existing loan of Rs 83 crore with ECL Finance.
- MPS approved investment of Rs 40 crore in its wholly owned arm MPS Interactive Systems.
- IDFC First Bank: The Reserve Bank of India approved V Vaidyanathan as managing director, chief executive officer of the bank for three years with effect from Dec. 19 2018.
- Hari Mundra resigned as the non-executive director of Ceat with effect from Jan. 29.
- Vodafone Idea’s board to meet on Jan. 23 to consider fund raising. The company had earlier formed a committee to evaluate fund raising of up to Rs 25,000 crore via equity. The fund raising is expected to complete before March 2019.
- Reliance Infrastructure’s subsidiary Delhi Airport Metro Express Private Limited (DAMEPL) to move to Supreme Court against the arbitration award in the matter of Delhi Metro Rail Corporation (DMRC).
- ITI signed a purchase order contract with Gujarat Fibre Grid Network Ltd. (GFGNL), worth Rs 1,011.41 crore to be completed in one year, for implementing BharatNet Phase II project in Gujarat. Of the total order, Rs 190 crore is towards operation and maintenance for three years.
- SBI: Hitachi has accepted to acquire 26 percent equity in SBI Payment Services Private Limited.
Nifty Earnings To Watch
- Kotak Mahindra Bank
Other Earnings To Watch
- Bhageria Industries
- Gallantt Ispat
- HDFC Asset Management Company
- Hindustan Zinc
- Housing & Urban Development Corporation
- IRB InvIT Fund
- Just Dial
- L&T Finance Holdings
- Union Bank of India
- Zensar Technologies
- Supreme Petrochem
- Gallantt Ispat
- Sundaram Finance Holdings
- Sasken Technologies
- Pondy Oxides & Chemicals
- Monnet Ispat & Energy
- Coromandel International
Earnings Reaction To Watch
Wipro (Q3, QoQ)
- Dollar revenue up 1.8 percent at $2046.5 million.
- Revenue up 3.4 percent at Rs 15,059 crore.
- Net Profit up 34.9 percent at Rs 2,544 crore.
- EBIT up 43 percent at Rs 2,775.7.
- Margin at 18.4 percent versus 13.3 percent.
- The company also announce bonus shares of one share for three shares held in the company.
Zee Learn (Q3, YoY)
- Revenue up 2.2 times at Rs 112.7 crore.
- Net profit up 80.5 percent at Rs 13.9 crore.
- Ebitda up 66.7 percent at Rs 30 crore.
- Margin at 26.6 percent versus 34.5 percent.
- Other Income of Rs 8.4 crore.
SBI Life Insurance (Q3, YoY)
- Net premium income up 35 percent at Rs ,9141.3 crore.
- Net profit up 15 percent at Rs 264 crore.
ICICI Lombard General Insurance (Q3, YoY)
- Gross direct premium Income up 25.9 percent at Rs 3,699 crore.
- Net profit up 3.2 percent at Rs 239 crore.
South Indian Bank (Q3, YoY)
- Net profit down 27 percent At Rs 83.85 crore.
- Gross NPA at 4.88 percent versus 4.61 percent (QoQ)
- Net NPA at 3.54 percent versus 3.16 percent (QoQ)
- Provisions at Rs 203.12 crore versus Rs 204.68 crore (QoQ) versus Rs 154.28 crore (YoY)
Omax Autos (Q3, YoY)
- Revenue down 26.5 percent at Rs 227.18 crore.
- Net profit at Rs 1.58 crore versus net loss of Rs 1.49 crore.
- Ebitda up 17.5 percent at Rs 11.4 crore.
- Margin at 5 percent versus 3.1 percent.
- Deferred tax credit of Rs 245 crore for the quarter under review.
HDFC Bank (Q3, YoY)
- Net interest income up 21.9 percent to Rs 1,2576 crore.
- Net profit up 20.3 percent to Rs 5,585.9 crore.
- Core net interest margin seen at 4.3 percent.
- GNPA at 1.38 percent versus 1.33 percent (QoQ).
- Net NPA at 0.42 percent versus 0.40 percent (QoQ).
- Philips Carbon Black: FID FDS Mauritius sold 10.3 lakh shares or 0.60 percent equity at Rs 186.64 each.
- Pitti Engineering: Bank of Baroda sold 3.45 lakh shares or 1.16 percent equity at Rs 64.57 each.
- Rubfila International promoter Ruchit Bharat Patel acquired 1.2 lakh shares between Oct. 26 and Nov. 11, 2018.
- Rico Auto Industries promoters acquired 34,000 shares from Jan. 16-17.
- Aarti Industries promoter Chandrakant Gogri sold 24,300 shares from Jan. 15-16.
(As reported on Jan. 18)
Money Market Update
- The rupee on Friday closed at 71.19/$ versus Thursday’s closing of 71.04/$.
- Nifty January futures closed trading at 10927, premium of 20 points.
- Max open interest for January series at 11,000 strike value call (open interest at 35.9 lakh shares).
- Max open interest for January series at 10,700 strike value put (open interest at 37.5 lakh shares).
Stocks In F&O Ban
- Adani Power
- Jet Airways
- Nifty PCR at 1.56 versus 1.52.
- Nifty Bank PCR at 1.14 versus 1.09.
On L&T Buyback
- SEBI rejects buyback; no set-back to ROE expansion.
- Believe the regulator is mistaken in looking at consolidated financials.
- Think L&T’s board could approve a one-time large dividend of Rs 53 per share this week.
- Recommend buying L&T as it is a good proxy for domestic capex.
- Denial by SEBI on the technicality of leverage comes as a negative surprise.
- Hardly any leeway to scale down the buyback size; could fund buyback with E&A sale proceeds.
- Better than expected core P&L performance in Q3 may assuage worries around execution.
On HDFC Bank
- Maintained ‘Overweight’ with a price target of Rs 2,400.
- December quarter review: in-line earnings; loan growth at 24 percent remains solid.
- Term deposit strategy paying off well.
- Overall asset quality steady; Agri showing some stress.
- Maintained ‘Buy’; hiked price target to Rs 2,530 from Rs 2,454.
- Core operating performance strong, but asset quality slips a tad.
- GNPL rose to 1.38 percent, with slippages higher at 2.1 percent, largely impacted by agri segment.
- Due to challenges in operating environment, expect a flight to safety in favour of private banks.
- Maintained ‘Buy’; hiked price target to Rs 2,600 from Rs 2,500.
- Healthy margins/fees; falling cost-to-income ratios.
- Marginally higher NPAs due to farm-loan waivers.
- Bank expects farm loan NPAs to remain high in run-up to general elections.
- Maintained ‘Outperform’; hiked price target to Rs 360 from Rs 350.
- December quarter results was around the margin beat; expect margin normalisation to continue.
- Revenue growth to remain below industry due to uncertainty in the healthcare business.
- Hike EPS estimates for FY19-21 by 1-2 percent.
- Maintained ‘Sell’; hiked price target to Rs 295 from Rs 285.
- Successive sharp margin beat led by PDD reversal and subcontractor decline.
- Hike EPS estimates for FY19-21 by 4-6 percent.
- Retain Sell given lack of convincing growth acceleration.
- Maintained ‘Neutral’; hiked price target to Rs 385 from Rs 350.
- Improving gradually on revenues, steadfastly on margins.
- Q4 guidance factors in macro uncertainty.
- Hike EPS estimates for the next two financial years by 5 percent.
On SBI Life Insurance
- Maintained ‘Buy’; hiked price target to Rs 760 from Rs 700.
- December quarter review: Strong protection growth, persistency steady.
- Improving productivity of banca and agency channel should sustain growth.
- SBI Life made MTM provision for investment depreciation, which could reverse.
- Maintained ‘Buy’ with a price target of Rs 830.
- New business powers strong December quarter show.
- Protection segment remains the key focus area.
- New bancassurance tie-ups to further strengthen distribution network.
Citi on L&T Infotech
- Maintained ‘Buy’; hiked price target to Rs 2,100 from Rs 2,045.
- Strong December quarter; remains our top mid-cap pick.
- EBIT margin rose due to an increase in offshore mix and better utilisation.
- Premium valuations to sustain given strong visibility and good execution.
Citi on AU Small Finance
- Maintained ‘Sell’; hiked price target to Rs 535 from Rs 490.
- December quarter review: Healthy book growth, slower income.
- Growth from retail; margins down but incremental spreads rising.
- Non-interest income hitch; CASA ratio lower but more granular.