A red light and green arrow are displayed on a light-emitting diode (LED) traffic signal above vehicles moving along a road in Tokyo, Japan (Photographer: Akio Kon/Bloomberg)  

All You Need To Know Going Into Trade On Jan. 28 

Asian stocks were mixed early Monday at the start of a crucial week for global trade and a policy meeting of the Federal Reserve.

U.S. futures slipped, Japanese shares posted modest losses while Korean equities were little changed. Australian stocks were closed for a holiday. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.20 percent to 10,814 as of 7:05 a.m.

Short on time? well, then listen to this podcast for a quick summary of the article!

BQ Live

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

U.S. Market Check

  • U.S. stocks rose as corporate earnings bolstered confidence in the economy and President Donald Trump said U.S. lawmakers agreed to re-open the government on an interim basis.
  • The yield on 10-year Treasuries fell one basis point to 2.75 percent.

Asian Cues

  • Japan’s Topix falls 0.2 percent.
  • Kospi little changed. S&P 500 futures fall 0.2 percent.
  • The S&P 500 Index rose 0.9 percent Friday, while the Nasdaq Composite Index gained 1.3 percent.

Also read: Here Are Three Scenarios for U.S.-China Trade Talks This Week

Commodity Cues

  • West Texas Intermediate fell 0.7 percent to $53.32 a barrel.
  • Gold fell 0.2 percent to $1,300.02 an ounce.

Indian ADRs

All You Need To Know Going Into Trade On Jan. 28 

Stocks To Watch

  • Coffee Day Enterprises said it would take required action in the next few days to get a portion of IT firm Mindtree shares -- owned by the company and its promoter VG Siddhartha -- released by the Income Tax Department. Meanwhile, L&T is said to have taken an enabling resolution to strike a deal to buy Siddhartha’s 21 percent stake in Mindtree, the Times of India reports, citing people directly aware of the matter.
  • Federal Bank appointed Dilip Sadarangani as part time chairman of the bank with effect from Jan. 25.
  • The U.S. FDA completed inspection of Lupin’s Pithampur with six observations. The company said it was confident of addressing the observations satisfactorily.
  • Zee Entertainment Enterprises clarified that there was no information or any announcement which the company has which had the bearing on its falling stock prices. Its group companies Essel Propack and Dish TV also clarified to the exchanges that its promoters had no linkages to media reports.
  • HAL said that competent authority had granted approval for enhancement of working capital limit from Rs 2,500 crore to Rs 6,050 crore as sanctioned by the State Bank of India and Consortium Banks.
  • Emami entered into an agreement for acquisition of ‘Crème 21’. As per calculations the cost of acquiring this business stands at around Rs 100 crore.
  • The Competition Commission of India approvals:
    CCI approved the acquisition of controlling stake of Hathway Cable and Datacom Limited and Den Networks by Reliance Industries’ Jio.
  • CCI approved the amalgamation of GlaxoSmithKline Consumer Healthcare Limited into Hindustan Unilever Limited.
  • CCI approved the acquisition of shares in Zydus Wellness Limited by True North Funds, Zydus Family Trust, Cadila Healthcare and Pioneer Investment Fund.
  • Spicejet, Jet Airways, InterGlobe Aviation: Government of India approved 235 new routes under India RCS scheme. All three aviation companies wind routes under the scheme and SpiceJet also received nod for turbo aviation seaplane proposals. (Bloomberg News)
  • Entertainment Network’s U.S arm to start operations commercially from Jan. 26 in New York and New Jersey. On Dec. 21, the company had entered into a time brokerage contract with U.S.-based broadcaster to broadcast radio programs and content to target South Asian community.
  • Vakrangee appointed Anil Khanna as the Managing Director and group Chief Executive Officer with effect from Jan. 25.
  • McNally Bharat Engineering received construction order worth Rs 72.6 crores from ESR Warehousing.
  • ICRA revised the long term facility of worth Rs 25 crore of Hindustan Media Ventures from ‘stable’ to ‘negative’ and re-affirmed its rating at ‘AA+’.
  • NBCC received order worth Rs 228 crore for redevelopment of WHO building in New Delhi.
  • DHFL proposed strategic plan for next 18-24 months. Current commercial paper stands at 1 percent of borrowings. The company said that it initiated steps to sell non-core assets and expects to close a major one by Jan. 30. Expected Leverage to come down from 9.27 to 7.5.

Also read: Zee Promoters Say Reached Understanding With Lenders On Pledged Shares  

Earnings To Watch

  • Escorts
  • Bank of India
  • Canara Bank
  • CEAT
  • Balaji Amines
  • Century Textiles & Industries
  • Chennai Petroleum
  • City Union Bank
  • Godrej Properties
  • Maharashtra Scooters
  • Mahindra Lifespace Developers
  • Music Broadcast
  • Orient Electric
  • Persistent Systems
  • Piramal Enterprises
  • Praj Industries
  • Ramco Systems
  • Rane Brake Lining
  • RBL Bank
  • Sanwaria Consumer
  • Setco Automotive
  • Shalby
  • Shoppers Stop
  • Shriram Transport Finance
  • Tata Power
  • TTK Prestige
  • Vaibhav Global
  • Wockhardt
  • Zen Technologies
  • Siyaram Silk Mills
  • Savita Oil Technologies
  • Nucleus Software Exports
  • Maithan Alloys
  • Intellect Design Arena
  • K.P.R. Mill

Earnings Reaction To Watch

L&T (Q3, YoY)

  • Revenue up 24 percent at Rs 35,709 crore.
  • Net profit up 37 percent at Rs 2,042 crore.
  • Ebitda up 27 percent at Rs 3,997 crore.
  • Margins at 11.2 percent versus 10.9 percent.
  • Other income higher at Rs 606 crore versus Rs 214 crore.

Also read: Q3 Results: L&T’s Profit Rises For Twelfth Straight Quarter

Gruh Finance (Q3, YoY)

  • Net interest income down 7.7 percent at Rs 166.7 crore.
  • Net profit up 6.8 percent at Rs 97 crore versus Rs 90.8 crore.
  • Provisions and write-offs of Rs 26 crore in base quarter.

GATI (Q3, Consolidated YoY)

  • Revenue up 7.2 percent at Rs 480.6 crore.
  • Net profit up 27.6 percent at Rs 3.7 crore.
  • Ebitda flat at Rs 24 crore.
  • Margins at 5 percent versus 5.3 percent.

Mahindra & Mahindra Financial Services (Q3, YoY)

  • Net Interest Income up 20.1 percent at Rs 1,204 crore.
  • Net profit down 19.6 percent at Rs 318.7 crore.
  • GNPA at 7.7 percent versus 9 percent (QoQ).
  • NNPA at 5.8 percent versus 6 percent (QoQ).
  • Exceptional gain of Rs 65 crore in base quarter.

Nilkamal (Q3. YoY)

  • Revenue up 7.9 percent at Rs 563.9 crore.
  • Net profit down 16.9 percent at Rs 27.5 crore.
  • Ebitda down 24.4 percent at Rs 50.1 crore.
  • Margins at 8.9 percent versus 12.7 percent.
  • Stock purchase expenses up 38 percent at Rs 138.6 crore.

Saregama (Q3, YoY)

  • Revenue up 60.7 percent at Rs 150.6 crore.
  • Net profit up 9.5 times at Rs 12.3 crore.
  • Ebitda up 4.2 times at Rs 19.3 crore.
  • Margins at 12.8 percent versus 4.9 percent.

V2 Retail (Q3, YoY)

  • Revenue up 58.2 percent at Rs 241.1 crore.
  • Net profit up 72.3 percent at Rs 23.6 crore.
  • Ebitda up 34.2 percent at Rs 30.6 crore.
  • Margin at 12.7 percent versus 15 percent.

Kirloskar Brothers (Q3, YoY)

  • Revenue up 17.2 percent at Rs 518 crore.
  • Net profit up 41.8 percent at Rs 12.9 crore.
  • Ebitda up 48.6 percent at Rs 37 crore.
  • Margin at 7.1 percent versus 5.6 percent.

Shriram City Union Finance (Q3, YoY)

  • Net interest income down 3.1 percent at Rs 909.6 crore.
  • Net profit up 1.9 percent at Rs 258.8 crore.
  • AUM up 9.6 percent at Rs 28,795 crore.
  • NIM at 12.43 percent versus 13.84 percent (QoQ).
  • GNPA at 9.63 percent versus 10.02 percent (QoQ).
  • NNPA at 4.96 percent versus 5.19 percent (QoQ).

Poly Medicure (Q3, YoY)

  • Revenue up 18.3 percent at Rs 148.7 crore.
  • Net profit up 1.8 percent at Rs 16.8 crore.
  • Ebitda up 5.1 percent at Rs 31.1 crore.
  • Margin at 20.9 percent versus 23.5 percent.

Foseco (Q3, YoY)

  • Revenue down 2.9 percent at Rs 89.2 crore.
  • Net profit down 10.3 percent at Rs 7 crore.
  • Ebitda down 11.1 percent at Rs 11.2 crore.
  • Margin at 12.6 percent versus 13.7 percent.

Bulk Deals

Dish TV

  • ECL Finance sold 1.24 crore shares (0.75 percent) at Rs 23.2 each.
  • IIFL Wealth Finance sold 1.2 crore shares (0.73 percent) at Rs 24.23 each.

Satin Credit Network

  • Norges Bank sold 2.92 lakh shares (0.6 percent) at Rs 257.5 each.

Trading Tweaks

Stocks Moving To ASM Framework:

  • AGC Networks
  • Everest Organics
  • IL&FS Transportation Networks
  • Mishtann Foods
  • Navkar Corporation
  • Sadhana Nitro Chem
  • Shankara Building Products
  • Dolat Investments
  • Grandeur Products
  • Raj Television Network
  • Satia Industries
  • SPL Industries.

Insider Trading

  • Maharashtra Seamless promoter and director Saket Jindal acquired 17,500 shares on Jan. 22.
  • Tourism Finance Corporation of India promoter LIC sold 1.5 lakh shares between Jan. 22-24.
  • Astra Microwave Products promoter group Prathap Reddy sold 9,100 shares on Jan. 15.

Money Market Update

  • The rupee on Friday closed at 71.18/$ against Thursday’s closing of 71.07/$.

F&O Cues

  • Nifty January futures closed trading at 10,786, with a premium of 5 points.
  • Maximum open interest for January series at 11,000 call (OI at 44.3 lakh shares)
  • Maximum open interest for January series at 10,700 put (OI at 30 lakh shares)

Stocks In F&O Ban

  • Jet Airways
  • Reliance Capital
  • Jain Irrigation

Put-Call Ratio

  • Nifty PCR at 1.37 versus 1.44
  • Nifty Bank PCR at 1.03 versus 1.13
All You Need To Know Going Into Trade On Jan. 28 

Brokerage Radar

On Zee Entertainment

Nomura

  • Maintained ‘Buy’ with a price target of Rs 671.
  • Management clarified that they have not been investigated by any agency over alleged fraud.
  • Zee promoters optimistic on stake sale.
  • Believe Zee is on track to deliver 17 percent and 13 percent CAGR in advertise and subscription revenue respectively over FY18-21.

Deutsche Bank Research.

  • Maintained ‘Buy’ with price target of Rs 575.
  • Mgmt. believes the fall in share price was majorly driven by Futures and Options.
  • Stock price movement not have a bearing on the stake sale process.
  • Buy rating premised on multiple fundamental reasons; Expect earnings CAGR of 19 percent over FY19-21.

CLSA

  • Maintained ‘Buy’ with a price target of Rs 670.
  • Stock plunge on high promoter pledging and fear of pledge being invoked.
  • Business operations remain on a strong growth trajectory.
  • Zee’s valuations compelling on sharp fall; see 19 percent earnings CAGR over FY19-21.

More Calls

UBS on Maruti Suzuki

  • Maintained ‘Buy’; cut price target to Rs 8,200 from Rs 9,000.
  • December Quarter Review: Big miss on margins to reverse partly.
  • Price hikes to reverse margins even without any reversal in commodity prices and FX.
  • New Ertiga doing well but overall outlook weak; Low inventory post December quarter.

Jefferies on Mahindra Finance

  • Maintained ‘Buy’; hiked price target to Rs 500 from Rs 490.
  • December quarter’s net profit miss on one-off cost and higher taxes.
  • Margins resilient despite rising funding costs; Solid loan growth.
  • GNPA lower QoQ; further improvement likely in March quarter.