A graph shows the movement of the Shenzhen Stock Exchange (SZSE) Component Index at a securities brokerage in Beijing, China. (Photographer: Qilai Shen/Bloomberg)

All You Need To Know Going Into Trade On Jan. 29 

Asian stocks declined Tuesday after their U.S. counterparts retreated on concerns the trade war with China is hitting corporate profits.

Shares posted modest losses across the region, with technology stocks underperforming after the American prosecutors filed criminal charges against Huawei Technologies China’s largest smartphone maker.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.2 percent to 10,665 as of 6:50 a.m.

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

U.S. Market Check

  • U.S. stocks fell after Caterpillar and Nvidia blamed slowing global growth for disappointing results, augmenting concern the trade war with China is hitting corporate profits.
  • The yield on 10-year Treasuries was steady at 2.74 percent.

Also read: U.S. Ramps Up Huawei Fight With Iran, Trade-Secret Charges

Asian Cues

  • Japan’s Topix Index fell 0.3 percent.
  • S&P/ASX 200 fell 0.6 percent.
  • Korea’s Kospi fell 0.2 percent.
  • S&P 500 futures declined 0.3 percent.

Also read: China Weakness Spreads Far and Wide, From Caterpillar to Nvidia

Commodity Cues

  • Brent crude ended 2.8 percent lower at $59.93 per barrel.
  • West Texas Intermediate oil futures steadied at $52.02 a barrel after falling 3 percent Monday.
  • Gold was little changed at $1,303.68 an ounce.

Also read: Saudis Pledge Even Deeper Oil Cuts in February Under OPEC+ Deal

Key Events To Watch This Week

  • Chinese President Xi’s top economic aide, Vice Premier Liu He, will meet with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Wednesday and Thursday.
  • On Tuesday the U.K. Parliament votes on amendments to Theresa May’s Brexit deal with the EU. The EU Parliament debates Brexit on Wednesday.
  • Wednesday Fed Chairman Jerome Powell holds a news conference after the FOMC rate decision.

Indian ADRs

All You Need To Know Going Into Trade On Jan. 29 

Stocks To Watch

  • Persistent Systems: Board approved buyback of up to 30 lakh shares or 3.75 percent equity at Rs 750 per share aggregating to Rs 225 crore. The buyback is at 33 percent premium to the current market price.
  • Zee Media Corporation: Vishwapati Trivedi resigned from the post of Independent Director with effect from Jan. 27 citing that he will not be able to contribute in ‘turbulent’ times.
  • Syndicate Bank: Determined the issue price of Rs 37.75 per share in respect of preferential issue aggregating to Rs 728 crore to promoter-Government of India. The bank says that at the determined issue price it can allot up to 43.2 crore shares against a capital infusion of Rs 1,632 crore. With these actions, Government of India’s stake in the bank will increase from 76.16 percent to 81.23 percent.
  • Aurionpro Solutions: Implements smart solutions in Noida Metro Project by automation of fare collection. This installation has been done between a consortium between SBI, SC Soft and the company itself.
  • KNR Constructions: To sell its entire shareholding its JV with Cube Highways and Infra to the latter for Rs 73.6 crore in a phased manner.
  • Power Grid Corporation of India: Arm commissioned 765 Kv transmission line in Tamil Nadu on Jan. 26.
  • Astron Paper & Board Mill: Arm’s plant to remain shut from Jan. 30 to Feb. 6 for maintenance work.

Also read: A TV Drama Spawned in India's Financial Shadows

Nifty Earnings To Watch

  • Axis Bank
  • Bajaj Finance
  • Bajaj Finserv
  • HCL Technologies
  • Housing Development Finance Corporation

Other Earnings To Watch

  • Apar Industries
  • Apcotex Industries
  • Bank of Baroda
  • Bharat Financial Inclusion
  • Bliss GVS Pharma
  • Cera Sanitaryware
  • Crompton Greaves Consumer Electricals
  • DCM Shriram
  • Eimco Elecon (India)
  • Electrosteel Castings
  • Eris Lifesciences
  • Godrej Consumer Products
  • Granules
  • Hawkins Cookers
  • Hester Biosciences
  • Himadri Speciality Chemical
  • Info Edge
  • Johnson Controls
  • Kalyani Forge
  • Kansai Nerolac
  • KEC International
  • KEI Industries
  • Mahanagar Gas
  • Oriental Bank of Commerce
  • Panasonic Carbon
  • Ramco Industries
  • SORIL Infra Resources
  • Strides Pharma Science
  • Tata Coffee
  • Tata Steel BSL
  • Teamlease Services
  • Ramco Cements
  • WABCO
  • Welspun Enterprises
  • Pokarna
  • Kingfa Science & Technology
  • Indiabulls Integrated Services
  • Fertilizers and Chemicals Travancore

Earnings Reaction To Watch

Bank of India (Q3, YoY)

  • Net Interest Income up 33.2 percent at Rs 3,332.2 crore.
  • Net loss at Rs 4,737.6 crore versus net loss of Rs 2,341.2 crore.
  • Provisions at Rs 9,179 crore versus Rs 2,828 crore (QoQ).
  • GNPA at 16.31 percent versus 16.36 percent (QoQ).
  • NNPA at 5.87 percent versus 7.64 percent (QoQ).
  • Reports large loss as it steps up provisions.
  • Net NPA below threshold for RBI’s prompt corrective action.

Shoppers Stop (Q3, YoY)

  • Revenue up 2.9 percent at Rs 991.1 crore.
  • Net profit up 2.7 times at Rs 44.3 crore.
  • Ebitda up 12.2 percent at Rs 89.1 crore.
  • Margin at 9 percent versus 8.2 percent.
  • Exceptional loss of Rs 16.6 crore in base quarter.

Praj Industries (Q3, YoY)

  • Revenue up 33 percent at Rs 330.3 crore.
  • Net profit up three times at Rs 22.4 crore.
  • Ebitda up 42.5 percent at Rs 23.8 crore.
  • Margin at 7.2 percent versus 6.7 percent.
  • Other Income of Rs 7.4 crore in the current quarter.

CEAT (Q3, YoY)

  • Revenue up 8.9 percent at Rs 1,713.9 crore.
  • Net profit down 36.1 percent at Rs 52.8 crore
  • Ebitda down 23.8 percent at Rs 142.5 crore versus Rs 187 crore.
  • Margins at 8.3 percent versus 11.9 percent.
  • Raw material costs up 24 percent at Rs 1181.9 crore.

Persistent Systems (Q3, QoQ)

  • Revenue up 3.5 percent at Rs 864 crore.
  • Profit up 4.1 percent at Rs 91.7 crore.
  • EBIT up 2.9 percent at Rs 106 crore.
  • EBIT margin flat at 12.3 percent.
  • Declared dividend of Rs 8 per share.

Siyaram Silk Mills (Q3, YoY)

  • Revenue up 13.4 percent at Rs 446.3 crore.
  • Net profit down 9.9 percent at Rs 20.1 crore.
  • Ebitda up 4.6 percent at Rs 52.7 crore.
  • Margin at 11.8 percent versus 12.8 percent.
  • Finance cost up 49 percent at Rs 13.7 crore.

Music Broadcast (Q3, YoY)

  • Revenue up 14.2 percent at Rs 87 crore.
  • Net profit up 37.8 percent at Rs 16.4 crore.
  • Ebitda up 22.7 percent at Rs 28.6 crore.
  • Margin at 32.9 percent versus 30.6 percent.
  • Phase III Market Utilisation at 53 percent.
  • Inventory Utilisation for 39 radio stations moved up to 60-70 percent.

Chennai Petroleum (Q3, YoY)

  • Revenue up 14.9 percent at Rs 9,865.8 crore.
  • Net loss at Rs 363 crore versus net profit of Rs 392 crore.
  • Ebitda loss at Rs 345.4 crore versus Ebitda profit at Rs 833.8 crore.
  • Raw material cost up 15 percent at Rs 8,856.4 crore.

Bulk Deals

  • Zee Entertainment Enterprises: DVI Fund Mauritius acquired 89.7 lakh shares or 0.93 percent equity at Rs 343.05 each
  • Sadbhav Engineering: Promoter Shantaben Vishnubhai Patel acquired 9.52 lakh shares or 0.55 percent equity at Rs 190 each.

Trading Tweaks

  • Sadhana Nitrochem ex-date for stock split from Rs 10 to Rs 5 per share.
  • Seamec, 5paisa Capital, Vivimed Labs, SKIL Infrastructure to move into short term ASM Framework.
  • HEG, Thirumalai Chemicals, Prabhat Dairy price band revised to 10 percent
  • SMS Lifesciences price band revised to 5 percent

Who’s Meeting Whom

  • PVR to meet investors from Jan. 29-31

Insider Trading

  • Thirumalai Chemicals promoter groups sold 92,000 shares on Jan. 28.
  • Confidence Petroleum promoter Confidence LPG Bottling acquired 1.2 lakh shares on Jan. 25.
  • KPIT Technologies promoters sold 1.48 crore shares on Jan. 24.
  • Future Retail promoter Future Corporate Resources acquired 7.55 lakh shares from Jan. 24-25.

As reported on Jan. 29)

Rupee

  • The rupee closed at 71.11/$ on Monday from 71.18/$ on Friday.

Also read: Like Turkey, India Turns to Central Bank for Help Before Elections

F&O Cues

  • Nifty January futures closed trading at 10677, premium of 15 points.
  • Max open interest for January series at 11,000 Call (open interest at 50.3 lakh shares).
  • Max open interest for January series at 10,500 Put (open interest at 28.5 lakh shares).

Stocks In F&O Ban

  • In ban: Jain Irrigation, Adani Enterprises, Adani Power
  • Out of ban: Jet Airways, Reliance Capital

Put-Call Ratio

  • Nifty PCR at 1.23 vs 1.37
  • Nifty Bank PCR at 0.78 vs 1.03
All You Need To Know Going Into Trade On Jan. 29 

Brokerage Radar

On Persistent Systems

CLSA

  • Maintained ‘Buy’; cut price target to Rs 700 from Rs 780.
  • Mixed revenue performance: Alliance & services weak but digital bounces back.
  • Margin surprises positively, but gains will have to be reinvested.
  • Buy due to a cheap valuation and buyback.

Investec

  • Maintained ‘Buy’; hiked price target to Rs 840 from Rs 800.
  • Solid margin performance; growth back in digital.
  • Margin performance in December quarter was strong; refrain from extrapolating.
  • Commentary suggest improving growth trajectory.

On Tata Power

CLSA

  • Maintained ‘Buy’; cut price target to Rs 90 from Rs 96.
  • December quarter’s core Ebitda fell due to domestic market obligation.
  • Indonesian coal spread collapses 39 percent; highest contraction in 13 quarters.
  • December quarter was one of its weakest quarters, but this could mark the bottom for several reasons.

Macquarie

  • Maintained ‘Neutral’ with a price target of Rs 83.
  • Earnings disappoint on account of higher under-recovery and lower profits in coal mining business.
  • Coal business impacted by Indonesia’s domestic market obligation rule.
  • Still await CERC’s final decision on tariffs for Mundra plant.

On Shriram Transport

Macquarie

  • Maintained ‘Outperform’ with a price target of Rs 1,320.
  • December quarter was in line with estimates; AUM growth slowed down.
  • Marginal deterioration in asset quality and NIM broadly stable.
  • Await management commentary on liquidity position and trajectory in cost of funds.

JPMorgan

  • Maintained ‘Overweight’ with a price target of Rs 1,600.
  • December quarter review: Steady performance in a challenging quarter.
  • Growth slows, but ROE construct maintained.
  • Believe stock offers reasonable value; any reorganization of corporate structure to be watched.

More Calls

Investec on RBL Bank

  • Maintained ‘Buy’ with a price target of Rs 660.
  • Strong top line momentum led by credit cards; On target to touch 15 percent RoE by the next financial year.
  • Higher provision on MFI loans post demon and high agri stress caused by farm loan waiver.
  • Growth should come through and premium valuations are sustainable.

Emkay on Escorts

  • Downgraded to ‘Hold’ from ‘Buy’; cut price target to Rs 660 from Rs 830.
  • Management expects domestic tractor industry growth to taper from 19 percent in December quarter to 3-5 percent in the March quarter.
  • Outlook for the next financial year remains uncertain due to factors such as high base and monsoons.
  • Expect revenue growth to taper from 23 percent in the current financial year; project it to grow 8 percent and 2 percent in the next two financial years respectively.

CLSA on Godrej Properties

  • Maintained ‘Buy’ with a price target of Rs 1,024.
  • Six new launches drive record sales in tough quarter.
  • Cash flow positive and new project additions to pick-up pace.
  • Consolidation benefits unfolding; maintain Godrej as top sector pick.