All You Need To Know Going Into Trade On Jan. 31
People drinking tea in India. (Photographer: Dhiraj Singh/Bloomberg) 

All You Need To Know Going Into Trade On Jan. 31

Asian stocks opened higher Friday, after a late-session rally in U.S. shares, as investors continued to gauge the implications of the spreading coronavirus.

Stocks climbed in Japan, South Korea and Australia, with a regional Asian benchmark on track for its first gains in seven sessions. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.36 percent to 12,082.50 as of 7 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 advanced and bonds retreated after the World Health Organization stepped up efforts to combat the deadly coronavirus by declaring an international health emergency.
  • Oil recovered in Asian trade after the World Health Organization said trade and travel restrictions were not necessary in response to the spread of coronavirus.

Get your daily fix of global markets here.

Key Events/Data To Watch

  • The Budget Session of Parliament begins today with the President's address. Finance Minister Nirmala Sitharaman will table the economic survey in Parliament at noon.
  • The government will release annual estimate GDP data for 2018-19.
  • India to release fiscal deficit data for April-December period.
  • Government to release eight infrastructure industries data for December.

Earning Reactions To Watch

Tata Motors (Q3, YoY)

  • Revenue fell 6.8 percent to Rs 71,676 crore. (Estimate: Rs 74,052 crore)
  • Net profit at Rs 1,738.30 crore versus net loss at Rs 26,993 crore. (Estimate: Rs 673 crore)
  • Ebitda rose 20.7 percent to Rs 7,393.72 crore. (Estimate: Rs 8,078 crore)
  • Margin stood at 10.3 percent versus 8 percent. (Estimate: 10.9 percent)

Also read: Tata Motors Q3 Results: Profit Beats Estimates Even As Sales Fall

JLR

  • Revenue rose 2.8 percent at 6,400 million pounds.
  • Margin stood at 10.8 percent versus 7.3 percent.
  • Net profit at 372 million pounds.
  • China retail sales grew rose by 24.3 percent thereby increasing revenue.

Bharti Infratel (Q3, QoQ)

  • Revenue rose 1 percent to Rs 3,673 crore. (Estimate: Rs 3,646 crore)
  • Net Profit fell 17.1 percent to Rs 799 crore. (Estimate: Rs 791 crore)
  • Ebitda was flat at Rs 1877 crore versus Rs 1,878 crore. (Estimate: Rs 1899 crore)
  • Margin stood at 51.1 percent versus 51.6 percent. (Estimate: 52.1 percent)

Marico (Q3, YoY)

  • Revenue fell 2 percent to Rs 1,824 crore. (Estimate: Rs 1,858 crore)
  • Net profit rose 10 percent to Rs 276 crore. (Estimate: Rs 268 crore)
  • Ebitda rose 3.9 percent to Rs 373 crore. (Estimate: Rs 378 crore)
  • Margin stood at 20.4 percent versus 19.3 percent. (Estimate: 20.3 percent)

Amber Enterprises (Q3, YoY)

  • Revenue rose 52.2 percent to Rs 788.4 crore. (Estimate: Rs 568.9 crore)
  • Net profit rose 6 times to Rs 22.6 crore. (Estimate: Rs 9.4 crore)
  • Ebitda rose 87.2 percent to Rs 54.3 crore. (Estimate: Rs 54.3 crore)
  • Margin stood at 6.9 percent versus 5.6 percent (Estimate: 6.3 percent)

JK Tyre & Industries (Q3, YoY)

  • Revenue fell 19.4 percent to Rs 2,199.8 crore.
  • Net profit fell 58.8 percent to Rs 11 crore.
  • Ebitda fell 7.9 percent to Rs 244.1 crore.
  • Margin stood at 11.1 percent versus 9.7 percent.

Bharat Electronics (Q3, YoY)

  • Revenue fell 16.8 percent to Rs 2,278.1 crore.
  • Net profit fell 56.8 percent to Rs 222.7 crore.
  • Ebitda fell 53.6 percent to Rs 356.7 crore.
  • Margin stood at 15.7 percent versus 28.1 percent.

Persistent Systems (Q3, QoQ)

  • $ Revenue rose 3.1 percent to $129.43 million.
  • Revenue rose 4.3 percent to Rs 922.7 crore.
  • Net profit rose 2.2 percent to Rs 87.9 crore.
  • EBIT rose 1.9 percent to Rs 80.7 crore.
  • Margin stood at 8.7 percent versus 9 percent.

Equitas Holdings (Q3, YoY)

  • Net Interest Income rose 21.7 percent to Rs 410.7 crore.
  • Net profit rose 46.7 percent to Rs 78.5 crore.
  • Advances rose 37 percent to Rs 14615 crore.
  • GNPA at 2.86 percent versus 2.86 percent QoQ.
  • NNPA at 1.73 percent versus 1.63 percent QoQ.

Laurus Labs (Q3, YoY)

  • Revenue rose 37.8 percent to Rs 729.6 crore.
  • Net profit rose 4.1 times to Rs 73.5 crore.
  • Ebitda rose 68.8 percent to Rs 148.2 crore.
  • Margin stood at 20.3 percent versus 16.6 percent.

MCX (Q3, YoY)

  • Revenue rose 16.1 percent to Rs 89.3 crore.
  • Net profit rose 32.4 percent to Rs 55.6 crore.
  • Ebitda rose 87.6 percent at Rs 39.2 crore.
  • Margin stood at 43.9 percent versus 27.2 percent.

Nifty Earnings To Watch

  • Hindustan Unilever
  • ITC
  • Power Grid Corporation of India
  • State Bank of India
  • Tech Mahindra
  • Vedanta

Other Earnings To Watch

  • Jubilant Life Sciences
  • Arvind
  • V-Guard Industries
  • Kansai Nerolac Paints
  • Shoppers Stop
  • Sun Pharma Advanced Research
  • Aditya Birla Capital
  • AIA Engineering
  • Alembic
  • Bank of India
  • Vinate Organics
  • RPG Life Sciences
  • Birlasoft
  • Butterfly Gandhimathi Appliances
  • Narayana Hrudayalaya
  • Castrol
  • Coromandel International
  • Elecon Engineering
  • Everest Industries
  • IFB Agro Industries
  • Indian Energy Exchange
  • Kirloskar Oil Engines
  • LG Balakrishnan & Bros
  • Magma Fincorp
  • National Fertilizers
  • Navneet Education
  • NCL Industries
  • Ponni Sugars (Erode)
  • Ruchi Soya Industries
  • Saregama
  • Texmaco Infrastructure & Holdings
  • Timken India
  • Tourism Finance Corporation of India
  • Aegis Logistics
  • Future Consumer
  • J&K Bank

Indian ADRs

All You Need To Know Going Into Trade On Jan. 31

Stocks To Watch

Kotak Mahindra Bank has reached an agreement with the Reserve Bank of India, settling long-standing differences between the lender and its regulator over promoter shareholding. In a notification to stock exchanges on Thursday, Kotak Mahindra Bank said the RBI has conveyed its in-principle agreement of the following:

  • Promoters voting rights in the bank to be capped at 20 percent of paid-up voting equity share capital until March 31, 2020.
  • Promoters’ voting rights in the bank to be capped at 15 percent from April 1, 2020 onwards.
  • Promoters’ shareholding in the bank to be reduced to 26 percent within six months from the date of final approval of the RBI.
  • Thereafter, the promoters will not purchase any further paid up voting equity shares’ of the Bank till the percentage of promoters’ shareholding reaches 15 percent.

Also read: RBI, Kotak Mahindra Bank Reach Agreement On Promoter Shareholding Tussle

  • Motherson Sumi Systems: Board gave in-principle approval a reorganisation of business within the group which will demerge domestic wiring harness business of the company into a newly formed legal entity with mirror shareholding, which shall be listed. Board also approved a proposal to merge 49 percent stake held by Samvardhana Motherson International in Samvardhana Motherson Automotive Systems Group into the company.
  • REC, PFC: The proposed merger of REC with Power Finance Corporation hit a roadblock and is not likely to happen in near future as it would violate RBI norms on the exposure of non-banking financial companies, PTI reported quoting sources.
  • Nocil: Board approved the merger of promoter entities Suremi and Sushripada into the company. Both these entities hold 17.95 percent stake in the company. Pursuant to the scheme, there will be no change in shareholding of promoter group and public shareholders.
  • Oriental Carbon & Chemicals said that the first phase of Insoluble Sulphur Plant and Sulphuric Acid Plant are expected to be commissioned on schedule by end of March 2021.
  • PNC Infratech said that its bid for EPC contract in Haryana worth Rs 639 crore stands cancelled, as NHAI has re-invited bids for the said project from eligible contractors. The company was the lowest bidder when it received the contract.
  • Strides Pharma: Board approved the merger of the company’s wholly-owned arm Vivimed Life Sciences with self.
  • Shriram City Union Finance: Board approved the establishment of U.S. Global Medium-Term Notes Program for a maximum limit of up to $2 billion for fundraising via the issue of foreign currency debt or rupee-denominated bonds overseas to foreign (global) investors.
  • Wipro: CEO and MD Abidali Neemuchwala steps down due to family commitment. He will hold office till a new successor is appointed.

Brokerage Radar

UBS on Marico

  • Maintained ‘Neutral’ with a price target of Rs 400.
  • Muted performance in a tough quarter.
  • Demand headwinds in rural impact volume growth.
  • New product pipeline could be key to recovery.

Emkay on Colgate

  • Maintained ‘Buy’; cut price target to Rs 1,620 from Rs 1,720.
  • Q3 performance was marginally below expectations; muted volume growth.
  • Margins lower due to higher ad spends; outlook remains positive.
  • Cut FY21-22 earnings estimates by 6-7 percent; valuations are reasonable.

Morgan Stanley on Indian Oil Corp

  • Maintained ‘Overweight’ with a price target of Rs 179.
  • Core earnings beat our estimates with robust fuel retailing margins.
  • Surprisingly lower than-expected decline in petrochemical profitability.
  • Refining margins broadly in line; higher opex disappointed.

Morgan Stanley on Bharti Infratel

  • Maintained ‘Underweight’ with a price target of Rs 227.
  • December quarter review: operational improvement but earnings miss.
  • Gross tenancy additions were higher this quarter with similar tenancy churn.
  • Ebitda missed estimates with higher opex and lower energy margins.

On Kotak Mahindra Bank

Macquarie

  • Maintained ‘Neutral’ with a price target of Rs 1,360.
  • Major overhang taken care of.
  • RBI gives in-principle approval relating to dilution of promoter shareholding.
  • Implies just 4% reduction and would require prior RBI approval.

Morgan Stanley

  • Maintained ‘Overweight’ with a price target of Rs 1,825.
  • Revised RBI rule around promoter holding positive.
  • Likely reduced overhand around significant equity supply.
  • Increase in foreign ownership limits and re-inclusion in MSCI are near term triggers.

On Bajaj Auto

UBS

  • Maintained ‘Sell’ with a price target of Rs 2,900.
  • Q3: margin beat on lower commodity costs and improving mix.
  • BS-IV inventory not a challenge; exports to show steady growth.
  • Expect flat domestic volumes in FY21 as BS-VI and EV transition cloud outlook.

Morgan Stanley

  • Maintained ‘Equal-weight’ with a price target of Rs 3,039.
  • Posted good December quarter results.
  • Company acknowledged demand uncertainty ahead, given sizeable BS-VI price hikes.
  • EVs and emission regime change are key risks to the business.

On Tata Motors

Morgan Stanley

  • Maintained ‘Equal-weight’ with a price target of Rs 155.
  • December quarter results missed estimates as JLR margins dipped.
  • Maintained margin guidance for FY20/FY21; cost-cutting on track.
  • Awaiting concrete signs of a pickup in demand in key end markets.

Prabhudas Lilladher

  • Maintained ‘Hold’; hiked price target to Rs 185 from Rs 177.
  • JLR margins below expectations while China continues to improve.
  • Miss in JLR margins led by higher variable marketing spend and negative product mix impact.
  • Positive growth outlook for China continues while domestic guidance uncertain.

Trading Tweaks

  • Stampede Capital, Metalyst Forgings to move into ASM Framework.
  • Alkali Metals to move into short term ASM Framework.
  • Greenpanel Industries, Prakash Steelage to move out of short term ASM Framework.
  • Sundaram Multi Pap price band revised to 10 percent.
  • MT Educare price band revised to 5 percent.

Who’s Meeting Whom

  • Mahindra & Mahindra Financial Services to meet BofA Securities on Jan. 31

Money Market Update

  • The rupee closed 71.49/$ versus 71.25/$ on Wednesday.

F&O Cues

Index Futures

  • Nifty February futures closed at 12059.9, premium up 24 points.
  • Nifty futures open interest across series up 8 percent, adds 11.6 lakh shares in open interest.
  • Nifty Bank February futures closed at 30,768.4, premium of 121 points
  • Nifty Bank futures open interest across series up 8 percent, adds 1.5 lakh shares in open interest.
  • Rollovers -Nifty at 66 percent, Nifty Bank at 62 percent.

Options

  • Nifty PCR at 1.24 versus 1.13 (across all series).

Nifty Weekly Expiry: Feb. 6

  • Max open interest on call side at 13,000 (13.7 lakh shares).
  • Max open interest on put side at 12,000 (11.8 lakh shares).
  • Open interest addition seen at 13,000C (+11.8 lakh shares), 12,200C (+6.9 lakh shares),12,100C (+6.5 lakh shares).

Nifty Monthly Expiry: Feb. 27

  • Max open interest on call side at 12,200 (15.6 lakh shares).
  • Max open interest on put side at 12,000 (25.5 lakh shares).
All You Need To Know Going Into Trade On Jan. 31
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