All You Need To Know Going Into Trade On July 10

Stocks in Asia were trading mixed after a subdued session on Wall Street, with investors awaited clues on policy from Federal Reserve Chairman Jerome Powell. U.S. Treasury yields touched a three-week high, offering support for the dollar.

Stocks posted modest gains in Hong Kong, China and South Korea, and slipped in Japan. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.1 percent to 11,570.50 as of 7:10 a.m.

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BQ Live

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

U.S. Market Update

U.S. stocks closed a whisker higher after treading water for most of the session as markets braced for an onslaught of central bank news this week.

Asian Cues

• Futures on the S&P 500 Index rose 0.1 percent.
• Japan’s Topix index fell 0.5 percent.
• South Korea’s Kospi index gained 0.6 percent.
• Australia’s S&P/ASX 200 Index advanced 0.2 percent.

Commodity Cues

• Brent Crude rose 0.49 percent to $64.80 a barrel.
• West Texas Intermediate crude gained 1.4 percent to $58.66 a barrel.
• Gold was at $1,394.31 an ounce, down 0.2 percent.

London Metal Exchange

• Copper ended lower for the third consecutive trading session, down 1.19 percent.
• Lead ended higher for the second consecutive trading session, up 2.02 percent.
• Tin halted a four-day gaining streak, closed 1.49 percent lower.
• Zinc ended lower for the fifth consecutive trading session, closed 0.63 percent lower.
• Aluminium ended higher for the second consecutive trading session, ended 0.66 percent higher.
• Nickel ended a two-day gaining streak, closed 0.16 percent lower.

Indian ADRs

Stocks To Watch

• InterGlobe Aviation said the company received a letter dated July 8 from Rakesh Gangwal, informing the company that he has written a letter to the SEBI seeking regulatory intervention on his alleged grievances regarding questionable transactions and governance violations. In the meantime, SEBI has asked the company to give its response to this letter by July 19.
• Mehra Goel & Co. resigned as the statutory auditor of Manpasand Beverages.
• ICRA downgraded KRBL’s rating on long term bank facilities from ‘AA’ (Stable) to ‘AA-’ and also placed it under “ratings under watch with negative implications” after The Enforcement Directorate attached assets worth Rs 15 crore of the company in connection with 2008 Embraer deal case on July 4.
• Dr. Reddy’s Andhra Pradesh units two observations under Form 483 from the U.S.FDA – Bloomberg News
• SBI cut MCLR by five basis points across all tenors.
• Mawana Sugar said Uttar Pradesh Co-operative Bank Ltd. has sanctioned soft loan of Rs 116.40 crore to the company to clear the outstanding dues of the farmers for the crushing season 2018-19. The said loan has been disbursed and utilized for payment to sugarcane farmers.
• Adani Ports to consider raising up to $700 million via dollar bonds at its board meet on July 12.
• NLC India commissions 63 MW of the 100 MW solar power plant at Tamil Nadu with effect from July 7.
• BHEL and Container Corp to form Joint Working Group to establish rail-based logistics terminal at Haridwar.
• Autoline Industries said the government of Maharashtra has approved additional Industrial Promotion Subsidy IPS claim of Rs 44.61 crores. Of this, the company has received Rs 14.50 crores on July 8 and will receive the balance Rs 35.12 crore in three tranches shortly.
• Tasty Bite Eatables to consider fund raising on July 12, 2019 by issuing equity shares on preferential basis.
• Himachal Futuristic Communications received a purchase order worth Rs 186.9 crore from BSNL for setting up of optical transmission backbone network for Armed forces. The project shall be completed within 10 months.
• VST Tillers said Uttar Pradesh Co-operative Bank Ltd. has sanctioned soft loan of Rs 116.40 crore to the company to clear the outstanding dues of the farmers for the crushing season 2018-19. The said loan has been disbursed and utilised for payment to sugarcane farmers.

Earnings To Watch

• GTPL Hathway
• Himachal Futuristic Communications

Earnings Reaction To Watch

Tata Consultancy Services (Q1, QoQ)

• Revenues up 0.4 percent at Rs 38,172 crore.
• Net profit up 0.1 percent at Rs 8,131 crore.
• Ebit down 3 percent at Rs 9,220 crore.
• Margin narrowed to 24.2 percent versus 25.1 percent.

Who’s Meeting Whom

• Genus Power to meet investors and analysts in Mumbai on July 9 and 10.
• Shriram City Union Finance to meet Haitong Securities on July 10.
• Siemens to meet HDFC Life Insurance on July 10.

Money Market Update

The sovereign bond investors will keep an eye on crude oil prices. The oil jumped the most in a week as an industry report showed a continued draw-down in U.S. crude inventories.

Yesterday, 10-year government debt rose two basis points to 6.59 percent after yields declined 29 basis points this month.

In the currency market, the rupee is likely to open slightly weaker today in line with its Asian peers. The implied opening from forwards suggests that the pair may start trading at 68.61 to the dollar.

F&O Cues

July Futures

• Nifty futures closed at 11,552, discount of 3.3 points versus premium at 7.7 points.
• Nifty futures open interest up 2.5 percent, adds 4.5 lakh shares in open interest.
• Bank Nifty futures closed at 30,639, premium of 70.6 points versus 85 points.
• Bank Nifty futures across series open interest down 4 percent, sheds 81,000 shares in open interest.

Bank Nifty

• Nifty PCR at 0.90 versus 0.88 (across all series).

Nifty Weekly Expiry 11 July

• Max open interest on call side at 12,000 (31 lakh shares).
• Max open interest on put side at 11,500 (17.2 lakh shares).
• Open interest addition seen in 11,550C (+6.7 lakh shares), 11,600C (+6 lakh shares), 11,450P (+5.8 lakh shares).
• Open interest shedding seen in 12,000P (-6.2 lakh shares), 11,900C (-5.9 lakh shares).

Nifty Monthly Expiry 25-July

• Max open interest on call side at 12,000 (31.2 lakh shares).
• Max open interest on put side at 11,300 (17.5 lakh shares).

Stocks in F&O Ban

• DHFL
• Reliance Capital.

Brokerage Radar

On TCS

CLSA

• Maintained ‘Buy’; cut price target to Rs 2,570 from Rs 2,650.
• Revenue and margin miss estimates; margins miss due to supply pressures.
• Rising relevance – large deal wins, digital share gains and client mining.
• Cut EPS estimates by 3 percent to factor in revenue and margin miss.

UBS

• Maintained ‘Neutral’ with a price target of Rs 2,400.
• Revenue miss likely to raise demand concerns.
• TCS continues to see stress in capital markets and European banking customers.
• Expect some near-term pullback.

BofAML

• Maintained ‘Neutral’; hiked price target to Rs 2,130 from Rs 2,040.
• Q1: U.S. decelerates; steady margin performance.
• Lower FY20/21 EPS estimates by 3-5 percent.
• Stronger margin to peers is likely to help retain premium valuations.

HSBC

• Maintained ‘Hold’ with a price target of Rs 1,900.
• Growth slowed down despite strong deals due to a cyclical slowdown in demand.
• Long-term outlook remain positive, but near term slowdown in demand to impact growth.
• Significant macro slowdown and rupeeappreciation remain key risks.

On InterGlobe Aviation

Citi

• Maintained ‘Sell’ with a price target of Rs 1,300.
• Conflict between promoters is more than just minor differences.
• Do not envisage a settlement anytime soon between promoters.
• Uncertainty regarding final resolution could cause weakness in stock price.

Credit Suisse

• Maintained ‘Outperform’ with a price target of Rs 1,900.
• Escalation of promoter dispute likely to be a significant headwind.
• Control and related party transactions are at the center of the dispute.
• Dispute does not seem to have had any meaningful operational impact so far.
• However, an operational impact cannot be ruled out, particularly in case of a public dispute.

Goldman Sachs

• Initiated ‘Buy’ with a price target of Rs 1,830.
• Expanding market share and capacity additions to drive growth.
• Indigo has one of the strongest balance sheets and leverage ratios.

More Calls

HSBC on Balkrishna Industries

• Maintained ‘Hold’; cut price target to Rs 850 from Rs 1,040.
• Commentary from management and global peers cites persistence of growth challenges.
• Cut earnings on weather-related hits in Americas and Europe and non-resolution of trade wars.

Goldman Sachs on SpiceJet

• Initiated ‘Buy’ with a price target of 161.45.
• Expect sector-leading profitability to improve over the next few years.
• Expanding share with a regional focus to improve yields.
• With increase large scale operations, SpiceJet to benefit from operating leverage.