All You Need To Know Going Into Trade On July 14
Asian markets have slipped in early trade, tracking the declines on Wall Street amid fresh tensions between U.S. and China.
Rising concerns over the economic impact of Covid-19 is also denting sentiment among investors. Treasuries and the U.S. Dollar were little changed while oil prices declined.
The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, fell 0.3% to 10,781 as of 6:55 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.
Let’s take a look at the factors that can influence equities in today’s session:
- Markets in Japan, Australia and South Korea have opened lower.
- Futures on the Dow Jones are trading 60 points higher after the index ended unchanged on Monday. S&P 500 and the Nasdaq underperformed after briefly touching highs.
- Sentiment deteriorated after the Trump Administration rejected China's expansive claims in the South China Sea, a reversal from previous policy of not taking sides in territorial disputes.
- Figures showed Singapore's economy plunged into a recession last quarter as an extended lockdown shuttered business and impacted retail spending.
- Yield on the 10-year treasuries stood at 0.62%.
- West Texas Intermediate crude fell 1.5% to $39.5 per barrel, ahead of an OPEC+ meeting at which the group may announce plans to start tapering the historic production cuts.
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Stocks To Watch
- Zee Learn: The Bombay High Court has dismissed the company's plea against UTI Mutual Fund. Zee Learn had cited RBI's moratorium circular as the basis for relief on interest payments to UTI Mutual Fund. The fund house has an exposure of nearly Rs 44 crore to NCDs issued by the company. The company argued that as the Mutual Fund is a public finance institution, the government's policy should be similar for Mutual Funds and Banks. The court said that the RBI circular on moratorium cannot be the basis of relief and it is not applicable to Mutual Funds.
- Motherson Sumi: Moody's Investors Service has confirmed the company's Corporate Family Rating (CFR) as Ba1. The outlook has been revised to negative from ratings under review. The negative outlook reflects the weak liquidity and the company's upcoming refinancing tasks under more challenging market conditions.
- City Union Bank: Board approved raising Rs 600 crore via QIP issue. To also raise Rs 500 crore via debt.
- Godrej Industries: Board approved raising Rs 750 crore via NCDs on a private placement basis.
- Phoenix Mills: Board approved raising Rs 1,100 crore via equity. It will also issue up to 15.63 lakh convertible equity warrants at Rs 640 per warrant, aggregating to Rs 100 crore.
- Sobha: Godrej Group's promoter entity Anamudi Real Estates increased its stake in the company to 9.99% in the June quarter from 1.08% in the March quarter.
- BF Utilities: Radhakishan Damani acquired 4.91 lakh shares or 1.3% stake during the quarter ending June as per the latest shareholding pattern.
- Goa Carbon: Acuite Ratings revises the long-term rating of the company to ACUITE BBB- from ACUITE BBB. Short-term rating has been reaffirmed as ACUITE A3+ on the Rs 273 crore bank facilities of the company. Outlook has been revise to stable from negative.
- Adani Green Energy: Increased its capacity by 50MW to 2,595 MW for the first quarter of fiscal 2021, on a sequential basis.
- Balaji Telefilms: Shoot of all television shows halted as one of the company’s actor has tested positive for Covid-19.
- Capri Global Capital: Total number of customers who opted for moratorium stood at 49% as on June 30. On back of the strong liquidity, the Company has not sought any moratorium from any of its lenders. The company has made 100% scheduled repayments till date and also prepayments of Rs 355 crore due till March 2021.
- Arvind Fashion Rights Issue: Kotak Standard Multicap Fund sold 4.83 lakh shares at Rs 36.26 per share.
- Q1FY21 Earnings Today: Mindtree, Century Textiles, Oberoi Realty, Delta Corp.
- Q4FY20 Earnings Today: ICRA, Khadim India, National Peroxide.
Companies With Covid-19 Updates
- April and May saw dip in sales.
- Inquiries at pre-Covid-19 levels from June onwards and sales too have improved.
- Believe there is no structural long-term impact on the business.
- Situation is dynamic with Karnataka announcing a new lockdown in Bengaluru.
- Construction activities impacted at project sites will have adverse impact on billing.
- Revenue recognition will be impacted as there will be delay in handing over the apartment.
- Liquidity profile of the company remains comfortable.
- Short-term impact on supply chain.
- Have resumed more than 1,200 out of the 1,400 stores across the country.
- Going slow on new store openings.
- Will continue expanding into newer towns through the franchise route.
- No borrowings or outstanding loans taken by the company.
- All manufacturing facilities operating at reasonable capacity utilisation.
- Future impact on business operations will not be significant.
- Products like Sugar Free, Complan, Glucon-D, Nycil Sanitiser have been more resilient due to their essential nature.
- See a good ramp-up of e-commerce business.
- Remain cautiously optimistic about the next two quarters of FY21.
- Construction activities have resumed in most of the projects.
- There has been a significant fall in workmen count across project sites.
- Scale of work progress is yet to get back to pre-Covid-19 situation.
- Business is expected to normalise by Q2FY21 upon resumption of free movement of migrant workmen.
- Company is taking appropriate measures including invoking the force majeure conditions and change in law simultaneously to take care of Covid-19 related impact.
- Do not expect any issue in servicing of debt.
- Revenue and profit will decline in Q1FY21.
Earnings Expectations: Wipro Q1FY21
- Total income seen 8.5% lower at Rs 14,414 crore
- Ebit seen 8.5% lower at Rs 2,322 crore
- Ebit margins seen flat at 16.1%
- Net profit seen 11.8% lower at Rs 2,069 crore
- A BQ Poll suggests I.T. services revenue seen 6.2% lower at $1,945 million
- All estimates are consolidated and compared on a quarter-on-quarter basis
Key Factors At Play For Wipro:
- Has discontinued practice of quarterly guidance for now.
- Covid-19 related disruption in business to take a toll on revenue
- Weakness expected in the BFSI vertical.
- Healthcare may mitigate some revenue weakness.
- Margins may remain steady over deferment of pay hikes.
Citi On BHEL
- Downgrade to sell from neutral
- Price target of Rs 34
- Valuations unappealing post recent rally
- Risks to cash flows and profits
- Adverse industry trends to not only continue in medium-term but worsen in the short-term
- Expect Q1FY21E revenue to decline ~30% year-on-year
- See increased pressure on cash flows and mounting receivables
- Open 30-day negative catalyst watch on the stock
Macquarie On HDFC Bank
- Outperform rating maintained
- Price target of Rs 1,124
- Not new to attrition or senior management turnover
- In absolute terms, auto loan NPAs went up 60% year-on-ear in FY19
- Most likely candidate for new CEO in our view is Sashi Jagdishan
- Remains top pick in the sector
Pledged Share Details
- Olectra Greentech: Promoter MEIL Holdings created pledge of 1.06 crore shares on July 9
- DB Corp: Promoter DB Consolidated released pledge of 28 lakh shares on July 9
(As Reported On July 13)
Who’s Meeting Whom
- Eicher Motors: To meet Amansa Capital, GIC and SBI Life Insurance on July 14-15
- Endurance Tech: To meet HDFC Standard Life Insurance and Aditya Birla Sun Life AMC on July 14-15
- Dixon Tech: To meet Abu Dhabi Investment Authority and Taiyo Pacific between July 14-16
- Affle India: To meet Dalal & Broacha, Ocean Dial AMC and other investors between July 14-16.
- AGM Date: Mindtree, SBI, Tata Power, SKF
- Price Band Revised From 10% To 5%: 5Paisa Capital
- Price Band Revised From 20% To 10%: Clariant Chemicals, Inspirisys Solutions, Kuantum Papers
- Ex-Date Share Split: Kuantum Papers (10:1)
- Move Into ASM Framework: Borosil Renewables
- Move Into Short-Term ASM Framework: Kuantum Papers, Bharat Rasayan, Panache Digilife, 5Paisa Capital
- Move Out Of Short-Term ASM Framework: Shreyas Shipping & Logistics
Money Market Update
- The rupee ended flat at 75.19 against the U.S. Dollar as compared to Friday’s close of 75.21.
- Nifty July futures closed at 10,807; premium of 5 points from discount of 2 points
- Nifty July futures shed 1.5% and 1.7 lakh shares in Open Interest
- Nifty Bank July futures closed at 22,175; premium widens to 85 points from 38 points
- Nifty Bank July futures add 8.2% and 1.3 lakh shares in Open Interest
- Enter F&O Ban: SAIL, Escorts
- Stocks In F&O Ban: BHEL, Century Textiles, Equitas, Escorts, Glenmark, Vodafone Idea, PNB, SAIL.
Nifty Monthly Expiry: July 16
- Maximum Open Interest on Call side at 11,000 strike (33 lakh shares)
- Maximum Open Interest on Put side at 10,700 strike (26.2 lakh shares)
- Active Options: 10,700 Put (+7.4 lakh shares) and 11,000 Call (+7.1 lakh shares)
Nifty Monthly Expiry: July 30
- Maximum Open Interest on Call side at 11,500 strike (28.2 lakh shares)
- Maximum Open Interest on Put side at 10,000 strike (35.2 lakh shares)