All You Need To Know Going Into Trade On July 15
A pedestrian walks a dog past the closed Natural History Museum in London, U.K. (Photographer: Hollie Adams/Bloomberg)

All You Need To Know Going Into Trade On July 15

Asian markets have climbed in mid-week trade amid optimism that progress is being made in developing a defence against Covid-19.

Moderna's Covid-19 vaccine produced antibodies in all patients tested in an initial safety trial.

Treasury yields have risen while the U.S. Dollar is retreating.

The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, rose 1% to 10,722 as of 7:00 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 may influence equities in today’s session:

  • Benchmark indices in Japan, South Korea and Australia are trading with gains, tracking a positive, but volatile close on Wall Street.
  • Futures on the Dow Jones are trading higher by 290 points after the index ended 2.1% higher in Tuesday's trade.
  • Banks were mixed after JPMorgan reported strong results while Wells Fargo declined.
  • U.S. President Donald Trump said he issued an order to end Hong Kong's special status with the U.S. and signed legislations that would sanction Chinese officials responsible for cracking down on political dissent in Hong Kong.
  • The Bank of Japan is likely to keep its main policy settings unchanged in its policy announcement today.
  • Yield on the 10-year treasury rose to 0.64%.
  • West Texas Intermediate crude gained 0.6% to $40.51 per barrel. Oil extended gains after a report showed U.S. crude stockpiles fell last week. The EIA oil inventory report is due today.

Get your daily fix of the global markets here.

All You Need To Know Going Into Trade On July 15

Earnings Fineprint: Wipro Q1FY21

  • U.S. Dollar revenue down 7.3% to $1,923 million
  • Revenue down 5.3% to Rs 14,922 crore
  • Ebit up 1.3% at Rs 2,573 crore
  • Ebit margin at 17.2% from 16.1%
  • Net profit up 2.8% to Rs 2,411 crore
  • I.T. Services operating margin at 19% from 16.1%
  • BFSI revenue down 5.3% to Rs 4,423 crore
  • Consumer business unit revenue down 9.7% to Rs 2,318 crore
  • Healthcare revenue down 4% to Rs 1,976 crore
  • Technology revenue up 1% to Rs 1,967 crore
  • Engineering revenue down 1.5% to Rs 1,928 crore
  • All numbers are compared on a sequential basis

Stocks To Watch

  • Infosys: Vanguard announced a partnership with the company as part of its ongoing strategy to enhance and evolve its full-service defined contribution (DC) business. The partnership will deliver a technology-driven approach to plan administration and Infosys will assume day-to-day operations supporting Vanguard's DC recordkeeping business.
  • SBI: Shareholders give nod to raise Rs 20,000 crore through FPO, private placement, QIP or any other method thereof.
  • Yes Bank: Board approves allotment of 341.5 crore equity shares to anchor investors at the lower end of the price band of Rs 12 per equity share. Price may be subject to change upon determination of the offer price. 14 anchor investors like Bay Tree India Holdings, HDFC Life Insurance, Amansa Holdings, Hinduja Leyland Finance have been allotted shares. Board to meet on or post July 18 to determine the issue price and that for anchor investors as well.
  • Wipro: To acquire IVIA Servigos de Informitica for $22.4 million. The target company provides I.T. solutions including system development, maintenance, consulting and project management services to clients in different sectors such as financial services, transportation, retail, healthcare and manufacturing in Brazil. The transaction is expected to be completed in the quarter ending September 30, 2020.
  • Oberoi Realty: Board approves raising up to Rs 2,000 crore through equity sale and up to Rs 1,500 crore via debentures.
  • Emami: The group has completed the sale of Emami Cement Nuvoco Corporation at an Enterprise Value of Rs 5,500 crore.
  • Bharat Electronics: Signs MoU with Airports Authority of India to collaborate on addressing the emerging global opportunities in the airports business including those in the Asia Pacific region.
  • Shankara Building Products: 70% of the company's locations are currently operational.
  • Asian Granito: Union Bank of India approves release of corporate guarantee against the credit facilities enjoyed by the company's arm Camrola Quartz.
  • Prestige Estates: Arm acquires 30.21% equity stake and optionally convertible preference shares representing 4.57% of preference share capital in DB Realtors (BKC).
  • HEG: India Ratings and Research downgrades the company's long-term issuer rating to IND AA- from IND AA. Outlook is stable. The downgrade reflects a significant fall in the price of graphite electrodes over the second half of FY20 resulting in a sharp compression in spreads, coupled with a significant inventory valuation hit.
  • IPO Update: Rossari Biotech gets about three times the demand as compared to the shares offered. The issue closes today.
  • Q4 Results Today: Minda Corporation
  • Q1 Results Today: L&T Infotech, Bandhan Bank, Federal Bank, GTPL Hathway

Earnings Reported After Market Hours

Delta Corp Q1FY21

  • Revenue down 74.1% to Rs 48.3 crore
  • Net loss of Rs 28.2 crore from net profit of Rs 42.5 crore
  • Ebitda loss of Rs 33.1 crore from Ebitda gain of Rs 67.7 crore
  • No revenue reported from gaming and hospitality operations
  • Online gaming revenue up 60% to Rs 57 crore
  • Adda52 has seen good traction and growth
  • Paid license fee of Rs 25.2 crore in the current quarter
  • Made representation to Government of Goa for waiver of license fee
  • All numbers are consolidated and compared on a year-on-year basis

Oberoi Realty Q1FY21

  • Revenue down 80.4% to Rs 118 crore
  • Net profit down 81.5% to Rs 28.1 crore
  • Ebitda down 75.4% to Rs 57.9 crore
  • Ebitda margin at 49.1% from 39%
  • Sharp fall in operational costs led to higher margins
  • Has not recognised revenue worth Rs 33.3 crore with respect to contracts with leases in its malls.
  • Real estate segment revenue down 80% to Rs 115.5 crore
  • Hospitality segment revenue down 92% to Rs 2.5 crore
  • All numbers are consolidated and compared on a year-on-year basis

Oberoi Realty Q4FY20

  • Revenue up 7.3% to Rs 615.5 crore
  • Net profit up 61.1% to Rs 251 crore
  • Ebitda up 76.7% to Rs 370.5 crore
  • Ebitda margin at 60.2% from 36.6%
  • Inventory gain of Rs 206 crore in the base quarter
  • All numbers are consolidated and compared on a year-on-year basis

Brokerage Radar

CLSA On Wipro

  • Underperform rating maintained
  • Price target raised to Rs 215 from Rs 210
  • Cost controls, working capital management impressive
  • Commentary on near-term outlook optimistic
  • Sustaining medium-term momentum can be a challenge if revenue growth remains below peers
  • Leadership transition can keep revenue growth Vs margin equation volatile
  • Will wait for better visibility on the new CEO's agenda to review rating
  • A potential buyback can limit the downside for the stock

Macquarie On Wipro

  • Neutral rating maintained
  • Price target raised by ~5% to Rs 210
  • Expect more clarity on the new CEO's strategy in the next three months
  • Deal pipeline healthy but decision making remains slower than pre-Covid levels across most clients
  • Expect overall revenue decline of 7.6% year-on-year in FY21E
  • Ebit margin may improve 20 basis points year-on-year to 17.5%
  • While worst is likely behind, revenue recovery likely to be gradual
  • Uncertainty persists in certain verticals
  • Raise FY21-22E EPS by 2.6-7%

Citi On Wipro

  • Upgrade to buy from neutral
  • Price target raised to Rs 260 from Rs 230
  • Managing costs well and delivering solid cash flows despite lagging peers on growth
  • Some part of the cost benefit to stay in the medium-term
  • Upgrade FY21-23E EPS by 3-6%
  • Raise price target multiple to 14 times from 13 times
  • Introduce a positive 90-day Catalyst Watch given potential buyback and growth focused commentary from new CEO
  • Margin resilience, attractive valuations and likely buyback should help

Macquarie On Mindtree

  • Underperform rating maintained
  • Price target raised to Rs 850 from Rs 670
  • Ebit margin boost led by cost savings and is sustainable in the near-term
  • Top accounts will likely do well due to higher demand for collaborative tools
  • Expect revenue to decline 5.6% year-on-year in FY21E
  • Model in 15% Ebit margin for FY21E
  • Long-term margin improvement will depend on continued rationalisation of small client accounts and shift to annuity projects
  • Raise FY22E EPS by 26% mainly to factor in higher Ebit margin

UBS On Mindtree

  • Sell rating maintained
  • Price target of Rs 750
  • Major revenue contribution from top client
  • Margins benefit from lower costs
  • Margins may improve further in FY21
  • Sharp fall in revenue ex-top client may cause concerns on recovery momentum

Earnings Expectations: Infosys Q1FY21

  • U.S. Dollar revenue seen 4.6% lower at $3,051 million as per a BQ Poll
  • Revenue seen 1.3% lower at Rs 22,957 crore
  • Ebit seen 3.2% lower at Rs 4,568 crore
  • Ebit margin seen at 20.8% from 21.2%
  • Net profit seen 9.1% lower at Rs 3,941 crore
  • Barring U.S. Dollar revenue, all estimates are Bloomberg estimates and compared on a sequential basis

Key Factors At Play For Infosys:

  • See little sequential cross currency impact
  • Lower revenue to weigh on operating margins
  • Ebit margins to see small benefit from rupee depreciation, cost optimisation
  • Demand in BFSI, manufacturing, retail to remain mixed
  • Potential pricing pressure could weigh on revenue
  • Watch for reinstatement of guidance for FY21
  • Revenue guidance (if given) may be in the range of 0 to -4% for FY21

Pledged Share Details

  • DB Corp: Promoter DB Consolidated released pledge of 25 lakh shares on July 13
  • Jindal Steel and Power: Promoter OPJ Trading revoked pledge of 26 lakh shares on July 6
  • Camlin Fine Sciences: Promoter Ashish Dandekar released pledge of 1.71 crore shares on July 14

(As Reported On July 14)

Bulk Deals

  • Eveready Industries: Dabur’s promoters acquired 61.68 lakh shares (8.49%) at Rs 81.8 per share. IL&FS Financial Services sold 51.48 lakh shares (7.08%) at Rs 81.8 per share while Vistra ITCL sold 12.19 lakh shares (1.68%) at Rs 81.85 per share.
  • Cosmo Films: Anvil Wealth Management acquired 1 lakh shares (0.52%) at Rs 372.81 per share.
  • Akshar Chemicals: UBS Principal Capital Asia sold 58,868 shares (0.72%) at Rs 229.73 per share.

Trading Tweaks

  • FPO opens: Yes Bank
  • IPO Closes: Rossari Biotech
  • AGM Date: Reliance Industries, Wendt, Tube Investments, Advanced Enzyme, Bombay Dyeing, Castrol, Tata Steel Long Products
  • Fund Raising: SBI
  • Price Band Revised From 10% To 5%: BGR Energy Systems, Inspirisys Solutions, Tera Software
  • Price Band Revised From 20% To 10%: Neuland Laboratories
  • Record Date Share Split: Kuantum Papers (10:1)
  • Move Into Short-Term ASM Framework: Simplex Infrastructures
  • Move Out Of Short-Term ASM Framework: Muthoot Capital Services, Indian Terrain Fashions, Orient Cement, Paisalo Digital, Genus Power Infrastructures, Capacit'e Infraprojects.

Money Market Update

  • The currency ended at a two-week low of 75.43 against the U.S. Dollar as compared to Monday's close of 75.19.
All You Need To Know Going Into Trade On July 15

F&O Cues

  • Nifty July futures closed at 10,614; premium of 7 points from 5 points
  • Nifty July futures shed 5% and 5.7 lakh shares in Open Interest
  • Nifty Bank July futures closed at 21,397; premium narrows to 5 points from 85 points
  • Nifty Bank July futures shed 7% and 1.2 lakh shares in Open Interest
  • Enter F&O Ban: Sun TV, Canara Bank, Mindtree
  • Out of F&O Ban: Glenmark
  • Stocks In F&O Ban: SAIL, Century Textiles, Equitas, Sun TV, Vodafone Idea, Punjab National Bank, Escorts, Canara Bank, Mindtree

Nifty Weekly Expiry: July 16

  • Maximum Open Interest on Call side at 10,800 strike (36.7 lakh shares)
  • Maximum Open Interest on Put side at 10,500 strike (22 lakh shares)
  • Active Options: 10,300 Put (-4.5 lakh shares) and 10,700 Call (+22.7 lakh shares)

Nifty Monthly Expiry: July 30

  • Maximum Open Interest on Call side at 11,500 strike (26.2 lakh shares)
  • Maximum Open Interest on Put side at 10,000 strike (32.1 lakh shares)
All You Need To Know Going Into Trade On July 15
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