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All You Need To Know Going Into Trade On July 16
Stocks in the news, big brokerage calls of the day, complete trade setup and much more!
16 Jul 2020, 07:14 AM IST 
A social distancing markers on the floor at New Delhi railway station in India. (Photographer: Prashanth Vishwanathan/Bloomberg)
Asian markets have opened mixed this morning with benchmark indices in most major markets opening flat. The U.S. Federal Reserve said that the economy is showing signs of nascent recovery at the beginning of July.
The U.S. Dollar maintained losses, treasuries were little changed while oil prices dipped.
The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, rose 0.2% to 10,672 as of 7:10 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 all that can influence equities in today’s session:
- Benchmark indices in Japan, South Korea and Australia have opened flat this morning, despite overnight gains on Wall Street.
- Futures on the Dow Jones are trading lower by 80 points. The index ended 0.8% higher on Wednesday.
- Twitter fell in after-hours trading after accounts of some prominent political and business leaders of the U.S. were hacked.
- U.S. President Donald Trump indicated to aides that he does not want to further escalate tensions with Beijing and has ruled out additional sanctions on top officials for now.
- Yield on the 10-year treasuries fell to 0.62%.
- West Texas Intermediate crude fell 0.5% to $41.01 per barrel.
Get your daily fix of the global markets here.
Earnings Fineprint: Infosys Q1FY21
- U.S. Dollar revenue down 2.4% to $3,121 million
- Revenue up 1.7% to Rs 23,665 crore
- Ebit up 8.9% to Rs 5,365 crore
- Ebit margin at 22.7% from 21.2%
- Net profit down 1.5% to Rs 4,272 crore
- BFSI Revenue up 2.4% to Rs 7,457 crore
- Retail revenue down 6.4% to Rs 3,391 crore
- Communications revenue up 4.9% to Rs 3,165 crore
- Energy revenue up 1.2% to Rs 3,027 crore
- Manufacturing revenue down 4.5% to Rs 2,256 crore
- Hi-Tech revenue up 12.7% to Rs 2,063 crore
- Digital revenue at $1,389 million (44.5% of total revenue); up 25.5% growth in constant currency terms
- FY21 revenue growth guidance in the range of 0-2% in constant currency
- Operating margin in FY21 to be in the range of 21-23%
- All numbers are consolidated and compared on a quarter-on-quarter basis
Opinion
Infosys Q1 Results: Profit Falls But Deal Wins, Cost Cuts Help Anchor Margin
Stocks To Watch
- State Bank of India: Board approves raising additional tier-I capital up to Rs 4,000 crore and fresh tier-II capital up to Rs 10,000 crore. It will redeem Rs 11,015 crore of existing tier-II bonds with call dates in FY21 and sell new bonds to replace them. The bond sale for redemption will be over and above the proposed tier-II capital raising.
- Yes Bank: FPO subscribed 24% on day 1. Retail book subscribed 9% while the Qualified Institutional Buyers (QIB) portion was subscribed 66%.
- Power Grid, GAIL: Provisional demand notices towards license fee have been withdrawn by the Department of Telecommunications.
- Covid-19 Impact On Manappuram Finance: May be able to withstand the impact of the pandemic. Lenders continue to roll over credit lines and have also extended additional finance. Expect to maintain profitability of its gold loan business. However, the negative impacts of the pandemic may impact profitability of its vehicle finance, MSME finance and housing finance business. Made additional provisions of Rs 70.25 crore for the quarter ended March, towards expected credit losses.
- Alembic: Clarifies that company’s fermentation facilities have been closed down and its runs only a chemistry based small API unit.
- Himatsingka Seide: Doddaballapur unit in Karnataka has been shut till July 21.
- Cochin Shipyard: Signed contracts for construction and supply of two Autonomous Electric Ferry for ASKO Maritime AS, Norway, with an option to build two more identical vessels.
- GE T&D India: SBI Mutual Fund increased stake to 7.07% from 4.72% in the company on July 14.
- Indiabulls Real Estate: Received proposal from the Embassy Group for the merger of the group's residential and commercial assets aggregating to 61.9 million square feet into the company. On filing the scheme of amalgamation with the relevant regulatory authorities, Sameer Gehlaut, as promoter, along with other existing promoter group entities shall initiate the process of de-promoterisation. Once that is effective, Jitendra Virwani along with other promoter entities of the Embassy Group will be the new promoters of the amalgamated company.
- Adani Transmission: Promoter SB Adani Family Trust revoked pledge of 30 lakh shares on July 14
- Non-Nifty Earnings Today: AB Money, Bajaj Consumer Care, Cyient, L&T Finance, L&T Technology.
- IPO Update: Rossari Biotech’s IPO received 79 times demand on the last day of the offer.
Earnings Reported After Market Hours
L&T Infotech Q1FY21
- U.S. Dollar revenue down 4.8% to $390.3 million
- Revenue down 2.1% to Rs 2,949.2 crore
- Net profit down 2.4% to Rs 416.6 crore
- Ebitda up 2.4% to Rs 592 crore
- Ebitda margin at 20.1% from 19.2%
- Lower operating expenses aid margins
- All numbers are consolidated and compared on a quarter-on-quarter basis
Brokerage Radar
CLSA On Infosys
- Buy rating maintained
- Price target raised to Rs 1,000 from Rs 860
- Q1 results well above expectations
- Healthy deal wins, stable cash management and an optimistic outlook
- Expected margins to be broadly stable in FY21
- PER gap with TCS should decline with restoration of formal guidance
- Raise FY21/FY22 EPS estimates by 9%
JPMorgan On Infosys
- Overweight rating maintained
- Price target raised to Rs 1,000 from Rs 900
- Q1 beat expectations sharply on all counts
- Has outpaced TCS over the last four quarters
- Tangible improvement in client relevance and superior performance justifies a re-rating
- Upgrade FY21-23 earnings estimates by 7-8%
- Upgrade FY21-23 margins by 60-120 basis points
- Remains the top pick in the sector
Macquarie On Infosys
- Maintain outperform rating
- Price target raised to Rs 910 from Rs 751
- Large deal wins, stable Ebit margins and strong revenue growth
- Higher revenue growth momentum will translate into an 11% EPS CAGR over FY20-22E
- Large deal win momentum to translate into faster than industry revenue growth rate in FY21-22E
- Lower SG&A and travel costs to act as key margin levers
- Expect revenue growth rates of 1.6% and 12% year-on-year in U.S. Dollar terms in FY21E and FY22E
- Increase FY21-22E EPS by 8-12% on higher revenue growth and margin assumptions
- Increase multiple to 19x from 17x
CLSA On Reliance Industries
- Buy rating maintained
- Price target of Rs 1,753
- Online extension of Reliance Retail progressing well
- Stake sale in retail business to strategic or financial investors may happen over coming quarters
- Remains committed to the equity stake sale to Aramco
- Spin-off of its petchem and refining business into a subsidiary by early-2021 may pave the way for this deal closure
UBS On Federal Bank
- Neutral rating maintained
- Price target of Rs 45
- Fee income disappoints; provisions insufficient
- Asset quality concerns in the SME book
- Operating performance likely to be subdued
- Increase credit cost estimates for FY21/22 to 3/2.5%
- Expect bank to report losses in FY21/22
- Remain neutral despite inexpensive valuations
- Uncertainty around Covid-19 related disruption in operating income and lack of clarity in NPL build-up
Trading Tweaks
- AGM Date: Mahindra and Mahindra, Persistent Systems, Tasty Bite Eatables, Visaka Industries, Grindwell Norton, Coromandel International, TCI Express, Astec LifeSciences, ABB, Piramal Enterprises, Federal Bank, Onward Tech, Tata Investment Corpration.
- Fund Raising: Tourism Finance Corporation
- Price Band Revised From 20% To 10%: Hathway Cable & Datacom
- Move Into ASM Framework: Sunshield Chemicals
- Move Into Short-Term ASM Framework: Sree Rayalaseema Hi-Strength Hypo, Indo Amines
- Move Out Of Short-Term ASM Framework: Cimmco, Sterling Tools, Jagsonpal Pharmaceuticals, Quess Corp, Veto Switchgears And Cables.
Money Market Update
- The rupee ended with gains in Wednesday's session, closing at 75.15 against the U.S. Dollar as compared to Tuesday's close of 75.43.
- Rupee ended as the second best performing currency in Asia after the South Korean Won.
F&O Cues
- Nifty July futures closed at 10,628; premium of 10 points from 7 points
- Nifty July futures shed 12.4% and 13.5 lakh shares in Open Interest
- Nifty Bank July futures closed at 21,321; premium widens to 20 points from 5 points
- Nifty Bank July futures shed 2.2% and 36,500 shares in Open Interest
- Enters F&O Ban: L&T Finance Holdings
- Stocks In F&O Ban: Canara Bank, Century Textiles, Equitas, Escorts, Vodafone Idea, L&T Finance, PNB, Mindtree, SAIL, Sun TV
Nifty Monthly Expiry: July 16
- Maximum open interest on Call side at 10,800 strike (44.7 lakh shares)
- Maximum open interest on Put side at 10,500 strike (21.7 lakh shares)
- Active Options: 10,600 Put (+3.9 lakh shares) and 10,800 Call (+13.9 lakh shares)
Nifty Monthly Expiry: July 30
- Maximum Open Interest on Call side at 11,000 strike (25.4 lakh shares)
- Maximum Open Interest on Put side at 10,000 strike (32.1 lakh shares)
