All You Need To Know Going Into Trade On July 21
A pedestrian walks along a deserted Marine Drive in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

All You Need To Know Going Into Trade On July 21

Asian markets have opened higher after technology stocks aided yet another day of gains on Wall Street.

The U.S. Dollar has extended declines to a six-week low while treasuries were steady. Focus remains on the U.S. as lawmakers are preparing a rescue package to replace some of the expiring benefits of the earlier versions.

The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, rose 0.9% to 11,114 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 some of the factors that may influence equities in today’s session:

  • Benchmark indices in Japan and Australia have opened higher while those in South Korea are outperforming.
  • Futures on the Dow Jones are little changed. The index underperformed its peers on Monday. Markets in the U.S. are now at a five-month high aided by a rally in technology stocks.
  • The Nasdaq jumped the most since April, hitting a record high after a surge in Amazon and Zoom.
  • Euro Area leaders appeared close to an agreement on a stimulus, although the total size of the recovery package remains in a flux.
  • A vaccine developed by the University of Oxford and AstraZeneca plc showed promising results in early human testing.
  • Yield on the 10-year treasury stood at 0.61%.
  • West Texas Intermediate crude fell 0.3% to $40.69 per barrel.

Get your daily fix of the global markets here.

All You Need To Know Going Into Trade On July 21

Stocks To Watch

  • Majesco: The company's U.S. subsidiary has signed a definitive agreement to be acquired by Thoma Bravo LP, a PE firm focused on software and technology-enabled services. The transaction values the company at $594 million. It will now operate as a privately held company. Shareholders will receive $13.1 in cash for each share of the company common stock upon closing of the transaction. The price is a 74% premium to the average closing price during the 30-day period ended July 17. The gross value to be received by the company for its stake in the U.S. subsidiary in the merger is $420.66 million, as compared to the total investments of $68.67 million made by the company in its U.S. subsidiary till date.
  • InterGlobe Aviation: IndiGo, impacted by the pandemic, is flying only a small percentage of its fleet of 250 airplanes and will cut 10% of its workforce, CEO Ronojoy Dutta said in a statement. Impacted employees will be given a severance pay while medical insurance has been extended till December.
  • NTPC: Added 800MW of Lara Super Thermal Power Project, to the company’s installed capacity. With this, the total installed capacity of NTPC and NTPC group has become 51,155 MW and 62,910 MW respectively.
  • NHPC: In accord with Gedcol for Odisha solar power projects.
  • Wipro: Announced a partnership with Compliance Quest to develop management solutions for the medical devices and life sciences industries.
  • Balaji Telefilms: Resumed shoot of all television shows from July 16.
  • Tata Power: Arm Coastal Gujarat Power has allotted NCDs worth Rs 350 crore on a private placement basis.
  • Gateway Distriparks: The board approved a raising funds not exceeding Rs 150 crore on a rights basis, QIP and preferential allotment or any other combination thereof. Out of which, the board will issue 16.1 crore shares worth Rs 116 crore for its rights issue at a price of Rs 72 per share. The rights entitlement ratio has been fixed at 4 rights equity shares for every 27 equity shares held by the eligible shareholders. The record date for the same has been fixed at July 24. The issue opens on July 30 and closes August 13. The rights issue price is a 20% discount to Monday's closing price.
  • Chennai Petrochem: Allotted NCDs worth Rs 810 crore on a private placement basis.
  • Omaxe: Signs agreement with Jindal Steel and Power to develop a multi-level parking-cum-commercial project at Chandni Chowk with North Delhi Municipal Corporation. JSPL will supply 7000-8000 metric tonne of structure steel to Omaxe.
  • Quick Heal Tech: Promoter Jupiter Fund sold 3.29 lakh shares (0.51%) at Rs 118.9 per share
  • Nifty Earnings Today: Hindustan Unilever, Bajaj Finance, Bajaj Finserv, Axis Bank
  • Non-Nifty Earnings Today: HDFC Life, ICICI Prudential, SBI Life, Syngene, Tata Elxsi, Polycab, IndiaMART InterMESH, Hindustan Copper, Hindustan Zinc, Mahindra CIE, Somany Home Innovation.

Earnings Reported After Market Hours

ACC Q2CY20

  • Revenue down 37.3% to Rs 2,602.2 crore
  • Net profit down 40.5% to Rs 270.9 crore
  • Ebitda down 32.9% to Rs 525.3 crore
  • Ebitda margin at 20.1% from 18.8%
  • Volumes down 33.3% to 4.8 MT
  • Realisations flat at Rs 5,315 per tonne
  • Ebitda per tonne flat at Rs 1,094
  • Operational numbers better than expected due to higher prices and lower discounts
  • Other costs declined on a sequential basis by Rs 200 crore
  • All numbers are consolidated and compared on a year-on-year basis

Bombay Dyeing Q1FY21

  • Revenue down 85.9% to Rs 91.2 crore
  • Net loss of Rs 129.3 crore from net profit of Rs 27.7 crore
  • Ebitda loss of Rs 22.3 crore from Ebitda gain of Rs 133.6 crore
  • All numbers are consolidated and compared on a year-on-year basis

Den Networks Q1FY21

  • Revenue down 3.8% to Rs 301.3 crore
  • Net profit up more than five times to Rs 58.7 crore
  • Ebitda up 55.1% to Rs 63.9 crore
  • Ebitda margin at 21.2% from 13.2%
  • All numbers are consolidated and compared on a year-on-year basis

Brokerage Radar

PhillipCapital On Majesco Deal

  • Rating Under Review
  • Offer price of U.S. business is a 72% premium to the last closing price of the U.S. unit.
  • Majesco holds 74% stake in the U.S. entity
  • India unit to get $421 million of cash for its stake which is a 198% premium to its current market capitalisation
  • Cash accrual for the India unit post tax will be Rs 2,550 crore, representing a fair value of Rs 850 per share
  • Promoters have announced their intent to distribute the entire proceeds to shareholders in the form of buyback / dividend.

Investec On ACC

  • Buy rating maintained
  • Price target of Rs 1,491
  • Q2 performance stands out on multiple fronts
  • Price, discounts make up for volume decline
  • Working capital management aids operating cash flow
  • Healthy balance sheet and free cash flow yields
  • Potential higher payouts and changes in regulatory policies can be key levers

CLSA On ACC

  • Buy rating maintained
  • Price target raised to Rs 1,675 from Rs 1,575
  • Decline in volumes was higher than estimates
  • Volume decline offset by lower costs and higher realisations
  • Better positioned in the current environment due to renewed focus on costs and visibility on medium-term growth
  • Raise Ebitda estimates by 3-6%
  • Stock is trading at a 30% discount to peers

CLSA On Telecom

  • Prefer Bharti Airtel over Vodafone Idea
  • Retain buy rating on Bharti Airtel; cut price target to Rs 715 from Rs 720
  • Raise AGR risk for Bharti Airtel to Rs 48 per share
  • Downgrade Vodafone Idea to underperform from buy; cut price target to Rs 9.2 from Rs 14
  • Raise AGR risk for Vodafone Idea to Rs 12.4 per share
  • 20 years of staggered payments are likely and upcoming potential sector floor tariffs will compel promoters of Vodafone Idea to reconsider insolvency plans

Prabhudas Lilladher On SBI Cards

  • Buy rating maintained
  • Price target raised to Rs 974 from Rs 782
  • Focus on non-discretionary and digital spends translated into healthy loans
  • NPAs and provisioning, though declining, are masked due to the moratorium
  • Build-in elevated NPAs and credit costs for FY21
  • Geared to return to normalcy sooner than expected
  • Raise FY22-23 EPS estimates by 18% and 5% respectively

UBS On Infosys

  • Neutral rating maintained
  • Price target raised to Rs 1,020 from Rs 810
  • Handling of whistle-blower crisis in 2019 has been reassuring
  • Expect absolute upside to be capped though re-rating relative to the sector is sustainable
  • Raise FY21/22 EPS estimates by 13%/9% on stronger-than-expected FY21 guidance
  • Downside risks can come from demand, price competition and resultant earnings miss

Pledged Share Details

  • Zee Entertainment Enterprises: Promoter Cyquator Media invoked pledge of 18.3 lakh shares on July 15
  • Emami: Promoters revoked pledge of 3.4 crore shares on July 17
  • Eveready Industries: Promoter Williamson Magor invoked pledge of 37.1 lakh shares on July 14.
  • Omaxe: Promoter Guild Builders created pledge of 71.2 lakh shares on July 17

(As Reported On July 20)

Who’s Meeting Whom

  • Shriram City Union Finance: To meet Hara Global Capital Management on July 21
  • Eicher Motors: To meet BlackRock, HDFC Standard Life Insurance and White Oak Capital between July 21-23

Trading Tweaks

  • AGM Date: AU Small Finance Bank, Bajaj Finance, Bajaj Finserv, DCM Shriram, HDFC, HDFC Life Insurance, Polycab, Tata Elxsi, Ajanta Pharma, Colgate Palmolive, Vaibhav Global
  • Price Band Revised From 10% To 5%: Gujarat Fluorochemicals
  • Move Into ASM Framework: Kilpest India
  • Move Into Short-Term ASM Framework: Polychem
  • Move Out Of Short-Term ASM Framework: Affle, Diamines & Chemicals, Adani Transmission, Greenlam Industries, Texmo Pipes and Products

Money Market Update

  • The rupee ended with gains at 74.92 against the U.S. Dollar as compared to Friday's close of 75.02.
  • The rupee ended as the second best performing currency in Asia on Monday.
All You Need To Know Going Into Trade On July 21

F&O Cues

  • Nifty July futures closed at 11,009; a discount of 14 points from premium of 3 points
  • Nifty July futures add 2.6% and 2.7 lakh shares in Open Interest
  • Nifty Bank July futures closed at 22,287; a discount of 35 points from premium of 5 points
  • Nifty Bank July futures add 1.9% and 27,000 shares in Open Interest
  • Enter F&O Ban: Adani Enterprises, M&M Financial
  • Out of F&O Ban: PNB
  • Stocks In F&O Ban: Adani Enterprises, BHEL, Canara Bank, Century Textiles, Glenmark, Vodafone Idea, L&T Finance, M&M Financial, Nalco, Sun TV.

Nifty Monthly Expiry: July 23

  • Maximum Open Interest on Call side at 11,200 strike (27 lakh shares)
  • Maximum Open Interest on Put side at 10,800 strike (26.4 lakh shares)
  • Active Options: 11,000 Put (+10.2 lakh shares) and 11,400 Call (+7.8 lakh shares)

Nifty Monthly Expiry: July 30

  • Maximum Open Interest on Call side at 11,500 strike (27.2 lakh shares)
  • Maximum Open Interest on Put side at 10,000 strike (35.3 lakh shares)
All You Need To Know Going Into Trade On July 21
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