All You Need To Know Going Into Trade On July 23

Asian stocks opened modestly higher as investors brace for a busy week of U.S. corporate earnings and potential developments in trade negotiations.

Shares in Japan, Australia and South Korea edged higher. U.S. futures were little changed after gains in technology shares lifted stocks earlier. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, climbed 0.4 percent to 11,400 as of 7:35 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.

BQ Live

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

• Technology shares led gains among U.S. stocks following mixed sessions in Europe while Asia edged modest gains as investors looked ahead to a busy week of corporate earnings.
• Oil posted its biggest gain in more than a week, after Iran’s seizure of a British tanker fanned concerns of a confrontation that could disrupt Middle East supplies.
• Gold lost 0.5 percent to $1,417.99 an ounce.

For a detailed global markets wrap, click here.

Earnings Reaction To Watch

Kotak Mahindra Bank (Q1, YoY)

• Net interest income up 23 percent to Rs 3,173 crore.
• Net profit up 33 percent to Rs 1,360 crore but misses estimate.
• NPAs, margin remains stable.
• MSMEs contribute Rs 100 crore to total slippages of Rs 750 crore.
• Loan growth at 18 percent. (YoY).
• Loan growth in CV/CE segment at 1 percent. (QoQ)
• Management says growth will come mainly from consumer lending.

TVS Motor (Q1, YoY)

• Revenue up 7.2 percent to Rs 4,468.6 crore.
• Net profit down 2.9 percent to Rs 142.3 crore.
• Ebitda up 10.8 percent to Rs 355.8 crore.
• Margin widens to 8 percent.
• Depreciation up 28 percent to Rs 119.4 crore and finance cost up 62 percent at Rs 29.1 crore.

Coromandel International (Q1, YoY)

• Revenue down 15.7 percent at Rs 2,130.7 crore.
• Net profit down 30.8 percent at Rs 62.4 crore.
• Ebitda down 8.7 percent at Rs 195.3 crore.
• Margin widen to 9.2 percent.

United Spirits (Q1, YoY)

• Revenue up 7.2 percent to Rs 2433.1 crore.
• Net profit up 37.2 percent to Rs 202.1 crore.
• Ebitda up 52.2 percent to Rs 490.5 crore.
• Margin widens to 20.2 percent.

Just Dial (Q1, YoY)

• Revenue up 13.6 percent to Rs 240.2 crore.
• Net profit up 48.8 percent to Rs 57.3 crore.
• Ebitda up 12 percent to Rs 64.3 crore.
• Margin narrows to 26.8 percent.
• Other income up 3.8 times to Rs 31.1 crore.

Kirloskar Ferrous (Q1, YoY)

• Revenue down 2.9 percent to Rs 482 crore.
• Net profit up 75.2 percent to Rs 18.4 crore.
• Ebitda up 30.3 percent to Rs 45.1 crore.
• Margins widens to 9.4 percent.
• Other income down 18 percent at Rs 103.5 crore.

Allsec Technologies (Q1, QoQ)

• Revenue up 1.7 percent to Rs 67.4 crore.
• Net profit at Rs 11.9 crore.
• EBIT flat at Rs 13.2 crore.
• Margin widens to 19.6 percent.
• Provision for impairment of goodwill at Rs 12.5 crore in base quarter.

Can Fin Homes (Q1, YoY)

• Net interest income up 16.9 percent to Rs 147.9 crore.
• Net profit up 9.4 percent to Rs 80.1 crore.

Mastek (Q1, QoQ)

• Revenue down 7.3 percent to Rs 247.5 crore.
• Net profit down 11.7 percent to Rs 24.2 crore.
• EBIT down 12 percent to Rs 26.3 crore.
• Margin narrows to 10.6 percent.

Aptech (Q1, QoQ)

• Revenue down 18.5 percent to Rs 51.6 crore.
• Net profit down 34 percent to Rs 3.1 crore.
• EBIT down 42.9 percent at Rs 3.2 crore.
• Margin narrows to 6.2 percent.

Nifty Earnings To Watch

• Zee Entertainment Enterprises
• Larsen & Toubro
• Hindustan Unilever

Other Earnings To Watch

• NIIT Technologies
• Torrent Pharmaceuticals
• Bayer Cropscience
• CRISIL
• DCM Shriram
• Everest Industries
• HDFC Life Insurance Company
• HT Media
• JK Paper
• Jyothy Laboratories
• Kajaria Ceramics
• Linde India
• Mahindra & Mahindra Financial Services
• Mahindra EPC Irrigation
• Oriental Hotels
• Poddar Pigments
• Ponni Sugars (Erode)
• Praj Industries
• Rushil Decor
• Saven Technologies
• SBI Life Insurance Company
• Schaeffler India
• Shanthi Gears
• SKF India
• Sundaram Clayton
• Elantas Beck India
• GE Power India Limited
• Indian Overseas Bank

Stocks To Watch

• DHFL: NSE suspended trading in company’s eight NCDs with effect from July 31. Exchange stated that the reason for the suspension is redemption. Also, its joint auditors have listed several qualifications and disclaimers to the company’s annual financial statement and said its ability to continue as going concern is in “significant doubt”.
• Vadilal Industries: Rajesh Gandhi resigned as the chairman of the company with effect from July 22. Vijay Shah to be appointed in his place.
• TVS Motor Singapore arm to invest $7 million in Scienaptic Systems.
• BSE signed MoU with Shanghai Stock Exchange to facilitate maintenance of orderly securities markets in both India and China.
• MTNL: Fire broke out in company’s office in Mumbai.

Brokerage Radar

Kotak Mahindra Bank

CLSA

• Maintained 'Buy'; hiked target price to Rs 1,750 from Rs 1,665.
• CASA franchises aiding healthy growth in operating profit.
• Asset quality stable; weaker trends in subsidiaries.
• Premium valuations justified given better CASA, asset quality and management certainty.

UBS

• Maintained 'Buy' with target price of Rs 1,650.
• Strong quarterly performance despite slower loan growth.
• More market share gains with better pricing now.
• Management expects loans to grow around 20 percent.

Macquarie

• Downgraded to 'Neutral' from 'Buy'; cut target price to Rs 1,400 from Rs 1,445
• Consolidated loan growth of 15% at 10-quarter low.
• 811 customer acquisition engine is back on track but far from profitability.
• Cut FY20/21 EPS estimates by 14/19 percent due to slower loan growth and fee income.

Morgan Stanley

• Maintained 'Overweight' with target price of Rs 1,600.
• Good pre-provisioning operating profit and strong asset quality.
• Loan growth moderated, but guidance broadly unchanged.
• Key positive was 22 percent growth in core PPoP led by strong net interest income.

More Calls

HSBC on Indian two-wheelers

• Two-wheeler demand remains weak; demand recovery is still uncertain.
• Many impending headwinds − inventory correction, BS VI transition and EV overhang.
• Stick to companies with cheaper valuations and lesser exposure to higher-value discretionary bikes.
• Bajaj Auto: Maintained 'Buy'; cut target price to Rs 3,200 from Rs 3,400.
• Hero MotoCorp: Maintained 'Buy'; cut target price to Rs 3,000 from Rs 3,400.
• Eicher Motors: Maintained 'Hold'; cut target price to Rs 20,000 from Rs 22,000
• TVS Motor: Maintained 'Hold'; cut target price to Rs 470 from Rs 530.

Citi on GSK Pharma

• Maintained 'Sell' with target price of Rs 1,240.
• Decent start to the year; margin improves further.
• GSK’s efforts to rationalize its portfolio have begun paying off.
• Low earnings base phase coming to an end, also see earnings growth normalizing in future.
• Valuations remain rich.

CLSA on TVS Motor

• Maintained 'Sell' with target price of Rs 360.
• Modest Q1; weakening 2W industry outlook.
• Margins unlikely to improve amid cost pressures and weak demand.
• Despite sharp fall, valuations still expensive.

CLSA on Bharti Airtel

• Maintained 'Buy'; cut target price to Rs 415 from Rs 425.
• Premiumisation strategy to drive ARPU.
• A tough FY19 led to pressures on cashflow.
• Multiple fundraising for comfortable gearing.

Macquarie on United Spirits

• Maintained 'Neutral' with target price of Rs 565.
• Beat on account of higher margin.
• Margin boost due to lower employee cost, other expenses and advertising spend.
• Underlying revenue growth broadly in line.

Bulk Deals

• Garden Reach Shipbuilders: UTI AMC sold 6.71 lakh shares (0.59 percent) at Rs 129.74 each.

Trading Tweaks

• Arvind, Birlasoft, Engineers India, Hindustan Zinc, IDBI Bank, Kajaria Ceramics, MCX, Oracle Financial Services, Raymond— F&O contracts for new expiry months will not be issued. No contracts shall be available for this companies with effect from Sept. 27.
• Jain Irrigation Systems to move out of short term ASM Framework.
• DB Realty price band revised to 5 percent.

Who’s Meeting Whom

• Great Eastern Shipping to meet Nalanda Capital on July 24

Insider Trading

• Steel Strips Wheels promoter Sunena Garg acquired 11,000 shares on July 19.
• Hubtown promoter Rushank Shah acquired 12,000 shares on July 19.

Money Market Update

In the currency market, the implied opening from forwards suggest the pair may start trading around 68.9788 a dollar. Asian indexes are edging higher however the closely tracked South Korean won remains little changed. Dealers see the pair in a range of 68.70-69.20 a dollar in the day.

Sovereign bonds may focus on the Rs 9,800 crore state bond sale today after a sharp selloff in the market in the last session. The yield on the 10-year note climbed six basis points to close at 6.42 percent after the RBI Governor said further easing will be dependent on incoming data. For today, dealers see it trading between 6.40-6.45 percent in the day.

F&O Cues

Futures

• Nifty July futures closed at 11,360, premium of 14 points.
• Nifty futures open interest across series down 4 percent, sheds 7.3 lakh shares in open interest.
• Bank Nifty July futures closed at 29,389.6, premium of 104 points.
• Bank Nifty futures open interest across series down 7 percent, sheds 1.2 lakh shares in open interest.
• Nifty Rollover at 35 percent, Nifty Bank Rollover at 33 percent.

Options

• Nifty PCR at 1.00 versus 1.04 (across all series).

Nifty Monthly Expiry 25-July

• Max Open Interest on call side at 11,600 (32.5 lakh shares)
• Max Open Interest on put side at 11,300 (38 lakh shares)
• Max Open Interest addition seen in 11,400C (+22 lakh shares), 11,300P (+7.6 lakh shares)
• Open Interest shedding seen in 11400P (-7 lakh shares), 11500P (-4.7 lakh shares)

Stocks In F&O Ban

In Ban:

• DHFL
• Dish TV*
• IDBI Bank
• Reliance Infrastructure

Out Of Ban:

• Reliance Capital

New in ban