All You Need To Know Going Into Trade On July 24
Pedestrians wearing protective masks walk past porters outside Chhatrapati Shivaji Maharaj Terminus (CST) railway station during the morning rush hour in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

All You Need To Know Going Into Trade On July 24

Asian markets have followed their counterparts on Wall Street lower on the final trading day of the week.

An unexpected rise in U.S. jobless claims rekindled a concern that the recovery in the U.S. economy has stalled.

The U.S. Dollar has extended its slide for the week, while Gold headed towards the $1,900/Oz mark.

The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, fell 0.6% to 11,164 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 may influence equities in today’s session:

  • Benchmark indices in Australia, South Korea and Hong Kong have opened lower while those in Japan remain shut due to a holiday.
  • Futures on the Dow Jones trade higher by 50 points. The index ended 1.3% lower on Thursday.
  • Nasdaq fell from a four-month high to a two-week low and turned negative for the week after a warning in production delay from Intel, weighed on sentiment.
  • U.S. jobless claims rose unexpectedly for the first time since March.
  • “You have people taking the opportunity to get a little bit off the table,” Victoria Fernandez, Chief Market Strategist at Crossmark Global Investments Inc., said on Bloomberg TV.
  • Yield on the 10-year treasuries fell to 0.58%.
  • West Texas Intermediate crude was little changed at $41.11 per barrel.

Get your daily fix of the global markets here.

All You Need To Know Going Into Trade On July 24

Stocks To Watch

  • Wipro: Signs definitive agreement to acquire 4C - One of the largest salesforce partners in the U.K., Europe and the Middle East for 68 million Euros. The transaction is expected to be completed in the quarter ending September 30. Wipro has an established salesforce business in the Americas, Japan and Australia which was reinforced with the acquisition of Appirio in 2016.
  • Covid-19 Impact On HPCL: Sale of petroleum products in May was at 77% compared to last year while the figure in June stood at 91%. LPG demand saw a sharp rise during the lockdown period. Increased the production of LPG by optimising operations. Supplied an average of 12.5 lakh cylinders per day during the April-June period. Overall capacity utilisation of almost 100% for its Mumbai and Visakh refineries.
  • Yes Bank: Board approves allotment of 1,250.4 crore shares of face value of Rs 2 per share worth Rs 15,000 crore. Paid-up equity capital rises to Rs 5,011 crore from Rs 2,510 crore, post the offer.
  • Lupin: Gets tentative approval from the U.S. FDA for its Empagliflozin and Linagliptin tablets. The approval is to market a generic version of Glyxambi tablets of Boehringer Ingelheim Pharma. The said drug is indicated as an adjunct to diet and exercise to improve glycemic control in adults with type-2 diabetes mellitus.
  • Adani Transmission's Quarterly Business Update: Transmission lines are operating at greater than 99.5% availabilities and there is no adverse impact on billing. The continued lockdown has resulted in migration of resources affecting project execution work. This will result in a slight delay in Scheduled Commercial Operation Date (SCOD) of projects. Distribution losses at 13.47% from 7.78% where losses increased on provisional average billing. Issued required force majeure and change in law notices under the provisions of transmission services agreement to mitigate the losses due to time and cost overrun.
  • Future Consumer: Promoter future capital investment invoked pledge of 6.19 crore shares between April 30-July 22. Promoter stake now falls to 42.19% from 45.32%.
  • PNC Infratech: Gets Letter of Acceptance (LoA) from the NHAI for two EPC projects for an aggregate contract value of Rs 1,547.8 crore.
  • Non-Nifty Earnings Today: Ambuja Cements, Atul, CCL Products, Coromandel International, Crompton Greaves Consumer, GHCL, TCI Express, Welspun India

Earnings Reported After Market Hours

Biocon Q1FY21

  • Revenue up 14.5% to Rs 1,671 crore
  • Ebitda down 5.5% to Rs 413 crore
  • Ebitda margin at 24.7% from 30%
  • Net profit down 26% to Rs 168 crore
  • Higher taxation weighs on profit
  • Revenue from generics business up 16% to Rs 599 crore
  • Revenue from Biosimilars business up 19% to Rs 691.6 crore
  • Revenue from Research Services flat at Rs 421.6 crore
  • All numbers are consolidated and compared on a year-on-year basis

ABB India Q2CY20

  • Revenue down 43% to Rs 985.8 crore
  • Net profit down 77% to Rs 16.3 crore
  • Ebitda down 89.6% to Rs 11.1 crore
  • Ebitda margin at 2.4% from 7.2%
  • Robotics & Discrete Automation revenue down 64% to Rs 24.6 crore
  • Motion revenue down 35% to Rs 393.2 crore
  • Electrification revenue down 51% to Rs 357.8 crore
  • Industrial automation revenue down 37% to Rs 237.3 crore
  • All numbers are standalone and compared on a year-on-year basis

AU Small Finance Bank Q1FY21

  • Net Interest Income up 30.4% to Rs 515.8 crore
  • Net profit up 5.5% to Rs 200.8 crore
  • Provisions up to Rs 181.3 crore from Rs 31.5 crore
  • Gross NPA at 1.69% from 1.68% last quarter
  • Net NPA At 0.62% from 0.81% last quarter
  • Further provisions of Rs 140 crore against the potential impact of Covid-19 this quarter. Total Covid-19 provisions now at Rs 278 crore
  • AUM growth of 17% year-on-year
  • Complete moratorium availed by 11% of borrowers by value on gross advances as on June 30, 2020
  • Overall collection efficiency at 90% from 54% in April
  • All numbers are standalone and compared on a year-on-year basis

Zensar Technologies Q1FY21

  • U.S. Dollar revenue down 7% to $130.8 million
  • Revenue down 2.6% to Rs 991.2 crore
  • Net profit up 5.5% to Rs 73.3 crore
  • Ebit up 0.6% to Rs 83.4 crore
  • Ebit margin at 8.4% from 8.1%
  • Lower other expenses aid margins
  • All numbers are consolidated and compared on a quarter-on-quarter basis

Repco Home Finance Q4FY20

  • Net Interest Income up 20.7% to Rs 131.6 crore
  • Net profit up 2.8% to Rs 55.9 crore
  • Loan book up 7% to Rs 11,826.1 crore
  • Provisions for expected credit loss at Rs 213.9 crore
  • Provisions for Covid-19 at Rs 39.3 crore
  • Not sought moratorium on its borrowings from banks and other financial institutions
  • Collected June EMI's from 68% of its customers
  • All numbers are consolidated and compared on a year-on-year basis

Mphasis Q1FY21

  • Revenue down 2.5% to Rs 2,288 crore
  • Ebit down 6.3% to Rs 359 crore
  • Ebit margin at 15.7% from 16.3%
  • Net profit down 22% to Rs 275 crore
  • All numbers are consolidated and compared on a year-on-year basis

Brokerage Radar

CLSA On Indian Telecom

  • India mobile active subscribers declined 33 million in FY20
  • Jio's divergence between active and reported subscribers was up 310 basis points to 19% year-on-year
  • Bharti Airtel maintained active subscriber share at 32%
  • Forecast sector mobile data penetration will rise 19 percentage points to 77% by FY22 CL

JPMorgan On HDFC AMC

  • Neutral rating maintained
  • Price target raised to Rs 2,800 from Rs 2,400
  • Market share loss remains concerning
  • Equity volatility weighs on Q1 performance
  • Ability to retain market share crucial to sustain earnings multiple
  • Volatile markets and increasing share of retail participation directly in the market could remain an overhang on equity flows in the near-term
  • Raise FY21/22 EPS estimates by 13-16%
  • Cut Operating margin assumptions for FY21 to 38 basis points from 41 basis points last year

BofA Securities On HDFC AMC

  • Buy rating maintained
  • Price target cut to Rs 3,020 from Rs 3,230
  • Believe margins have bottomed out and see improving trajectory
  • Expect recovery in AUM share of high margin equity
  • Factor in operating margins of 39 basis points for FY21

BofA Securities On PNB Housing Finance

  • Underperform rating maintained
  • Raise price target by 13% to Rs 215
  • Stock may have reacted positively on resolution of three corporate accounts and encouraging guidance on progress on two more accounts over the next one month
  • 85% of corporate AUM still under moratorium
  • Potential asset quality deterioration in the corporate segment remains a key overhang
  • Significant recoveries to be an upside risk for the stock
  • Retain underperform rating till asset quality issues are firmly behind

Morgan Stanley On JSPL

  • Overweight rating maintained
  • Price target raised to Rs 215 from Rs 198
  • Could deliver healthy operating performance for the rest of FY21
  • Refinancing of international debt would be key re-rating trigger
  • Balance sheet concerns on liquidity appear manageable
  • Cost savings of Rs 2,500 per tonne during the quarter a positive surprise
  • Estimate potential shortfall of Rs 2,500 crore in free cash flow to meet debt obligations
  • Divestment of Oman business could help improve return ratios
  • Revised consolidated FY21-23E Ebitda estimates higher by 3-6%

Nifty Earnings Today

Earnings Estimate: ITC Q1FY21

  • Net sales seen 29.5% lower at Rs 8,106 crore
  • Net profit seen 33% lower at Rs 2,130 crore
  • Ebitda seen 41% lower at Rs 2,675 crore
  • Ebitda margin seen at 33% from 39.7%
  • All estimates are standalone and compared on a year-on-year basis

Key Factors At Play For ITC:

  • 40 days of complete lockdown to impact cigarette sales
  • Lower cigarette sales to result in sharp operating profit dip
  • Cigarette sales likely to normalise over the next quarter
  • FMCG, Hotels business to see drop in revenue
  • Agri-business revenue likely to remain steady
  • Paper and paper boards business to decline

Earnings Estimate: Asian Paints Q1FY21

  • Revenue seen 55% lower at Rs 2,324 crore
  • Ebitda seen 73% lower at Rs 313 crore
  • Ebitda margin seen falling to 13.5% from 22.5%
  • Net profit seen 86% lower at Rs 91 crore

Key Factors At Play: Asian Paints

  • Volume growth in domestic paints business (Estimates range for a de-growth between 50-55%)
  • Management commentary on post lockdown demand outlook and recovery
  • Impact on gross margins from prices of key raw materials and product mix trends

Earnings Estimate: Zee Entertainment Q4FY20

  • Revenue down 7% to Rs 1,868 crore
  • Net profit seen 2% lower at Rs 287 crore
  • Ebitda seen 22% lower at Rs 448 crore
  • Ebitda margin seen lower at 24% from 29%

Key Factors At Play: Zee Entertainment

  • Ad revenue may decline due to sustained macro slowdown
  • Covid-19 shutdown leading to lack of fresh content and a strong base quarter may weigh
  • Domestic subscription revenue expected to rise
  • International subscription revenue may decline
  • Sharper decline in operational revenue may impact margins

Earnings Estimate: JSW Steel Q1FY21

  • Likely to report first consolidated net loss since Q2FY14
  • Revenue seen 38% lower at Rs 12,192 crore
  • Ebitda seen 72% lower at Rs 1,039.9 crore
  • Ebitda margin seen at 8.5% from 18.8%
  • May report net loss of Rs 709 crore as compared to a net profit of Rs 1,028 crore
  • All estimates are consolidated and compared on a year-on-year basis

Key Factors At Play For JSW Steel:

  • Lower volumes, higher export realisations to weigh on operational performance
  • Lower iron ore prices may provide some respite
  • Domestic steel consumption fell 57% during the quarter
  • Overseas subsidiaries continue to weigh on net profit
  • Commentary on price hike, FY21 production guidance target, net debt levels, commentary on overseas subsidiary and Bhushan Power some key points to watch

Pledged Share Details

  • Adani Transmission: Promoter SB Adani Family Trust created pledge of 2.46 crore shares on July 20
  • Adani Ports & SEZ: Promoter SB Adani Family Trust created pledge of 7.96 crore shares on July 20
  • Adani Green Energy: Promoter SB Adani Family Trust created pledge of 1.15 crore shares between July 20-23

(As Reported On July 23)

Bulk Deals

  • IndiaMART InterMESH: Norges Bank acquired 1.49 lakh shares (0.51%) at Rs 2,350 per share and Amadeus Group sold 3.59 lakh shares (1.24%) at Rs 2,368.03 per share.
  • Rossari Biotech: Goldman Sachs acquired 4.81 lakh shares at Rs 692.17 per share.

Trading Tweaks

  • AGM Date: Wockhardt, Strides Pharma, Cyient, ABB, Biocon, Coromandel International, CCL Products, CG Consumer Electricals, Nath Biogenes, Persistent Systems, Grindwell Norton, TCI Express, Religare Enterprises, Wendt
  • Record Date For Rights Issue: Gateway Distriparks (Rights issue at 4:27, premium at Rs 62 per share)
  • Price Band Revised From 10% To 5%: Heritage Foods, Tribhovandas Bhimji Zaveri
  • Price Band Revised From 20% To 10%: Indo Count Industries, Yes Bank
  • Move Out Of Short-Term ASM Framework: Indo Amines
  • Move Into Short-Term ASM Framework: Matrimony.Com

Insider Trades

  • Apollo Tyres: Promoter Sunrays Properties & Investments acquired 9.44 crore shares on July 22
  • Sagar Cements: Promoter RV Consulting acquired 4.5 lakh shares on July 20

(As Reported On July 23)

Money Market Update

  • The rupee ended unchanged on Thursday at 74.76 against the U.S. Dollar which was the closing level for the currency on Wednesday as well.
All You Need To Know Going Into Trade On July 24

F&O Cues

  • Nifty July futures closed at 11,207; discount narrows to 8 points from 22 points
  • Nifty July futures shed 0.7% and 69,000 shares in Open Interest
  • Nifty Bank July futures closed at 23,095; premium of 11 points from discount of 78 points
  • Nifty Bank July futures shed 5% and 84,000 shares in Open Interest
  • Stocks In F&O Ban: Adani Enterprises, BHEL, Escorts, Glenmark, GMR Infra, Vodafone Idea, JSPL, L&T Finance, M&M Financial, Nalco, SAIL, Sun TV

Nifty Monthly Expiry: July 30

  • Maximum Open Interest on Call side at 11,500 strike (33 lakh shares)
  • Maximum Open Interest on Put side at 11,000 strike (38 lakh shares)
  • Active Options: 11,100 Put (+8 lakh shares), 11,400 Call (+5.8 lakh shares)
All You Need To Know Going Into Trade On July 24
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