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All You Need To Know Going Into Trade On July 31
Stocks in the news, big brokerage calls of the day, complete trade setup and much more!
31 Jul 2020, 08:15 AM IST 
A strawberry frosted donut with sprinkles is arranged for a photograph at a Dunkin’ Donuts Inc. location in Los Angeles. (Photographer: Patrick T. Fallon/Bloomberg)
Asian markets have opened lower on the final trading day of the week.
Data showed that the U.S. economy had the sharpest contraction on record, which resulted in a weak session on wall street.
The Bloomberg Dollar spot index is set for its worst month in a decade. The GDP data also resulted in a gain in treasuries.
The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, rose 0.4% to 11,145 as of 7:05 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, Australia and South Korea have opened with losses in early trading.
- Futures on the Dow Jones are trading higher by 130 points as of 7:10 a.m. The index ended 0.8% lower on Thursday.
- The number of Americans filing for unemployment benefits increased last week.
- U.S. President Donald Trump floated the idea of delaying the November 3 election until the pandemic eases.
- China's manufacturing data for July indicated a slow mend for Asia's largest economy.
- Yield on the 10-year treasuries fell to 0.54%.
- West Texas Intermediate Crude rose 0.8% to $40.22 per barrel.
Get your daily fix of the global markets here.
Earnings Fineprint: Reliance Industries Q1FY21
- Revenue down 43.8% to Rs 88,253 crore
- Net profit up 31% to Rs 13,233 crore
- Exceptional gain of Rs 4,966 crore on transfer of petrol marketing business to Reliance-BP Joint Venture contributes to profit
- Ebitda down 20.8% to Rs 16,875 crore
- Ebitda margin at 19.1% from 13.6%
- Gross Refining Margins at $6.3 per barrel from $8.1 per barrel
- GRM impacted by lower product cracks and narrower light-heavy crude differential
- Inventory loss of Rs 1,637 crore due to sharp drop in crude prices
- Petrochemical segment revenue down 33% to Rs 25,192 crore
- Refining segment revenue down 54% to Rs 46,642 crore
- Retail revenue down 17% to Rs 31,633 crore
- Finance cost up 32% to Rs 6,375 crore
- All numbers are consolidated and compared on a year-on-year basis
Opinion
RIL Q1 Results: Exceptional Gain Masks Sharp Fall In Refining, Petchem Revenues
Earnings Fineprint: Reliance Jio Q1FY21
- Revenue up 11.6% to Rs 16,557 crore
- Net profit up 8.1% to Rs 2,520 crore
- Ebitda up 13.4% to Rs 7,005 crore
- Ebitda margin at 42.3% from 41.6%
- ARPU at Rs 140.3 from Rs 130.6
- Sustained subscriber momentum, tariff hikes contribute to ARPU growth
- Reliance Industries to hold 66.48% stake in Jio platforms on a fully diluted basis
- Total data consumption on network up 11% to 1,420 crore GB
- All numbers are standalone and compared on a quarter-on-quarter basis
Opinion
Reliance Jio Q1 Results: Profit, ARPU Rise On The Back Of Tariff Hikes
Stocks To Watch
- Lakshmi Vilas Bank: Extends the exclusivity period for the proposed amalgamation of Clix Capital Service and Clix Finance into the bank till September 15, due to delay in the mutual due diligence and preparation of documents for regulatory requirements due to the Covid-19 situation and travel restrictions.
- HDFC: Public shareholders give nod to raise up to Rs 1.25 lakh crore via NCDs. Shareholders also approve sale of shares held in HDFC Life Insurance an HDFC Ergo General Insurance which will be pursuant to RBI guidelines / approval.
- Wipro: Awarded multi-year contract by U.K.-based Metro Bank for I.T. solutions.
- InterGlobe Aviation: Board has decided to further deliberate on the matter relating to raising of funds at a subsequent meeting.
- Jet Airways: Pursuant to NCLT Order, and in exercise of its buyout option, the company has made payment of $13 million to the lessors of the six aircrafts.
- UltraTech Cement: Completed the divestment process of Shandong Binani Rongan Cement upon receipt of all regulatory approvals.
- Dixon Technologies: Government of India puts import of TV sets in restricted list. Importers will have to approach DGFT to apply for licence before importing TV sets.
- Bata: LIC increased its stake to 6.47% from 4.46% in the company from August 2019 till July 29
- Satin Creditcare Network: Board approves rights issue worth Rs 120 crore. To issue 2 crore rights shares at Rs 60 per share. The rights issue price is a 24% discount to Thursday's closing price. The rights entitlement ratio is set at 48 rights shares for every 125 shares held as on the record date. The record date has been set as August 5.
- Adani Power: CCI has approved the acquisition of 49% stake in Odisha Power Generation Corporation.
- Indian Overseas Bank: Board approved issuing equity share to a maximum extent of 500 crore equity shares by way of public offer, rights issue and also approved to raise tier-II capital up to Rs 1,500 crore.
- Tata Power: Shareholders give nod to issuance of equity shares to promoter Tata Sons on a preferential basis.
- REC: Bloomberg News reports that the company has asked a contractor to remove a Chinese supplier from a smart meter contract in Jammu and Kashmir to comply with new import regulations. The company said that it is reviewing power contracts to comply with import curbs.
- Kesoram Industries: Board approved raising Rs 2,000 crore via debt and equity.
- Future Supply Chain Solutions: CARE Ratings has downgraded the company’s long-term banking facilities, NCDs and long-term loans to CARE BB+ from CARE A-, due to weakening of business and financial risk profile on account of extended lockdown due to Covid-19. Credit watch changed from negative implications to developing implications.
- Rashtriya Chemicals & Fertilizers: Board to consider raising Rs 500 crore via NCDs on August 5.
- Amber Enterprises: To consider raising funds on August 7.
- Covid-19 Impact On Sagar Cements: Opted to avail the RBI's moratorium on working capital and term-loan facilities. However, the company has serviced its interest and repayment commitment to IFC against the outstanding debentures in the books of its 100% subsidiary Sagar Cements (R) Ltd.
- Can Fin Homes: Board approved appointment of Canara Bank’s MD and CEO Lingam Venkata Prabhakar as the company’s additional director (non-executive) till December 2022.
- CSB Bank: Reduced MCLR by 30-40 basis points across various tenors with effect from August 1. One-month MCLR at 7.9% and six month MCLR at 8.6%.
- Nifty Earnings Today: Indian Oil Corporation, State Bank of India, UPL, Tata Motors, Sun Pharma
- Non-Nifty Earnings Today: Deepak Fertilisers, Dr Lal Pathlabs, Thyrocare, Godrej Agrovet, JSW Energy, Motilal Oswal, NIIT, Tata Chemicals, Teamlease.
Earnings Reported After Market Hours
Torrent Pharma Q1FY21
- Revenue up 1.7% to Rs 2,056 crore
- Net profit up 48.6% to Rs 321 crore
- Ebitda up 22.2% to Rs 661 crore
- Ebitda margin at 32.1% from 26.8%
- Lower other expenses, employee and raw material costs contribute to margin expansion
- India business revenue up 2% to Rs 925 crore
- U.S. business revenue down 1% to Rs 373 crore. Constant currency sales at $47 million.
- Brazil business revenue down 20% to Rs 140 crore
- Germany business revenue down 6% to Rs 246 crore
- All numbers are consolidated and compared on a year-on-year basis
Lakshmi Vilas Bank Q1FY21
- Net Interest Income down 27% to Rs 90 crore
- Net loss narrows to Rs 112.3 crore from Rs 237.2 crore
- Provisions at Rs 72.6 crore from Rs 154.6 crore
- Gross NPA flat at 25.4% from 25.39% last quarter
- Net NPA at 9.64% from 10.04% last quarter
- Total Covid-19 related provisions at Rs 20.26 crore, of which Rs 10.25 crore have been provided this quarter
- All numbers are standalone and compared on a year-on-year basis
Brokerage Radar
Macquarie On HDFC
- Outperform rating maintained
- Price target of Rs 2,095
- Decent show in a tough quarter
- 70% of builder loan book is under moratorium
- Challenges to retail loan growth remain owing to lockdowns
- Excess provisions can cushion against future losses
- Recoveries related to Jet Airways and Orissa Slurry exposure will be accounted for next quarter
- Best Housing Finance company to own with a sound balance sheet
- Expect HDFC to capture market share in the long run.
- Recent capital raise announced will be an added catalyst
CLSA On HDFC
- Outperform rating maintained
- Price target of Rs 2,100
- Remain less worried on ultimate loss in individual mortgages
- Moratorium in the non-individual book, though well-collateralised, should lead to uncertainty
- Expect Loan/NII growth to revert to 10-12% from FY22
- Valuations are reasonable
CLSA On Dabur
- Buy rating maintained
- Price target raised to Rs 590 from Rs 565
- Structural growth prospects from diversified portfolio and dynamic new management
- Valuation is yet to capture its long-term growth potential
- Raise earnings and EPS estimates by 4%
JPMorgan On Reliance Industries
- Neutral rating maintained
- Price target raised to Rs 1,860 from Rs 1,490
- Valuations are stretched on a bottom-up basis
- Even in FY23, core energy and telecom business will account for 87% of Ebitda
- More downgrades likely for consensus EPS
- Need to see tangible progress on various digital / commerce initiatives and various investments translate into business initiatives
- Continued shutdowns remain a key risk
BofA Securities On Reliance Industries
- Buy rating maintained
- Price target of Rs 2,355
- Scaling JioMart and store openings to drive retail growth
- Stock may take a breather in the near-term due to strong performance
- Maintain buy rating as contribution from high multiple consumer / tech business continues to rise
Pledged Share Details
- Zee Entertainment Enterprises: Promoter Essel Corporate invoked pledge of 10.36 lakh shares on July 27
- Emami: Promoter Diwakar Vinyog released pledge of 40 lakh shares on July 29
- Ruchi Soya Industries: Promoter Patanjali Ayurveda created pledge of 19.25 crore shares on July 21.
(As Reported On July 30)
Bulk Deals
- Future Supply Chain Solutions: Dhunseri Ventures acquired 2.41 lakh shares (0.55%) at Rs 158.1 per share.
- AU Small Finance Bank: Westbridge AIF acquired 59.88 lakh shares (1.95%) at Rs 746.4 per share and Redwood Investment sold 69.23 lakh shares (2.26%) at Rs 746.4 per share. Other buyers included Abu Dhabi Investment Authority (1.35 lakh shares), Reliance Mutual Fund (4 lakh shares) and Morgan Stanley (4 lakh shares).
Trading Tweaks
- AGM Date: Axis Bank, Atul, Bank of Baroda, Bharti Airtel, Blue Dart Express, Cyient, Godrej Agrovet, Orient Cement, Shriram City Union Finance, Indian Bank, Equitas Holdings, Sundaram Brake Linings, Camlin Fine Sciences, Canara Bank, Central Bank of India.
- Fund Raising: Motilal Oswal Financial Services
- Price Band Revised From 20% To 10%: DPSC
- Price Band Revised From No Band To 20%: Just Dial, NCC
- Move Into Short-Term ASM Framework: DPSC, Tarmat, Onward Technologies
- Move Out Of Short-Term ASM Framework: Kamat Hotels
Insider Trades
- Mindtree: Promoters sold 5.1 lakh shares on July 29
- Persistent Systems: Promoter Rama-Purushottam Foundation sold 1.4 lakh shares on July 28
(As Reported On July 30)
Money Market Update
- The rupee ended at 74.85 against the U.S. Dollar on Thursday, paring Wednesday's modest gains. The currency ended at 74.80 on Wednesday.
F&O Cues
- Nifty August futures closed at 11,084.65; discount of 18 points from premium of 10 points
- Nifty August futures add 48% and 37.15 lakh shares in Open Interest
- Nifty Bank August futures closed at 21,619; discount of 28 points from premium of 54 points
- Nifty Bank July futures add 66% and 5.5 lakh shares in Open Interest
Nifty Monthly Expiry: August 6
- Maximum Open Interest on Call side at 11,500 strike (15.9 lakh shares)
- Maximum Open Interest on Put side at 11,000 strike (15.7 lakh shares)
- Active Options: 11,000 Put (+8.2 lakh shares) and 12,000 Call (+9.9 lakh shares)
Nifty Monthly Expiry: August 27
- Maximum Open Interest on Call side at 11,500 strike (18 lakh shares)
- Maximum Open Interest on Put side at 11,000 strike (31 lakh shares)
