Exchange staff talk whilst examining financial data on computer screens on the trading floor. (Photographer: Jason Alden/Bloomberg)

All You Need To Know Going Into Trade On July 5

Asian stocks saw a muted start to trading Friday with no direction from their U.S. counterparts thanks to the American holiday.

Shares in Japan, Australia and South Korea were little changed, as were U.S. futures.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded little changed at 11,981 as of 6:40 a.m.

Prime Minister Narendra Modi has his first chance since a decisive election win to put the Indian economy back to track. Newly appointed Finance Minister Nirmala Sitharaman is expected to boost spending and provide tax relief to consumers in her maiden Union Budget.

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BQ Live

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

U.S. Market Update

  • U.S. markets equity markets were closed Thursday for the Independence Day holiday.
  • U.S. 10-year Treasuries fell one basis point to 1.94 percent.

Also read: More Joy for Emerging Markets Now Hinges on Fed, Survey Shows

Asian Market Cues

  • Topix Index was little changed.
  • S&P/ASX 200 rose 0.1 percent.
  • Kospi Index rose 0.1 percent.
  • Futures on the S&P 500 Index increased 0.1 percent.

Also read: China Bond Defaults Are Looking Less Scary. Why That Won’t Last

Commodity Cues

  • Brent crude fell for the second consecutive trading session, down 0.14 percent.
  • West Texas Intermediate crude fell 1 percent to $56.76 a barrel.
  • Gold was little changed at $1,416.94 an ounce.

Also read: Oil Set for Weekly Decline as Economic Worries Trump OPEC Cuts

London Metal Exchange

  • Copper ended higher for the second day, down 0.03 percent.
  • Tin ended higher for the second consecutive trading session, up 0.22 percent.
  • Zinc ended lower for the second consecutive trading session, down 0.98 percent.
  • Aluminium ended higher for the second consecutive trading session, up 0.95 percent.
  • Nickel resumed declines after a one-day rally, closed 0.08 percent lower.
  • Lead halted a four-day decline, closed 0.03 percent higher.

Also read: The Biggest Winner From a Rise in Precious Metals

Budget Day Guide

Fiscal Deficit Forecast

The Economic Survey presented yesterday by Chief Economic Adviser Krishnamurthy Subramanian pegs the general government fiscal deficit, which includes the deficit of the central government and state governments, at 5.8 percent.

The central government managed to meet its revised fiscal deficit projection of 3.4 percent of GDP in the previous fiscal, according to data from the Controller General of Accounts.

All eyes are on the fiscal deficit projection for the current fiscal. While the interim budget had pegged 2019-20 deficit at 3.4 percent, fears abound on whether a revenue shortfall will allow for that deficit projection to be maintained.

Also read: Economic Survey 2019: All You Need To Know 

Read more stories on Economic Survey here

GDP Forecast

The real gross domestic product growth for the current fiscal year started April 1 is projected at 7 percent, according to the annual Economic Survey report.

The forecast marks an improvement from the 6.8 percent expansion last year, and is the same as the Reserve Bank of India’s reading, which in June lowered its projection by 20 basis points from 7.2 percent.

According to the survey, India needs a growth rate of 8 percent to reach its goal of becoming a $5 trillion economy by 2025

Click here to read all the stories on Union Budget 2019

Stocks To Watch

  • Sobha Q1 results operational update: New sales volume rose 11 percent to 1.06 million square feet, year-on-year. Total sales value increased 8 percent to Rs 611.8 crore. However, the average price realisation fell 8 percent to Rs 7,312 per square feet due to change in sales mix across various projects.
  • Majesco statutory auditors Varma & Varma resigned from post with effect from July 3. MSKA & Associates were appointed as statutory auditors.
  • Yes Bank acquired 9.47 percent Stake In Eveready Industries as the Bank invoked pledge of 68.8 lakh shares on July 3. This was due to the breach of terms of credit facilities sanctioned by the bank to the company’s arm Mcleod Russel.
  • Spencer’s Retail completed the acquisition of 44.58 crore shares of Godrej Industries in Natures Basket. Now, the target company will become wholly owned arm of Spencer Retail.
  • Pfizer received Maharashtra MIDC approval for business transfer to Vidhi for a consideration of Rs 178 crore.
  • L&T Finance Holdings arm received $550 million in an External Commercial Borrowing investment round from World Bank’s arm, BNP Paribas, Citi Bank and DBS Bank.
  • L&T Infotech clarified that the company is not subject to any enquiry by U.S. CIS and the company doesn’t comment on client specific matters which are in line with contractual obligations.
  • Srei Infra Finance board approved consolidating the lending business of the company with its wholly owned arm Srei Equipment Finance into one entity since the focus for last four years has been on growing equipment financing and reducing the infrastructure loan portfolio, as stated in the company’s press release.
  • Bharat Financial Inclusion board filed certified copy of NCLT order to Registrar of Companies on scheme of merger of the company with IndusInd Bank. The bank will issue its 639 equity shares for every 1,000 shares held in Bharat Financial Inclusion.
  • ONGC’s foreign arm ONGC Videsh picked ANZ, Bank of India and Wetspac for refinancing a $500 million loan. (Bloomberg News)
  • KRBL Enforcement Directorate attached under PMLA the land and rice mill company at Sangrur, Punjab worth Rs. 15.32 crores in kickback case of M/s Embraer SA, Brazil. (Twitter)
  • Maruti Suzuki CCI ordered probe on the company after dealer complaint. The probe is on alleged anti-competitive conduct in implementing discount control policy on dealer. (CCI Press Release)
  • GMR Group sold their entire stake of 47.62 percent in GMR Chhattisgarh Energy to Adani Power, according to its media statement. The group also stated that corporate guarantees worth Rs 892 crore furnished the group arms GMR Energy and GMR Power Corporation shall be released,
  • Usha Martin said that they had completed the transfer of the operative iron-ore mine and coal mine under development to Tata Sponge Iron.
  • Hindalco will have to tackle European antitrust objections on its plan to buy aluminum producer Aleris Corporation to expand as a supplier to the car industry. Novelis said the European Commission sent it a statement of objections to the proposed purchase. (Bloomberg News)

Earnings Reaction To Watch

GM Breweries (Q1, YoY)

  • Revenue up 7.4 percent to Rs 118.6 crore.
  • Net profit down 26.6 percent to Rs 16.3 crore.
  • Ebitda down 23.9 percent to Rs 25.8 crore.
  • Margin at 21.8 percent versus 30.7 percent.

Bulk Deals

Super Shakti Metaliks.

  • Aviator Emerging Market Fund acquired 83,400 shares (1.45 percent) at Rs 407 each.
  • LTS Investment Fund sold 83,400 shares (1.45 percent) at Rs 407 each.

Allsec Technologies.

  • SSD Securities acquired 6 lakh shares (3.94 percent) at Rs 286.17 each.
  • First Carlyle Ventures Mauritius sold 6.84 lakh shares (4.49 percent) at Rs 286.49 each.

Pledge Share Details

  • Asahi India Glass promoter and director Sanjay Labroo created pledge of 4 lakh shares on June 28.
  • Adani Transmission promoter group Gautam Adani created pledge of 61.27 lakh shares on July 3.

Trading Tweaks

  • Apcotex Industries record date for share split from Rs 5 to Rs 2.
  • Star Cement, Sasken Technologies, Welspun Corp record date for share buyback.
  • Madras Fertilizers to move into short term ASM Framework.
  • V2 Retail, Vikas EcoTech to move out of short term ASM Framework.

Who’s Meeting Whom

  • Thyrocare Technologies to meet Baring Private Equity Asia on July 5.

Insider Trading

  • Thyrocare Technologies promoter group A Velumani HUF acquired 1.32 lakh shares from June 24-28.
  • Mindtree promoter L&T acquired 8.71 lakh shares on July 3.

Money Market Update

  • The rupee on Thursday strengthened for the ninth straight session to 68.52/$ versus Wednesday’s closing of 69.89/$ on Wednesday, forging the longest winning streak in 20 months.

F&O Cues

July Futures

  • Nifty futures closed at 11,979.6, premium at 33 points versus 32 points.
  • Nifty futures open interest down 0.4 percent, sheds 68,000 shares in open interest.
  • Bank Nifty futures closed at 31,548.2, premium of 76 points versus 113 points.
  • Bank Nifty futures across series open interest up 7 percent, adds 1.1 lakh shares in open interest.

Options

  • Nifty PCR at 1.48 versus 1.39 (across all series).

Nifty Weekly Expiry 11-July

  • Max open interest on call side at 12,000 (12.6 lakh shares).
  • Max open interest on put side at 11,800 (8.8 lakh shares).
  • Open Interest addition seen in 12,000C (+5.7 lakh shares), 11,000P (+5.5 lakh shares), 11,800P (+4.4 lakh shares).

Nifty Monthly Expiry 25-July

  • Max open interest on call side at 12,000 (16.6 lakh shares).
  • Max open interest on put side at 11,500 (16.6 lakh shares).

Stocks In F&O Ban

In Ban:

  • DHFL
  • Reliance Capital

Stock Futures OI Series

Fund Flows

All You Need To Know Going Into Trade On July 5

Brokerage Radar

ICICI Securities on Strides Pharma

  • Upgraded to ‘Buy’ from ‘Add’; cut price target to Rs 472 from Rs 544.
  • Warning letter at Puducherry would not affect the supplies of its six products.
  • Do expect delay in new approvals and incremental cost pertaining to remedial measures.
  • Lower valuation multiple due to warning letter at Puducherry and exit from high margin and value Australia business.

Morgan Stanley on Zee Entertainment

  • Maintained ‘Underweight’ with a price target of Rs 370.
  • Traditional business has held up well so far.
  • Success in digital remains critical in medium to long term, which may require significant investments.
  • Promoter stake sale is due this month; await details on announcement and strategy going forward.

Jefferies on Petronet LNG

  • Maintained ‘Buy’; hiked price target to Rs 315 from Rs 300.
  • Expect steady June quarter despite a soft macro.
  • Strong growth years now appear behind it.
  • Maintain by on undemanding valuations and for higher payouts.

HSBC on Oberoi Realty

  • Downgraded to ‘Hold’ from ‘Buy’; maintained price target at Rs 630.
  • Downgrade on valuation and fund deployment remain concerns.
  • Cautious stance has resulted in non-deployment of funds raised a year back.
  • Expect opportunities to continue to emerge, but deployment remains a challenge.

Citi on Marico

  • Maintained ‘Buy’ with a price target of Rs 415.
  • Steady growth with improving trends in hair oils.
  • Expect 9 percent revenue growth in June quarter, largely driven by volumes.
  • Preferred pick in India staples.

Citi on Sobha

  • Maintained ‘Buy’ with a price target of Rs 625.
  • Decent pre-sales growth in June quarter.
  • Average price realisation down due to change in sales mix across various projects.
  • Sobha continues to deliver steady growth in sales with healthy underlying cash flows.

Bloomberg Quint

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