All You Need To Know Going Into Trade On July 8

Stocks in Asia dipped at the start of the week after their U.S. counterparts retreated and Treasury yields rose Friday on the strong jobs report.

South Korean shares bore the brunt of losses, with shares in Japan and Australia also falling. S&P 500 futures edged lower. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.3 percent to 11,779 as of 7 a.m.

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BQ Live

U.S. Market Check

• U.S. stocks fell from all-time highs, Treasuries tumbled and the dollar rallied after a strong jobs report clouded the Federal Reserve’s rate plans.
• The yield on 10-year Treasuries climbed less than one basis point to 2.04 percent.

Asian Cues

• Futures on the S&P 500 Index slid 0.1 percent.
• Japan’s Topix index slid 0.3 percent.
• South Korea’s Kospi index retreated 1 percent.
• Australia’s S&P/ASX 200 Index slipped 0.3 percent.

Commodity Cues

• Gold fell 0.2 percent to $1,396.77 an ounce.
• West Texas Intermediate crude rose 0.1% to $57.57 a barrel.
• Brent crude fluctuated between gains and losses to trade little changed at $64.21 a barrel.

London Metal Exchange

• Copper halted a two-day fall, closed 0.3 percent lower.
• Lead resumed declines after a one-day breather. ended 0.5 percent lower.
• Tin ended flat after gaining for two consecutive trading sessions.
• Zinc ended lower for the third day, down 0.74 percent.
• Aluminium halted a two-day gains, ended 0.22 percent lower.
• Nickel ended 1.13 percent higher.

Key Events/Data To Watch This Week

• U.K. Conservative Party members vote on Monday by post to choose Theresa May’s successor. Front-runner Boris Johnson and Jeremy Hunt will appear at events through the week to try and secure votes, including a TV debate on July 9.
• Federal Reserve Chairman Jerome Powell testifies before Congress on monetary policy and the state of the U.S. economy on Wednesday and Thursday
• A key measure of U.S. inflation, the core consumer price index, is expected to increase 0.2 percent in June from the prior month, while the broader CPI is forecast to remain unchanged from May.

Indian ADRs

Stocks To Watch

• Mindtree: Rostow Ravanan resigned from the post of CEO and managing director. Krishnakumar Natarajan too resigned as executive chairman. Besides, NS Parthasarathy resigned as executive vice chairman and chief operating officer. They will continue to stay as board members and employees till July 17, in-line with their contracts.
• Siemens sold its lease hold interest in Gujarat for Rs 158.5 crore to LM Wind Power Bladed and further assignment to be sold worth Rs 35 crore is subject to receipt of approval from authorities.
• HT Media, Hindustan Media Ventures: Price Waterhouse resigned as statutory auditors with effect from July 5. The auditor stated that it is desirous of having a single auditor for all listed companies. The accounting firm stated that there are restrictions on the firm to undertake on new listed companies, hence the resignation has been tendered.
• Team Lease Services increased its stake by 26 percent to 76 percent in Cassius Technologies.
• Unichem Laboratories incorporated its China arm under the name of Younikaimo Pharma for sale in China of formulations and API ingredients manufactured by the company.
• Piramal Enterprises: Board approved issuing NCDS worth Rs 1,500 crore.
• KRBL clarified that it is not involved in the Embraer deal case and authorities have provisionally attached land and building worth Rs 15 crore.
• Eid Parry June sugar sales down 15 percent
• Lemon Tree Hotels: Board has executed share purchase agreement to acquire Key Hotels.
• Oil India clarified that it has only given consent to explore possibilities of Russia block’s sale. No firm decision has been undertaken on the sale.
• Aster DM Healthcare incorporated Aster Clinical Lab for a proposed Rs 40 crore. Company to carry on the pathology business.
• Quickheal Technologies granted U.S. patent for anti-ransomware technology.
• PPAP Automotive: Manish Dhariwal resigned from CFO’s after on July 5
• Cox & Kings stated that interest payment date of NCD was mistakenly as June 30, instead of August 5 in the Master Creation Form issued from NSDL. The company said that the interest will be paid on fifth of each month. It has requested the exchanges to disregard the announcement made by company on July 3, informing delay in servicing debt obligations as the company has been informed by the trustee Axis Bank that there is no delay in debt servicing.
• PNB Housing Finance: Credit Watch Rating assigned to PNB Housing Finance’s long term instruments/ bank facilities removed by CARE Rating and revised to CARE AA+; stable. Rating assigned on short term instruments/ commercial paper has been reaffirmed.
• Zuari Agro Chemicals: Informs about the shutdown of Urea/ Ammonia plants due to tube leak of PG-Reboiler in the CO2 removal section of the plant.
• Edelweiss Financial Services: CARE Ratings downgraded ratings on NCDs worth Rs 284 crore to CARE AA- from CARE AA. The rating revision takes into account increasing risk averseness in the market towards NBFC sector in general and wholesale lending focussed NBFCs in particular which pose challenges in resource mobilisation.
• The Indian Hume Pipe: Government of Andhra Pradesh terminated two contracts worth Rs 701.7 crore related to construction of drinking water supply projects, owing to change in the policy of the Government. The Company will explore legal remedies.
• Reliance Capital: CARE Ratings revised its rating outlook to credit watch with negative implications on long-term debt program, market linked debentures and subordinated debt worth Rs 21,000 crore. The ratings have been revised on account of the likely utilization of part proceeds of divestments to meet the debt guaranteed by Reliance Capital which was not factored as per the earlier plan submitted. The repayment schedule of the guaranteed debt has not yet been provided. Hence, CARE does not have clarity on the impact of these payments on the liquidity profile of RCL.
• India Grid Trust: Completed acquisition of two power transmissions assets from Sterlite Power for an enterprise value of Rs 5,025 crore. Asset acquisition from Sterlite Power to boost IndiGrid’s AUM to Rs 10,660 crore.

Earnings To Watch

• Delta Corp
• Steel Strips Wheels
• Goa Carbon

Bulk Deals

• Natco Pharma: East Bridge Capital Master Fund acquired 15.77 lakh shares (0.86 percent) at Rs 528 each.

Westlife Development

• Allard Growth Fund acquired 16.95 lakh shares (1.09 percent) at Rs 306 each
• Tree Line Advisors sold 31.3 lakh shares (2.01 percent) at Rs 305.7 each

Block Deals

Lakshmi Vilas Bank

• Narantak Dealcomm acquired 14.1 lakh shares (0.44 percent) at Rs 71 each
• Belgrave Investment Fund sold 14.1 lakh shares (0.44 percent) at Rs 71 each

Pledged Share Details

• Mcleod Russel promoters invoked pledge of 76.2 lakh shares from June 10-26
• Kalpataru Power Transmission promoter group Kalpataru Properties revoked pledge of 10 lakh shares on July 3
• Max Financial Services promoter group Max Ventures Investment Holdings created pledge of 1 lakh shares on July 2
• Adani Ports & SEZ promoter group Gautam Adani created pledge of 2.6 crore shares on July 3
• Future Retail promoter Future Corporate Resources invoked pledge of 21.12 lakh shares on July 3

Trading Tweaks

• GSS Infotech to move into short term ASM Framework
• MT Educare to move into ASM Framework
• Multibase India price band revised to 5 percent
• 8K Miles Software Services to move out of short term ASM Framework

Who’s Meeting Whom

• Shriram City Union Finance to meet Nomura on July 9
• Balrampur Chinni Mills to meet Spark Capital Funds on July 11
• Astra Zeneca Pharma to meet Finvest Advisors on July 8

Money Market Update

The rupee is likely to open weaker today, in line with its Asian peers. Implied opening from forwards suggest the home currency may start trading at 68.44 to the dollar. On Friday, the local legal tender clocked its longest gaining streak in over 15 years.

Today, post-budget rally in sovereign bonds may be capped by rise in crude oil prices and Treasury yields. Note that government plans to raise as much as $10 billion from its first overseas sovereign bond because there’s a huge appetite for its debt in the foreign market, according to a top finance ministry official.

Besides, the bond traders will keep an eye on reverse repo auctions today.

On Friday, bonds rallied with benchmark bond yields declining six basis points after the government surprisingly lowered its fiscal deficit target and said would raise money overseas.

F&O Cues

July Futures

• Nifty futures closed at 11,820.9, premium at 10 points versus 33 points
• Nifty futures open interest up 1 percent, adds 1.3 lakh shares in open interest
• Bank Nifty futures closed at 31,503, premium of 28 points versus 76 points
• Bank Nifty futures across series open interest up 4 percent, adds 69.8k shares in open interest

Options

• Nifty PCR at 1.09 versus 1.48 (across all series)

Nifty Weekly Expiry 11-July

• Max open interest on call side at 12,000 (35.7 lakh shares)
• Max open interest on put side at 11,700 (12.7 lakh shares)
• open interest addition seen in 12,000C (+23 lakh shares), 12,100C (+15.7 lakh shares), 11,900C (+13.8 lakh shares)

Nifty Monthly Expiry 25-July

• Max open interest on call side at 12,000 (23.1 lakh shares)
• Max open interest on put side at 11,500 (16 lakh shares)

Stocks In F&O Ban

• In ban: DHFL, Reliance Capital

Fund Flows

Brokerage Radar

Credit Suisse on IndusInd Bank

• Resumed ‘Outperform’ with a price target of Rs 1,800.
• Expect credit costs to remain elevated, but low PCR and improving PPOP to assets to cushion it.
• Strong growth in MFI loans to keep overall growth outlook for the merged entity intact.
• Build-in Bharat Financial merger which accretes 10 percent to FY19 EPS.

Morgan Stanley on India Equity Strategy

• Add Jubilant Foodworks and M&M Financial in place of Titan and Bharat Financial to focus list.
• Government's announcements on NBFCs and RBI's new liquidity window for banks to buy NBFC assets is a major positive.
• Continue to prefer financials, consumer discretionary and industrials over other sectors in India.

CLSA on India Infrastructure

• Roads spend ahead but rail missed Budget.
• Overall rise in transport infra capex should surprise the market.
• Government’s off-budget funding could help beat targets, but it could crowd out private capex.
• Buy builders like Sadbhav, and select developers/utilities like Adani Ports, IRB and NTPC.

Morgan Stanley on Indian Banks

• PSU banks recapitalisation - a significant positive.
• Reduces tail risk of a credit crunch.
• Bank of Baroda: Upgrade to ‘Equal-weight’ from ‘Underweight’; hiked price target to Rs 135 from Rs 115.
• Hiked price target on account of on lower cost of equity; valuation appears fair.