All You Need To Know Going Into Trade On July 9
Asian markets remain muted this morning as investors analysed gains in the U.S. amid simmering tensions between U.S. and China.
The offshore Yuan rose above the 7 per dollar mark, treasuries were steady while Gold climbed past the $1,800/Oz mark.
The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, rose 0.46% to 10,734 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 all that can influence equities in today’s session:
- Markets in Australia and South Korea see modest gains while those in Japan are declining.
- Futures on the Dow Jones are unchanged after the benchmark index ended 0.7% higher on Wednesday.
- The S&P 500 advanced to a one-month high while Nasdaq rose to a record high.
- Pandemic-sensitive sectors like airlines remained under pressure.
- Weekly jobless claims report in the U.S. to be reported today.
- Yield on the 10-year treasuries stood at 0.66%.
- Oil prices remain at a four-month high despite U.S. Crude inventories holding near a record and gasoline demand still at the weakest seasonal level in more than 20 years.
- West Texas Intermediate crude traded at $40.89 per barrel.
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Stocks To Watch
- ICICI Bank: Board approves raising Rs 15,000 crore through equity. The fund raise may happen in one or more tranches via private placement, preferential issue, FPO or a combination thereof.
- State Bank of India: The executive committee of the bank's central board approves a maximum investment of Rs 1,760 crore in Yes Bank's FPO.
- State Bank of India: SBICAP to invest in Investec Capital Services India to form a Joint Venture entity. SBICAP Securities' institutional equities broking and research business will be transferred to the proposed entity.
- PI Industries: Board approves closure of QIP. Issue price has been fixed at Rs 1,470 per share, which is a 4.2% discount to the floor price and a discount of 11% to Wednesday's closing price.
- Can Fin Homes: Board to consider raising funds via equity and debt on July 17.
- TCPL Packaging: Announces that the entire promoter shareholding is free from encumbrance.
- Sterling & Wilson Solar: Promoters fail to repay the installment of Rs 500 crore out of the outstanding loans envisaged to be repaid by June 30. The promoters in a separate exchange filing on June 26, had expressed apprehension regarding the same. Promoters say that the repayment may spill beyond a few weeks due to Covid-19. The Board has insisted that the promoters provide the necessary security in respect to the June installment in an expeditious manner.
- Indian Overseas Bank: Reduces MCLR by 15-25 basis points across various tenors from July 10. One-month MCLR will now be 7.3% while one-year MCLR will be 7.75%.
- GE T&D India: ICRA has re-affirmed the long-term and short-term credit rating at ICRA A+ and ICRA A1+. Outlook on long-term ratings downgraded to negative from stable due to decline in the company's revenue, profitability and increase in it's working capital cycle.
- Dilip Buildcon: Allots NCDs worth Rs 200 crore.
- IRB Infra: Allots NCDs worth Rs 150 crore.
- Emami: SBI Mutual Fund reduces stake to 4.6% from 5.32%.
- Gufic Biosciences: Gets approval from South African Heath Products Regulatory Authority to manufacture Vancomycin after its manufacturing facility in Navsari was inspected by the National Institute of Pharmacy and Nutrition, Hungary. The company can now expand its business in South Africa.
- Shoppers Stop: Opens new store at Phoenix Mall in Lucknow, taking the total number of operational stores to 90.
- Non-Nifty Earnings Today: Arvind Fashions, Sadbhav Engineering, MEP Infra
Earnings Expectations: TCS Q1FY21
- Revenue in U.S. Dollar terms seen 5.6% lower at $5,140 million
- Revenue in rupee terms seen 2.6% lower at Rs 38,910 crore
- Ebit seen 5.9% lower at Rs 9,432 crore
- Ebit margin seen at 24.2% from 25.1%
- Net profit seen 4.4% lower at Rs 7,694 crore
- All estimates are Bloomberg estimates and compared on a sequential basis
Key Factors At Play For TCS:
- Delay in project execution, new deal signings may lead to weakness
- Higher exposure to Emerging Markets may weigh on earnings
- BFSI vertical may decline as indicated owing to uncertainties
- Retail vertical to remain volatile
- Lower revenue, utilisation to impact margins
- Gains from a weak rupee and deferred pay hikes to counter margin contraction
What To Watch For TCS:
- Change in operating conditions under Covid-19 environment
- Visibility in revenue
- Client budgets and spending trends
- Pace of project execution under new setting
- Outlook on employee costs and onboarding
BofA Securities On Bharat Electronics
- Downgrade to underperform from buy
- Price target cut to Rs 87 from Rs 89
- See lack of near-term growth triggers
- See no visibility of large awards in the pipeline
- Potential for margin compression and likely deterioration of working capital
- Expect muted EPS CAGR of 2% over FY20-FY23E
- Trades at long-term average valuations post recent rally
- Cut FY21-22 EPS estimates by 3%
CLSA On Biocon
- Sell rating maintained
- Price target of Rs 240
- Seventh straight year of negative free cash flow for the company
- Ramp-up in biologics has been weak despite first mover advantage in key products
- Market share gains to only be gradual considering rising competition and strong innovator defence
- See downside risks to consensus earnings estimates
Antique On Axis Bank
- Buy rating maintained
- Price target of Rs 525
- Deposit profile, though improved, remains weaker than other large private banks
- Impact of Covid-19 may delay overall recovery in corporate profitability
- Will have to build higher risk adjusted NIMs to improve structural RoAs
- Retail profitability has room for improvement
Antique On NBCC
- Downgrade to sell from hold
- Price target of Rs 19
- Ground reality different from projected blue sky scenario
- PMC margins are on a slippery slope
- Balance sheet could be at risk
- Capital structure to fund Jaypee asset is unknown
- Stress on reported earnings to continue
- Forecast -9%/-26%/-13% CAGR in revenue/Ebitda/net profit till FY22E.
Macquarie On Lupin
- Neutral rating maintained
- Price target of Rs 775
- Metformin recall casts a shadow on earnings, a negative surprise
- Earnings impact depends on the company's ability to reclaim sales
- Immediate relaunch can protect material downside
Pledged Share Details
- DB Corp: Promoter DB Consolidated released pledge of 9.75 lakh shares on July 2
- JSW Steel: Promoters revoked pledge of 1 crore shares on July 2
- Adani Transmission: Promoter Adani Tradeline revoked pledge of 27.3 lakh shares on July 7
(As Reported On July 8)
- Tejas Networks: Kedia Securities acquired 7.54 lakh shares (0.82%) at Rs 49.13 per share. Kedia Securities is promoted by Vijay Kedia.
- Mangalore Chemicals and Fertilizers: Recovery Officer DRT sold 7.94 lakh shares (0.67%) at Rs 42.67 per share.
- Aditya Birla Fashion Rights Issue: Param Value Investments acquired 5 lakh shares at Rs 23 per share and Invesco MF sold 4.74 lakh shares at Rs 23 per share.
Who’s Meeting Whom
- Eicher Motors: To meet TIAA-CREF, Comgest Singapore and HDFC Standard Life Insurance on July 9 and 10.
- Great Eastern Shipping: To meet Unifi Capital on July 9
- Ex-Date Rights Issue: PVR, Shriram Transport Finance
- AGM Date: HDFC, HDFC AMC, Federal Bank, Bombay Dyeing, JSW Holdings, Laurus Labs, Trident, RBL Bank, L&T Infotech, Advanced Enzyme Tech.
- Fund Raising: Punjab National Bank
- Price Band Revised From 10% To 5%: Thirumalai Chemicals, MTNL, IG Petrochem
- Move Into Short-Term ASM Framework: Kamat Hotels, Jiya Eco-Products
- Move Out Of Short-Term ASM Framework: Edelweiss Financial Services, Sharda Cropchem, Religare Enterprises, Vakrangee, Alembic, Onward Technologies.
Money Market Update
- The currency ended weaker for the third straight day, ending past the 75 mark.
- The rupee ended at 75.02 against the U.S. Dollar as compared to Tuesday's close of 74.93.
- Rupee ended as the second worst performing currency in Asia behind the Taiwanese Dollar.
- Nifty July futures closed at 10,696; discount narrows to 10 points from 34 points
- Nifty July futures shed 4.2% and 4.9 lakh shares in Open Interest
- Nifty Bank July futures closed at 22,611, premium of 26 points from 25 points
- Nifty Bank July futures add 6.9% and 94,000 shares in Open Interest
- Nifty Put-Call Ratio at 1.38 from 1.63 across all series
- Stocks In F&O Ban: SAIL, BHEL, Equitas, Glenmark, Indiabulls Housing Finance
Nifty Monthly Expiry: July 9
- Maximum Open Interest on Call side at 11,000 strike (38.4 lakh shares)
- Maximum Open interest on Put side at 10,500 strike (27.5 lakh shares)
- Active Options: 10,000 Put (-12.6 lakh shares) and 10,800 Call (+10.5 lakh shares)
Nifty Monthly Expiry: July 30
- Maximum Open Interest on Call side at 11,500 strike (24.4 lakh shares)
- Maximum Open Interest on Put side at 10,000 strike (32.5 lakh shares)