All You Need to Know Going Into Trade On June 10
Asian stocks and U.S. equity futures climbed on Monday after President Donald Trump suspended his plans for tariffs on Mexico.
Japanese and South Korean stocks climbed. Chinese markets will re-open after a holiday Friday. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.43 percent to 11,948 as of 7 a.m.
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Here’s a quick look at all that could influence equities today.
U.S. Market Update
- U.S. stocks rallied for a fourth day after weak jobs data added to bets the Federal Reserve will cut rates.
- The yield on 10-year Treasuries decreased four basis points to 2.08 percent.
- Japan’s Topix Index rose 1 percent.
- South Korea’s Hang Seng rose 0.6 percent.
- Hang Seng futures fell 0.2 percent earlier.
- S&P 500 futures rose 0.4 percent.
- Brent crude ended gains for the third consecutive trading session, up 0.79 percent to $63.79 per barrel.
- West Texas Intermediate rose 0.8 percent to $54.44 a barrel.
- Gold fell 0.4 percent to $1,335.66 an ounce.
London Metal Exchange
- Copper ended 0.15 percent lower.
- Zinc ended 0.76 percent lower.
- Aluminium closed 0.68 percent lower.
- Nickel ended lower for the sixth consecutive trading session, down 0.42 percent.
- Lead halted a five-day gaining streak, closed 3.1 percent lower.
- Tin closed 0.13 percent lower after gaining for two consecutive trading sessions.
Key Events To Watch This Week
- On Monday, British lawmakers quiz Huawei executives on security as the U.K. weighs whether to allow the Chinese giant to have a role in next-generation broadband networks.
- Japanese Prime Minister Shinzo Abe visits Iran on Wednesday, where he’ll meet with Iran’s Supreme Leader Ayatollah Ali Khamenei.
- ECB President Mario Draghi speaks at a conference in Frankfurt
- A key measure of U.S. inflation, the consumer price index, is also due Wednesday
- The race to succeed Theresa May heats up with the first Conservative Party leadership ballot Thursday.
- Euro-area finance ministers meet in Luxembourg Thursday. On the agenda: financial penalties for Italy over its debt load, and the euro-area budget.
- China and the U.S. release industrial production, retail sales data Friday
Stocks to Watch
- State Bank of India introduced new home loan product linked to repo rate. Cuts rate for cash credit /overdraft of above Rs 1 lakh by 25 basis points to 8 percent.
- Kotak Mahindra Bank: The Reserve Bank of India imposed a penalty of Rs 2 crore for deficiencies in regulatory compliance. The Bank stated in its press release that this penalty is for an alleged failure to comply with the RBI’s directions to submit details of the promoter shareholding, the proposed course of action by the Bank, and not conveying the commitment of the Bank for achieving promoter dilution as per the timelines stipulated.
- Mindtree Open Offer Update: Larsen & Toubro made cash offer of 5.13 crore shares, or 31 percent of the voting share capital at Rs 980 per share, aggregating to Rs 5,027.4 crore, as reported in the exchanges. Open offer to begin from June 17. The offer price is at a discount of 1 percent from the current market prices. This action is being undertaken to comply with SEBI norms.
- Adani Ports and Special Economic Zone set June 21 as the record date for share buyback.
- Manappuram Finance said that it has received a show cause notice from SEBI on May 29 pertaining to an incident in 2013. The notice alleged that certain officials of the company had selectively disclosed unpublished price sensitive information to a research analyst firm. Company said it is currently examining the contents of the notice and seeking legal advice on the next course of action.
- Zee Entertainment Enterprises: Brickwork Ratings reduced the credit rating of non-convertible preference shares issued as bonus to its equity shareholders in 2014 at BWR AAA, with credit watch turning from developing implications to negative implications.
- Reliance Capital: completed the payments and paid interest and principal on bonds due on June 6, a spokesman for the company said in a text message. (Bloomberg News)
- DHFL: UTI MF increased markdown to DHFL’s debt securities to 100 percent, introduced exit load in some schemes on a prospective basis. It sees more pressure and legal action on DHFL from creditors. (UTI Press Release)
- Bharat Forge entered into a joint venture agreement with Germany’s Refu Electronik for developing, manufacturing and selling on board controllers and components for e-mobility vehicles. The company will hold 50 percent stake by investment of Euro 11.35 million.
- JSW Steel: Mumbai bench of NCLT approved amalgamation of company’s 3 three units with self on June 6. Only 1 unit of JSW Steel (Salav) is now subject to approval from Ahmedabad NCLT for the amalgamation with the parent company.
- Tata Power: CRISIL revised debt instruments and long-term facilities from ‘AA-(Stable)‘ to ‘AA-(Positive)‘. The company said that this move came after it cleared all dues on debentures worth Rs 1,082 crore and term loan of Rs 605 crore and an improved visibility seen due to implementation of the high-power committee’s recommendations for its arm-Coastal Gujarat.
- UFO Moviez India Ltd.: Board approved demerger of Valuable Digital Screen (Caravan Talkies) from UFO Moviez. Company says the proposed demerger will enable the company to cater to the needs of the advertisers across both rural and urban audiences thereby enabling them to plan their spends in a coordinated manner, through a common vendor.
- Atul’s arms Atul Elkay Polymers and Lapox Polymers terminated joint venture agreement with Turkey’s Elkay for promoting stone care chemicals in India on June 7, due to changed circumstances and mutual consent of both parties. The company said that the termination will not have any impact. The Joint venture agreement was entered on March 2012.
- Bank of Maharashtra reduced MCLR by 5 basis points and 10 basis points across various tenors. Three month MCLR at 8.40 percent and 1 year MCLR at 8.6 percent.
- Srei Infrastructure Finance signed a memorandum of understanding with PTC India Financial Services Ltd. to facilitate financing, syndication, and advisory services in Energy Value Chain across industries in India.
- Tourism Finance Corporation of India to incorporate a new subsidiary for undertaking the business of advisory and consultancy services.
- Vadilal Industries clarified on the show cause notice issued by the United States Federal Food, Drug, and Cosmetic Act on March 31, stating that in the re-inspection undertaken on June 6. The FDCA officials have cleared all the earlier non-conformities and no material impact due to the show-cause notice will be seen for the company.
- Indian Oil Corporation, ONGC, Oil India and Reliance Industries: Norwegian Government to consider selling shares in all global energy stocks on June 12 parliamentary meeting. Norway’s Government Pension Fund Global holds stake in Indian Oil Corporation, ONGC, Oil India and Reliance Industries Fund owns less than 1 percent stake in each of the four companies.
- Maruti Suzuki: Production for May 2019 lower by 18.1 percent to 1.51 lakh units.
- M&M Company to observe no production days ranging between 5-13 days in various plants as part of aligning its production with sales requirements.
- DHFL paid investors around Rs 276.05 crore on its principal and interest obligations towards its non-convertible debentures.
- PC Jeweller: CRISIL downgraded long and short term rating to CRISIL BB+ and CRISL A4+ from CRISIL BBB+ and CRISIL A2 respectively. The downgrade reflects significant operating losses on account of an unexpected one time discount given to export customers following build-up of receivables outstanding as on March 31, 2019. CARE Ratings downgraded fixed deposit programme to CARE BB+ from CARE BBB.
- MOIL: Received environmental clearance for manganese ore mine in an area of 49 hectares for additional production capacity of 1.2 lakh tonnes per annum. This area is adjacent to Ukwa mine and the total reserve of this new lease area is estimated at 3.8 million tonnes. It is expected to touch ore body and production during 2020. After the environmental clearance, total production capacity of Ukwa block will be 2.35 lakh tonnes per annum.
- Reliance Infrastructure Board meet to consider Q4 adjourned to June 14. Reliance Infrastructure had held a meeting on May 30 which was postponed to June 7 which was then again adjourned to June 8. The company said that the audit committee has sought time to review and incorporate financials of Reliance Power which came out with its Q4 results on June 08, 2019.
Den Networks: ICRA Upgraded Credit Rating
- Term Loans rating upgraded to ICRA AA- from ICRA A
- Working capital facilities rating upgraded to ICRA AA- from ICRA A
- Non-fund based working capital rating upgraded to ICRA A1+ from ICRA A1
- Unallocated limits rating upgraded to ICRA AA-/ICRA A1+ from ICRA A/ICRA A1
Earnings Reaction To Watch
Reliance Power (Q4, YoY)
- Revenue down 32.5 percent to Rs 1,586 crore.
- Net loss of Rs 3,558.5 crore versus net profit of Rs 189 crore.
- Ebitda down 35.5 percent to Rs 650 crore.
- Margin at 41 percent versus 43 percent.
- Exceptional loss of Rs 4,170 crore due to impairment of assets and write-off of advances and receivables.
- Auditor raised doubt on group ability to continue as a going concern as its current liabilities exceeded its total assets, due to losses incurred in FY19 and due to pending matters related to two of its subsidiaries.
- Aavas Financiers: AU Small Finance Bank sold 5.85 lakh shares or 0.75 percent equity at Rs 1,380.29 each
- Reliance Infra: Axis Trustee Services sold 19.5 lakh shares or 0.75 percent equity at Rs 78.28 each
- Mangalam Cement: LTS Investment Fund sold 1.5 lakh shares or 0.56 percent equity at Rs 260.75 each
Indiabulls Real Estate
- Embassy Property Developments acquired 6.31 crore shares or 14 percent equity at Rs 150.45 each.
- Promoter Dahlia Infrastructure sold 53 lakh shares or 1.2 percent equity at Rs 151 each.
- Promoter SG Devbuild sold 60 lakh shares or 1.3 percent equity at Rs 151 each.
- Promoter Kritikka Infra sold 93 lakh shares or 2.1 percent equity at Rs 143.2 each.
- Promoter Jyestha Infra sold 3.63 crore shares or 8.1 percent equity at Rs 151 each.
- Gati promoter Jubilee Commercial created pledge of 5,000 shares on May 29.
- Reliance Infrastructure: Axis Trustee invoked pledge on 20 lakh shares or 0.76 percent equity held by promoter
- Reliance Capital: Axis Trustee invoked pledge on 12 lakh shares or 0.47 percent equity held by promoter.
- Zuari Agro Chemicals: Promoter released pledge on 15.6 lakh shares or 3.71 percent equity .
- J.Kumar Infraprojects ,MIRC Electronics Sundaram Brake Linings to move out of short term ASM Framework
Price Band Revisions
- 2 Percent: HPC Biosciences, Vikas Proppant & Granite
- 5 Percent: Eveready Industries, 5paisa Capital, 63 Moons Technologies , DCM Financial Services , Dhampure Specialty Sugars, IL&FS Investment Managers, Jaiprakash Power Ventures, Jaypee Infratech , Manpasand Beverages, Mercator, Reliance Communications, Uniply Industries , Williamson Magor & Company
- 10 Percent: Lakshmi Vilas Bank , Mcleod Russel India , 8K Miles Software Services , Adhunik Industries Eros International Media , Gammon Infrastructure Projects, GPT Infraprojects, Indiabulls Integrated Services , Kridhan Infra , Nagarjuna Oil Refinery, Prabhat Dairy, SMS Lifesciences India, Unitech
- 20 Percent: Spicejet, A2Z Infra Engineering , Dilip Buildcon ,IG Petrochemicals , Shriram EPC, Aditya Birla Money, Adlabs Entertainment , Cantabil Retail India, CIL Nova Petrochemicals, Dhanlaxmi Bank , Goldiam International ,Hotel Leelaventure, Indo Count Industries , Indo Rama Synthetics (India), Kwality , Linde India, Matrimony.com , Punjab Alkalies & Chemicals ,Reliance Naval and Engineering , Religare Enterprises , Saven Technologies, Shankara Building Products , Tata Steel Bsl , UFO Moviez India, Veto Switchgears and Cables , Vipul
(With Effect From June 10)
Who’s Meeting Whom
- Tata Motors to meet Morgan Stanley, DE Shaw and other investors from June 10-12
- Rallis India to meet Premji Investment and SBICAP Securities on June 11
- Mahindra Lifespace Developers to meet Carnelian Capital Advisors on June 21
- TVS Motor to meet Ward Ferry Management, Morgan Stanley and other investors on June 10
- Tata Steel to meet Mirae Asset Management, HSBC Research and Bank of America-Merril Lynch from June 10-12
- Brigade Enterprises to meet ICICI Pru MF on June 10
- Mahindra Logistics to meet JO Hambro Capital Management on June 10
- Puravankara to meet ICICI Pru AMC on June 10
- L&T Technology Services Promoter Larsen & Toubro sold 2.4 lakh shares on June 6
- JSW Steel promoter group Beaufield Holdings sold 10.6 lakh shares on June 3
- Aarti Industries promoters sold 20,000 shares from May 29-June 6
Money Market Update
The Indian rupee ended higher this week. The currency appreciated 0.33 percent this week to close at 69.47 against the greenback. The local legal tender was among the best Asian performers this week.
- Nifty futures closed at 11,900.7, premium of 30 points versus 48 points.
- Bank Nifty futures closed at 31,115, premium of 48 points versus 82 points.
- Nifty PCR at 1.32 versus 1.36 (across all series)
Nifty Weekly Expiry (June 13)
- Max OI on call side at 12,000 (19.6 lakh shares)
- Max OI on put side at 11,800 (14.5 lakh shares)
- OI addition seen at 11,800P (+8.6 lakh shares), 11,700P (+4.7 lakh shares)
Nifty Monthly Expiry (June 27)
- Max OI on call side at 12,500 (27.6 lakh shares)
- Max OI on put side at 11,500 (27.7 lakh shares)
- Max OI addition seen at 12,500 (+1.5 lakh shares)
- Max OI shedding seen at 11,900P (-1.4 lakh shares)
Stocks In F&O Ban
- In Ban: DHFL, IDBI, PC Jeweller
On Indian Banks
Deutsche Bank Research
- New NPA norms to provide flexibility in the resolution process.
- Circular is likely to provide some relief to the power sector.
- Expect some pick-up in the pace of resolution under the new norms.
- Circular provides timely resolution, flexibility in choosing resolution plan and penalties if timelines are not adhered.
- Overall the circular is positive for banks.
- Most of the changes implemented in the new circular are practical.
- It rightly incentivizes banks to find a time-bound resolution.
- Reduces hindrances in finalizing a resolution plan.
Jefferies on Hindustan Unilever
- Maintained ‘Hold’ with a price target of Rs 1,820.
- Investor day highlighted HUL’s superior execution and lead over peers in terms of adoption of technology.
- Key theme for 2019 Investor day like 2018 was the emphasis on the role of data and digital.
- HUL seems confident of long-term growth potential and shape of the portfolio in beauty and personal care and food & refreshments categories.
Deutsche Bank Research on Tata Motors
- Maintained ‘Hold’ with a price target of Rs 175.
- Company transforming from growth-at-all-cost organisation to an agile and cost-focused entity.
- Efforts of JLR have started showing some results in controlling capex and cash flows.
- Demand environment remains a drag.
Deutsche Bank Research on Embassy REIT
- Maintained ‘Buy’ with a price target of Rs 370.
- Indiabulls Real Estate promoter stake sale to Embassy group.
- No immediate impact on Embassy REIT; adds to growth optionality.
Morgan Stanley on GlaxoSmithKline Pharma
- Maintained ‘Underweight’; hiked price target to Rs 1,134 from Rs 1,102.
- India growth has been muted due to recent industry slowdown marked by regulatory changes.
- Expect a steady recovery in business.
- But upcoming large new facility at Bangalore could put pressure on margin.
Morgan Stanley on ITC
- Maintained ‘Overweight’; hiked price target to Rs 360 from Rs 320.
- Survey indicate sharp fall in duality of tobacco consumption.
- Cigarette volumes, pricing and earnings may surprise on the upside.
- Investors remain worried on tax increases, but we are more sanguine.
HSBC on Phoenix Mills
- Maintained ‘Buy’; hiked price target to Rs 870 from Rs 800.
- Next leg of growth to be driven by premiumization and mall additions.
- Expect 2019-20 to be challenging year led by slower consumption.
- Cut 2019-20 earnings estimate by 7 percent, but hike 2020-21 estimate by 2.4 percent on various factors.
JPMorgan on Vedanta
- Maintained ‘Overweight’; cut price target to Rs 225 from Rs 300.
- Take more conservative view on earnings outlook due to lower commodity prices.
- See earnings upside if Goa iron ore and copper smelter restart earlier than expected.
- Attractive growth story at 12% dividend yield, but parent’s leverage is a concern.