ADVERTISEMENT

All You Need To Know Going Into Trade On March 1

Stocks in the news, big brokerage calls of the day, complete trade setup and much more!  

The Sun rises over Tower Bridge as commuter walks down a set of stairs  (Photographer: Chris J. Ratcliffe/Bloomberg)  
The Sun rises over Tower Bridge as commuter walks down a set of stairs  (Photographer: Chris J. Ratcliffe/Bloomberg)  

Asian equities have begun the new trading week on a positive note as sovereign bonds extended a rebound while the U.S. Dollar declined.

Benchmark indices in Japan and Australia are rising this morning. The Reserve Bank of Australia said that it will buy A$4 billion of longer-dated bonds, double the usual size.

Oil prices gained this morning after witnessing their best ever first two months of the year.

The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, rose 1.5% to 14,738 as of 6:50 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:

  • Futures on the Dow Jones are trading with gains of 200 points. The index ended 1.5% lower on Friday.
  • Treasury yields are showing signs of stabilising after central banks from Asia and Europe moved to calm turmoil that sent the yields to their highest in a year.
  • “The market is testing the Fed and global central banks as to how serious they are here,” Al Lord, Lexerd Capital Management chief executive officer, said on Bloomberg TV. “There are growth expectations and growing inflation concerns, and that’s playing out in the markets.”
  • The U.S. House of Representatives passed the $1.9 trillion Covid-19 aid package over the weekend. The bill now heads to the senate.
  • Yield on the 10-year treasuries stood at 1.38%.
  • West Texas Intermediate crude rose 1.8% to $62.58 per barrel.

Get your daily fix of the global markets here.

All You Need To Know Going Into Trade On March 1

Stocks To Watch

  • Indian Oil Corporation: Approves capital investment worth Rs 32,946 crore to expand capacity of its Panipat Refinery to 25 MMTPA from 15 MMTPA along with installation of Polypropylene Unit and Catalytic Dewaxing unit. The project is expected to be commissioned by September 2024. The expanded capacity will not only improve the operational flexibility of the refinery but also improve margins and de-risk the company's conventional fuels business.
  • Tata Motors: At JLR's analyst day, the company says that it remains committed to consistent, competitive, cash accretive growth and to deleverage the business. JLR also said that it will cut its manufacturing capacity by 25% over five years and write off investments in products it has decided to scrap under new CEO Thierry Bollore. JLR will take a non-cash charge of about 1 billion pounds in the quarter ending March related to higher previous spending and projects it won't complete. It also said that it will introduce six fully electric Land Rover variants in the next five years. It aims to have all of its Jaguar models and 60% of Land Rovers sold to be zero-emission vehicles by 2030.
  • Reliance Industries: Reliance Strategic Business Ventures which is a wholly-owned subsidiary of the company has now acquired a majority stake in SkyTran for a total consideration of $26.7 million. Reliance's stake in the SkyTran now stands at 54.46% on a fully-diluted basis. The company had earlier held 26.3% stake in SkyTran.
  • Ashok Leyland: The company has hired bankers to evaluate a possible merger of its U.K. subsidiary Switch Mobility with a Special Purpose Acquisition Company, Bloomberg reported citing a Sky News report, citing people familiar with the matter. The plan for a merger of Switch Mobility with a blank-cheque company in New York is at a preliminary stage and can value the company at up to $2 billion. A potential capital increase is another option being considered for the EV maker, according to the Sky News report.
  • APL Apollo Tubes: Board approves merger of Shri Lakshmi Metal Udyog and Apollo Tricoat Tubes with itself. Minority shareholders to receive one share of APL Apollo for every one share of Apollo Tricoat. Appointed date for merger is set at April 1, 2021 and is expected to be closed in the third quarter of FY22. Simplification of group structure, ability to offer innovative products resulting in higher margins and a stronger balance sheet with lower cost of capital were highlighted as some of the rationale behind the merger. APL Apollo has termed the transaction to be EPS and margin accretive.
  • Aurobindo Pharma: Approves transfer of business undertaking comprised in Unit-10, on a going concern basis, to APL Healthcare Ltd., a wholly-owned subsidiary. Unit-10 is engaged in the business of manufacturing oral formulations in Andhra Pradesh. The transfer will be done for a lumpsum consideration of Rs 1,091.98 crore and is expected to be completed by Q1FY22. Integration of Unit-10, which is an SEZ unit along with other SEZ units in APL Healthcare to bring more synergies and cost effectiveness. The company also cites accountability and greater visibility for performance and augmenting fund raising capabilities and strategic tie-ups in the future as some of the other motives behind the move.
  • KEC International: Wins new orders worth Rs 1,140 crore for various businesses. T&D businesses wins orders worth Rs 963 crore in Middle East and Africa. Railways business wins order worth Rs 113 crore for overhead electrification and associated works for speed upgradation in India. Civil business wins order worth Rs 64 crore for infra works in the hydrocarbon segment in India.
  • Affle (India): Has approved the proposal of raising of funds by way of further issue of securities including warrants and bonds or any combination thereof through a preferential issue and Qualified Institutions Placements by the company or through any other permissible mode or any combination thereof, for an aggregate amount not exceeding Rs 1,080 crore. Further an Extraordinary General Meeting of the members of the company is scheduled on March 24, 2021 to seek the approval of the members for the proposed fund-raising.
  • DLF: Plans to raise up to Rs 395 crore through issue of secured NCDs. The company informed that the proposal will be discussed on March 3 at a meeting of the finance committee of the board of directors.
  • Hindustan Aeronautics: Has declared second interim dividend of Rs 15 per equity share of Rs 10 each fully paid up for the Financial Year 2020-21. The company has fixed March 8, 2021 as the record date for the payment of interim dividend.
  • KEI Industries: Has approved declaration of Interim Dividend of Rs 2 per equity share of face value of Rs 2 each for the Financial Year 2020-21. The record date for determining the shareholders entitled to receive the interim dividend is March 10, 2021.
  • Zensar Technologies: Completes divestment of 100% equity shareholding in Aquila Technology Corp. Accordingly, Aquila has ceased to be part of the group.
  • RailTel Corporation: Awarded three orders worth Rs 105.8 crore from the Ministry of Railways. The tenure for completion of the three orders is 18 months.
  • Tata Chemicals: Appoints Nandakumar Tirumalai as the new CFO from April 1, 2021. Tirumalai will replace John Mulhall, who will transition into the role of CEO at Tata Chemicals North America - a wholly-owned subsidiary.
  • Wipro: Has completed the acquisition of Eximius Design, an engineering services company with expertise in semiconductor, software and systems design.
  • Harita Seating Systems: The composite scheme of amalgamation of Harita Ltd, Harita Venu, Harita Cheema, Harita Financial Services and Harita Seating Systems with Minda Industries has been sanctioned by National Company Law Tribunal, Chennai.
  • Spandana Sphoorty Financial: Has allotted 12,000 secured NCDs of face value of Rs 1 lakh each on a private placement basis to IIFL Income Opportunities Fund - Series 2 in demat form, in consideration of an aggregate amount of Rs 120 crore. Further the company has fixed February 26, 2024 as the date of maturity. Interest rate payment is fixed at 12.50% per annum payable monthly.
  • ICICI Bank, Axis Bank: Have entered into a Memorandum of Understanding amongst members of the consortium seeking to set up a Pan-India (National) Umbrella Entity for Retail Payments, subject to requisite regulatory approvals. The two banks have acquired 20% stake each in Mopay subject to regulatory approvals for cash considerations of Rs 100 crore each.
  • NLC India: Has issued 6,000 Commercial Papers of face value of Rs 5 lakh each, aggregating to Rs 300 crore.
  • Acrysil: Has completed the capacity expansion of 1 lakh units at its Bhavnagar plant in Gujarat. The commercial production of additional 1 lakh units has commenced from February 25. The manufacturing capacity of Quartz Kitchen Sinks has increased from 5 lakh units to 6 lakh units per annum.

Brokerage Radar

Morgan Stanley On Cholamandalam Investment & Finance

  • Initiate coverage with overweight rating
  • Price target of Rs 625
  • Expect Chola to sustain its current forward price-to-book of ~3.5x as it reaches a new RoE high
  • Expect Chola to end FY21 with an RoE of 18% - the highest in our coverage
  • Strong track record across business cycles and external adversities
  • Cyclically, its business lines are likely to see strong multi-year tailwinds
  • Forecast a strong 21% RoE on average in FY22-23
  • Bull case has 74% potential upside driven by a rerating to 5x forward price-to-book
  • Sharp resurgence in Covid-19, disorderly rise in interest rates are the key risks

CLSA On Nestle India

  • Upgrade to buy from outperform
  • Price target raised to Rs 19,250 from Rs 19,000
  • Looking to significantly expand target consumer base
  • Focus on rural expansion and shedding its image as an urban-centric company
  • Management said it has 40-50 new products in the pipeline and may also look to introduce new brands from its parent's global portfolio
  • Expect 19% EPS CAGR over CY20-23CL
  • Recent underperformance offers a good entry point

Emkay On Indian Cement Sector

  • Channel checks suggest that the industry likely recorded month-on-month growth and high single-digit volume growth in February year-on-year
  • Industry may report over 20% year-on-year volume growth in Q4FY21E aided by a low base of March 2020
  • Average pan-India prices likely rose 1% month-on-month and 3% year-on-year in February with a 1-2% increase in most regions except the South, where prices fell 1% month-on-month
  • With strong underlying demand, low inventory levels and cost escalations, there is a high conviction for cement price increases across regions.
  • Remain optimistic on recovery in cement prices
  • Prices of petcoke and diesel have increased 45% and 10%, respectively, in the last six months, which will start reflecting in cost/ton in Q4FY21E.

Motilal Oswal On Tata Motors

  • Maintains buy rating
  • Price target of Rs 400
  • Expects substantial reduction in net debt and Free-Cash flow increase from FY23
  • JLR going back to basics and simplifying its business
  • Expects FY21 to be near cash flow break-even
  • Unlike the past, JLR doesn't need to invest in creating capabilities and physical infrastructure
  • Raise consolidated EPS estimates by 15%/9% for FY22/23E

Pledge Share Details

  • Adani Transmission: Promoters Gautam Adani and Rajesh Adani revoked pledge of 8.02 lakh shares between February 24-25.
  • Adani Ports & SEZ: Promoters Gautam Adani and Rajesh Adani revoked pledge of 33.81 lakh shares on February 25.
  • Adani Enterprises: Promoters Gautam Adani and Rajesh Adani revoked pledge of 31.20 lakh shares between February 24-25.
  • Sun Pharma: Promoter Shanghvi Finance revoked pledge of 10.22 lakh shares on February 23.
  • Mangalore Chemicals & Fertilizers: Promoter Zuari Agro Chemicals revoked pledge of 50 lakh shares on February 24.

As Reported On February 26.

Bulk Deals

  • Bharti Airtel: Integrated Core Strategies (Asia) Pte sold 3.70 crore shares (0.68%) at Rs 556.46 per share.
  • Esab India: Acacia Partners LP sold 3.31 lakh shares (2.15%) at Rs 1,865 per share. SBI Mutual Fund bought 3 lakh shares (1.95%) at Rs 1,865 per share.
  • RailTel Corporation of India: Nippon India Mutual Fund bought 20 lakh shares at Rs 116.13 per share. Goldman Sachs India Fund bought 37.09 lakh shares at Rs 113.57 per share.

Who's Meeting Whom

  • UTI AMC: To meet Motilal Oswal on March 1.
  • Chambal Fertilisers and Chemicals: To meet FIL India Business and Research Services on March 1 and ICICI Prudential Mutual Fund on March 2.
  • Wipro: To meet HDFC Securities on March 1.
  • UltraTech Cement: To meet T. Rowe Price Investment Management and Kotak Mahindra AMC on March 1.
  • Finolex Industries: To meet Dhanki Securities on March 1.

Trading Tweaks

  • Price Band Revised From 10% To 5%: Hindustan Copper, IIFL Finance, Reliance Power
  • Price Band Revised From 20% To 10%: Matrimony.com
  • Record Date Buyback: Smartlink Holdings
  • Move Into ASM Framework: Sterlite Technologies, Jayaswal Neco Industries, Matrimony.com, Adani Total Gas, Somany Home Innovation
  • Move Out Of ASM Framework: Responsive Industries, Marksans Pharma
  • Move Into Short-term ASM Framework: Asian Granito India, Arvind
  • Move Out Of Short-term ASM Framework: Shankara Building Products, Jayaswal Neco Industries

Insider Trades

  • Oriental Carbon & Chemicals: Promoter New India Investment Corporation sold 2,000 shares on February 25.
  • Mastek: Promoter Ashank Desai bought 57,738 shares between February 23-24.
  • Ramco Systems: Promoter Saradha Deepa sold 8,000 shares on February 24.
  • Godrej Agrovet: Promoter Godrej Industries bought 12,231 shares on February 23.
  • HG Infra Engineering: Promoter Harendra Singh Family Trust bought 8,600 shares on February 22.

As Reported On February 26.

Money Market Update

  • The currency ended at 73.47 against the U.S. Dollar as compared to Thursday's close of 72.43. This was the biggest single-day drop in the rupee in nine months.
  • For the week, the rupee was the third worst performing currency among its peers in Asia.
All You Need To Know Going Into Trade On March 1

F&O Cues

  • Nifty March futures ended at 14,565; premium of 36 points
  • Nifty March futures add 13.3% and 17,026 shares in Open Interest
  • Nifty Bank March futures end at 34,889; premium of 86 points
  • Nifty Bank March futures add 9.8% and 5,280 shares in Open Interest
  • Nifty Put-Call Ratio at 1.66
  • No Stocks In F&O Ban
All You Need To Know Going Into Trade On March 1