All You Need To Know Going Into Trade On March 27
Asian stocks fell in early Wednesday trading, with markets falling into a choppy pattern as investors weigh disappointing economic signs against a decisive turn towards accommodation by major central banks.
The bulk of losses came in Japan, where more than two thirds of companies traded without the right to current dividends. Declines for equities in Seoul and Sydney were more modest, yet in contrast to the positive session on Wall Street overnight.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.26 percent to 11,493 as of 7:15 a.m.
Short on time? Well, then listen to this podcast for a quick summary of the article!
Here’s a quick look at all that could influence equities today.
U.S Market Check
- U.S. stocks rallied as investor concern over an economic downturn showed signs of easing.
- Energy shares led gains in the S&P 500 Index as oil surged after Russia signaled commitment to output cuts.
- The yield on benchmark U.S. bonds increased after a two-day plunge, though the spread between three-month and 10-year rates remained in negative territory.
- Japan’s Topix index fell 0.9 percent.
- Hang Seng Index futures earlier added 0.3 percent overnight.
- Australia’s S&P/ASX 200 Index slid 0.4 percent.
- South Korea’s Kospi index fell 0.5 percent.
- The S&P 500 gained 0.7 percent. Futures dipped 0.1 percent.
- Brent crude traded 0.16 percent lower at $67.86 per barrel.
- West Texas Intermediate crude slipped 0.2 percent to $59.85 a barrel.
- Gold rose 0.1 percent to $1,316.91 an ounce.
London Metal Exchange
- Aluminium ended 0.27 percent higher.
- Nickel halted a three-day fall, ended 0.88 percent higher.
- Lead declined for the fourth consecutive trading session, ended 0.9 percent lower.
- Tin ended lower for the second day, down 0.23 percent.
- Copper ended 0.16 percent lower.
- Zinc ended higher for the second day, up 1.45 percent.
Key Events To Watch This Week
- U.S.-China trade talks resume, with a cabinet-level American delegation due in China.
- U.K. Parliament is set to stage several key votes on Brexit on Wednesday.
- Fed Governor Randal Quarles will speak Friday to the Shadow Open Market Committee on “Strategic Approaches to the Fed’s Balance Sheet and Communications.”
Stocks To Watch
- Sheela Foam OFS promoters said they will sell 42.3 lakh shares or 8.68 percent of equity capital of the company with an over-subscription option of another 2 percent stake. The floor price has been set at Rs 1100 per share which is at a discount of 15.6 percent to the current market price, where to company can raise a maximum of Rs 573 crores.
- Ireland’s HMPRA and the U.K.’s MHRA carried out joint inspection of Wockhardt’s Aurangabad facility. The company said that HPRA has granted GMP certificate for the afore-mentioned facility for a period of three years till January 2022. The company incorporates a wholly owned arm for pharma business and research and development laboratories.
- Mindtree said it had decided to not proceed with share buy-back. The company will also constitute a panel on L&T's unsolicited offer. Apurva Purohit will lead this panel of independent directors.
- Dr. Reddy’s Laboratories: Allant Grant Oberman appointed as Independent (Additional) Director for five years with effect from March 26. He has served as the CEO and president for Various Teva Group companies and was also the CEO for Concordia International Corporation.
- RBI imposed a Rs 2 crore penalty on Punjab National Bank during assessment of implementation of SWIFT-related operational controls.
- Unitech: Supreme Court granted approval for sale of company’s entire stake in its Power Transmission Arm to Sterling and Wilson Private Limited.
- Allahabad Bank’s board approved raising equity up to Rs 4,000 crores provided the stake of the government of India remained not less than 52 percent of the total equity paid up capital of the bank.
- ICICI Prudential Life Insurance OFS received a demand of 6.29 times from its base issue at an indicative price of Rs 316.11 per share, as per the exchanges. The insurance house has also cut its stake in Jyothy Labs from 5.03 percent to 3.01 percent.
- Dish TV appointed company’s CEO Anil Kumar Dua as Executive Director with effect from March 26.
- Persistent Systems: Mark Simpson will head the Alliance Unit with effect from April 1. The existing head of the afore-said Jitendra Gokhale will take over as head of Accelerite Unit from Nara Rajagopalan.
- Meghmani Organics said that an accidental fire broke out in its Gujarat Plant on March 26. The plant has three manufacturing sections out of which only one is affected due to fire, which manufactures Cypermthrin. The company says it is ascertaining the loss of fire and is fully covered for insurance claim.
- Apollo Tyres approved the appointment of its APMEA region president Satish Sharma as a whole time director for a period of five years with effect from April 1.
- Narayana Hrudayalaya said it will incorporate wholly owned subsidiary in the U.S.. The company said it proposes to set up a business process and technology consultancy business in the U.S.
- KIOCL postponed plan to de-list shares from Metropolitan Stock Exchange of India.
- Wockhardt in talks with PE firms to raise $300 million (Economic Times)
- State-run RVNL sets IPO price band at Rs 17-19 per share. Offer opens on March 29.
- PVR: Morgan Stanley France SAS acquired 3.16 lakh shares or 0.68 percent equity at Rs 1,572.9 each.
Pledge Share Details
- Kalpataru Power Transmission promoter groups released pledge of 10 lakh Shares on March 22.
- Laurus Labs promoter Dr Raju Kalidnidi revoked pledge of 6 lakh shares on March 25.
(As reported on March 26)
Who’s Meeting Whom
- Symphony to meet Philip Capital on March 28.
- Shoppers Stop to meet DSP Merill Lynch on March 28.
- Eris Lifesciences to meet Fundsmith Equity Fund and Taiyo Capital Partners on March 27.
- ACC to meet Carnegie Fonder on March 27.
- Bharat Forge to meet Lazard Asset Management on April 4.
- Tourism Finance Corporation to meet Edelweiss on March 28.
- Aster DM Healthcare to meet Taiyo Pacific Partners on March 28.
- PI Industries to meet Emkay Global and B&K Securities between March 27-28
- Orient Abrasives promoter group Manan Chetan Shah acquired 10.08 lakh shares on March 22.
- Bodal Chemicals promoter group Bhavin Patel acquired 8.06 lakh shares between March 22-25
- Security & Intelligence Services promoter group Vocational Skills Council sold 1.5 lakh shares on March 22.
Money Market Update
- The rupee on Tuesday strengthened for the second straight session to close at 68.86/$ versus Monday’s closing of 68.94/$.
- Nifty March futures closed trading at 11510, premium of 28 points.
- Max OI for March series at 11,500 Call, OI at 29.9 lakh shares.
- Max OI for March series at 11,000 Put, OI at 32.2 lakh shares.
Stocks In F&O Ban
- In Ban: Adani Enterprises, Adani Power, IDBI, Jet Airways, Reliance Power
- New in Ban: Jet Airways
- Out of Ban: PNB
- Nifty PCR at 1.64 versus 1.46
Active Stock Futures
Macquarie on Strides Pharma
- Upgraded to ‘Outperform’ from ‘Neutral’; hiked price target to Rs 532 from Rs 486.
- Expect U.S. to be key margin driver aided by market share gains and strong launch pipeline.
- Expect strong visibility in regulated markets and improved margins in branded Africa.
- Expect lower debt and improved Ebitda to net profit translation from April.
Morgan Stanley on Mindtree
- Maintained ‘Underweight’ with a price target of Rs 761.
- Lack of alignment between founders and L&T group has created uncertainty on deal outcome.
- Important to monitor: Mindtree's independent committee’s recommendation on May 10.
- Best-case could be an alignment between the founders of Mindtree and L&T.
ICICI Direct on L&T Infotech
- Initiated ‘Buy’ with a price target of Rs 1,950.
- Digital transformation and superior execution key growth driver.
- Expect superior margins vs midcap peers.
- Expect healthy double-digit revenue growth of 16.7 percent CAGR in FY18-21 in dollar terms.
JPMorgan on Infosys
- Maintained ‘Overweight’ with a price target of Rs 750.
- Guidance should reduce stock price volatility; but perception among investors that guidance makes the Infosys stock more volatile is gaining ground.
- Impact on intrinsic shareholder returns is immaterial irrespective of guidance.
- Expect Infosys to guide for 8-10 percent CC growth and EBIT margin of 21-23 percent for 2019-20.
BofAML on Pidilite
- Downgraded to ‘Underperform’ from ‘Neutral’; hiked price target to Rs 1,080 from Rs 920.
- Stock baking in aggressive growth; minimal room for error.
- Strong volume growth to sustain and 2019-20 EPS growth to be optically strong due to low base.
- Cut EPS estimates by 12-17 percent to factor in weaker margins and roll forward the target.
BofAML on Power Grid Corp
- Downgraded to ‘Neutral’ from ‘Buy’; maintained price target at Rs 225.
- Slowing EPS growth and high valuation offers limited upside.
- See risk of litigations from IPPs to pay relinquishments.
- Any dispute could put 60 percent of Power Grid’s EPS under risk.
Goldman Sachs on Cement
- Shifting preference to price beneficiary post recent rally.
- Remain confident on demand strength.
- Prefer ACC over UltraTech due to attractive valuations.
- ACC: Upgraded to ‘Buy’ from ‘Neutral’; hiked price target to Rs 1,770 from Rs 1,470.
- UltraTech: Downgraded to ‘Neutral’ from ‘Buy’; hiked price target to Rs 4,200 from Rs 4,100.
- Shree Cement: Maintained ‘Sell’; hiked price target to Rs 17,750 from Rs 16,000.
Deutsche Bank on Jain Irrigation
- Maintained ‘Sell’; cut price target to Rs 56 from Rs 65.
- Caught in debt trap as working capital and interest payments are eating into cash flows.
- Net debt rising due to aggressive growth pursuit; Leverage rise to 4.1 times.
- Core retail micro irrigation business remains challenged.
HSBC on GAIL
- Maintained ‘Buy’ with a price target of Rs 487.
- Concerns on GAIL’s LNG portfolio are overdone.
- Key catalyst of tariff hike appears overlooked.
- Earnings outlook remains robust; Valuations attractive.
HSBC on Tech Mahindra
- Maintained ‘Hold’; hiked price target to Rs 840 from Rs 780.
- 5G opportunity is distant, while pressure on legacy business could impact growth.
- Margins are up 600 bps in 2 years; near peak levels with limited upside.
- Stock reasonably priced, with limited upside triggers.
HSBC on DLF
- Maintained ‘Hold’; hiked price target to Rs 216 from Rs 185.
- QIP at discount removes significant overhang; governance concerns gradually going away.
- Underlying market is showing signs of improvement.
- Maintain Hold as wait for DLF to regain sales momentum.
Antique on Ganesha Ecosphere
- Initiated ‘Buy’ with a price target of Rs 440.
- Business model well-poised for the next leg of growth.
- Robust channel network in place for procurement of raw material.
- Expansion in Bilaspur RPSF facility to provide earnings visibility in the current and the next financial year.
- Expect revenue and net profit to grow at a compounded annual growth rate of 18 percent and 32 percent respectively over FY18-21.