All You Need To Know Going Into Trade On March 6
People sit reading newspapers in Bangalore, India. (Photographer: Dhiraj Singh/Bloomberg)

All You Need To Know Going Into Trade On March 6

The sell-off in global stocks resumed in Asia Friday as optimism about fiscal packages round the world to address the blow from the coronavirus evaporated.

Japanese equities sank about 2 percnet and Australian shares retreated with the country’s bond yields. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 3.09 percent to 10,884 as of 7:48 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.

Here’s a quick look at all that could influence equities today

  • U.S. stocks tumbled as volatility sparked by the spread of the coronavirus woes continued to grip financial markets.
  • Brent crude settled below $50 a barrel for the first time since July 2017, as uncertainty loomed over whether Russia would agree to OPEC’s proposal for a large production cut.

Get your daily fix of global markets here.

Indian ADRs

All You Need To Know Going Into Trade On March 6

Stocks To Watch

  • Yes Bank: The Government of India placed the lender under moratorium and capped withdrawals for a month, while the Reserve Bank of India superseded the board of the private lender citing a steady decline in its financial position. The Ministry of Finance took the decision after considering an application submitted by the Reserve Bank of India, said a ministry statement on Thursday evening. The moratorium will last till April 3 and all legal proceedings against the bank will be stayed during the period, it said. The bank is not allowed to pay any depositor more than Rs 50,000 without written permission from the RBI during the period of moratorium.
  • State Bank of India: The board of directors of government-owned lender have given an in-principle approval to explore investment opportunity in Yes Bank Ltd., according to a statement filed with stock exchanges. The statement is in response to a Bloomberg report, on Thursday morning, that the government had approved a plan for SBI to lead a consortium that will buy a stake to rescue the capital-starved Yes Bank.
  • Dr. Reddy’s Laboratories received three Form 483 observations for active pharmaceutical ingredient manufacturing plants at Telangana by U.S. FDA.
  • Lupin has launched the authorized generic version of Vimovo tablets, used for the treatment of arthritis and ulcers.
  • Reliance Industries acquired 37.7 percent stake in Alok Industries for Rs 250 crore. On March 8, NCLT had approved the resolution plan in which Alok Industries had allotted 83.3 crore shares for Rs 3 per share.
  • Agro Tech Foods: The board approved an increase in royalty payments from 1.6 percent to 2.5 percent, of net proceeds of sales for all products under ‘Act-II’ brand with its holding company Conagra Foods RDM. There will be an additional 1.75 percent royalty for all microwave popcorn products with the brand name “Act II”. The royalty payment is for the usage of licensed trademark and know-how.
  • JSW Steel: ICRA Ratings has downgraded the company’s long-term ratings to AA- from AA, outlook remaining negative. Agency stated that change in the rating has taken into account weaker than anticipated financial performance due to moderation in domestic demand and weak steel prices and expected increase in leverage in the near to medium term owing to the proposed acquisition of Bhushan Power and Steel.
  • HCC: Default in loans stand at Rs 622.27 crore and total financial indebtedness to the bank and financial institutions stand at Rs 3,182.74 crore, as on Feb. 29.
  • Sagar Cements: The February cement sales rose 2.44 percent to 294,518 million tons.
  • Force Motors: The February Domestic Sales fell 19 percent to 2,000 units.
  • Cipla: LIC has increased its stake in the company from 2.5 percent to 4.52 percent.
  • Lemon Tree Hotels has signed a license agreement for a 62-room hotel at Agra.
  • Orient Refractories: The NCLT has disapproved of a scheme of amalgamation between the company and RHI India and RHI Clasil. The company said in its press release, that it is examining the order in detail.
  • Pidilite Industries has incorporated a joint venture company ‘Pidilite C-Techos Walling’ to carry on the business of construction of building works, manufacturing of ACC panels and other ancillary products. The Company will hold a 60 percent stake in the venture.
  • Sudarshan Chemical Industries clarified that none of its plants have closed down for violation of pollution norms.
  • Music Broadcast said that it has redeemed the last outstanding non-convertible debentures of Rs 50 crore. Apurva Purohit, the director of the company said that the above redemption will help the company become almost debt-free with only approximately Rs. 16.5 crore outstanding as on date on a gross basis and reduce interest outgo by Rs. 4.85 crores per annum.
  • Cyient has appointed Karthikeyan Natarajan as president and chief operating officer of the company.
  • Ester Industries: The board has approved an expansion plan of setting up a new BOPET film line in India, with a proposed capacity expansion of 48,000 MTPA and a capital outlay of Rs 500 crore.

Public Sector Bank Mergers

  • Punjab National Bank: The board approved a swap ratio for amalgamation with the Oriental Bank of Commerce and the United Bank of India. The bank will issue 1,150 shares of Rs 2 for every 1,000 shares of Rs 10 each of Oriental Bank of Commerce and 121 shares of Rs 2 each for 1,000 shares of Rs 10 each of the United Bank of India. Record date set as March 25.
  • Union Bank of India: The board approved a share swap ratio for amalgamation with Andhra Bank and Corporation Bank. The bank will issue 325 shares of Rs 10 each for every 1000 shares of Rs 10 each to Andhra Bank and 330 shares of Rs 10 each for every 1000 shares of Rs 2 each to Corporation Bank. Record date set as March 23.
  • Canara Bank: The board approved a swap ratio merger for amalgamation with Syndicate Bank. Bank to issue 158 shares of Rs 10 for every 1,000 shares each of Syndicate Bank. Record date set as March 23.
  • Indian Bank: The government of India has notified the amalgamation of Allahabad Bank into the Bank.

Brokerage Radar

UBS on Small Finance Banks

  • Equitas: Maintained ‘Buy’; cut price target to Rs 160 from Rs 175
  • Ujjivan: Maintained ‘Buy’ with a price target of Rs 450
  • AU Small Finance: Downgraded to ‘Sell’ from ‘Neutral’; hiked price target to Rs 1,000 from Rs 760.
  • Growth outlook strong; surplus liquidity.
  • Surplus liquidity to aim net interest margins, but CASA scale-up slower than expected.
  • Asset quality healthy despite slowdown; cost to income ratio to fall gradually with scale.

On Yes Bank

UBS

  • Maintained ‘Sell’ with a price target of Rs 20.
  • Believe downside scenario of fair value is Rs 1 is playing out.
  • See two possibilities: capital infusion by government/PSU or initial investments from government/PSU and fund raising from markets later.
  • This event could heighten risk perception of smaller/weaker banks in near term.

Macquarie

  • Maintained ‘Underperform’ with a price target of Rs 25.
  • Contagion risk emanating from the collapse of the bank has been contained.
  • Expect sharp downward move in stocks of Yes Bank and SBI.
  • Don’t think capital infusion by PSU could infuse any confidence.

JPMorgan

  • Maintained ‘Underweight’; cut price target to Re 1 from Rs 55.
  • Quasi sovereign bailout is a bond holder/depositor bailout and not an equity one.
  • New capital will likely come in at a steep discount to current share price.
  • Believe forced bailout investors will likely want the bank to be acquired at near zero value to account.
  • For SBI, incrementally negative for its valuations as it sets a precedent for nationalization of any future private losses.

Offerings

  • SBI Cards and Payment Services IPO subscribed 26.5 times. Retail investors subscribed 2.5 times. Institutional investors subscribed 57 times.
  • Antony Waste Handling IPO gets 13 percent demand on the second day of sale, offer to close March 6.

Bulk Deals

  • Eveready Industries: Amansa Holdings sold 27.97 lakh shares (3.85 percent) at Rs 64.01 each
  • Best Agrolife: Resonance Opportunities Fund acquired 3 lakh shares (3.76 percent) at Rs 233 each

Jubilant Life Sciences

  • East Bridge Capital Master Fund acquired 24.05 lakh shares (1.51 percent) at Rs 497.6 each
  • Morgan Stanley Asia (Singapore) sold 16.26 lakh shares (1.02 percent) at Rs 495.75 each

Nava Bharat Ventures

  • East Bridge Capital Master Fund acquired 42.36 lakh shares (2.40 percent) at Rs 65.15 each
  • Morgan Stanley Asia (Singapore) sold 42.21 lakh shares (2.40 percent) at Rs 65.15 each

Trading Tweaks

  • Borosil Renewables ex-date for demerger
  • PG Electroplast to move out of short term ASM Framework
  • Filatex Fashions price band revised to 10 percent
  • Future Consumer, IRCTC, Greenpanel Industries, Ind-Swift Laboratories price band revised to 5 percent

Who’s Meeting Whom

  • Onward Technologies to meet Roha Capital on March 6
  • CG Consumer Electricals to meet Credit Suisse and Fidelity on March 9
  • Amber Enterprises to meet Investec Capital Services on March 6
  • Allcargo Logistics to meet Finvest Advisors on March 6

Insider Trading

  • Tata Chemicals promoter Tata Sons acquired 30 lakh shares from Feb. 28 -March 3
  • Aarti Industries promoter Chandrakant Gogri sold 1.3 lakh shares on March 4
  • GMR Infra promoter GMR Enterprises acquired 38.24 lakh shares on March 2
  • Nath Bio-Genes promoter Akash Farms LLP acquired 20 lakh shares on Feb. 28

(As Reported On March 5)

Money Market Update

  • The rupee ended weaker at Rs 73.31 against the dollar on Thursday versus Rs 73.23 against the dollar on Wednesday.

F&O Cues

Index Futures

  • Nifty March futures closed at 11,255.3, discount of 13.6 points versus 3.9 points
  • Nifty March futures OI up 2 percent, adds 2.9 lakh shares in OI
  • Nifty Bank March futures closed at 28,829.3, premium of 14 points versus 99.3 points
  • Nifty Bank March futures OI down 1.5 percent, sheds 18.9k shares in OI

Options

  • Nifty PCR at 1.41 versus 1.15 (across all series)

Nifty weekly Expiry: March 12

  • Max OI on call side at 11,400 (9.6 lakh shares)
  • Max OI on put side at 11,000 (9.2 lakh shares)
  • OI addition seen in 11,400C (+6.8 lakh shares), 11,600C (+5.2 lakh shares)

Nifty Monthly Expiry: March 26

  • Max OI on call side at 12,000 (26.9 lakh shares)
  • Max OI on put side at 11,000 (31.8 lakh shares)

Stocks In F&O Ban

  • Yes Bank
All You Need To Know Going Into Trade On March 6
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