An opening bell sits near screens displaying stock price charts inside the Regional Securities Exchange SA, also known as the Bourse Regionale des Valeurs Mobilieres SA (BRVM), in Abidjan, Ivory Coast. (Photographer: Jose Cendon/Bloomberg)

All You Need To Know Going Into Trade On May 10

Asian shares climbed with U.S. equity futures as the U.S. and China continued a pivotal round of trade negotiations.

Shares in Japan and South Korea rose, while futures indicated a rebound in China, with hours to go before Washington ratchets up tariffs. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.23 percent to 11,315 as of 7:05 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. Markets Check

  • U.S. stocks capped a fourth day of losses, though finished off the lows of the day.
  • The yield on 10-year Treasuries added two basis points to 2.46 percent.

Also read: U.S. Yield Curve Inverts for the First Time Since March

Asian Cues

  • Japan’s Topix index rose 0.3 percent.
  • Australia’s S&P/ASX 200 Index added 0.1 percent.
  • South Korea’s Kospi rose 0.8 percent.
  • Hang Seng futures earlier rose 0.3 percent.
  • FTSE China A50 futures earlier advanced 1.3 percent.
  • Futures on the S&P 500 Index added 0.3 percent.

Also read: China Is Armed With Powerful Market Weapons in Duel With Trump

Commodity Cues

  • Brent crude advanced 1.3 percent to $71.14 a barrel
  • West Texas Intermediate gained 0.9% to $62.24 a barrel.
  • Gold was steady at $1,284.72 an ounce.

Also read: Iranian Crude Shipments Slump as U.S. Oil Sanctions Bite Deeper

London Metal Exchange

  • Copper ended lower for the third consecutive trading session, down 0.75 percent.
  • Aluminium ended 0.11 percent higher.
  • Tin halted a three-day rally, ended 0.85 percent lower.
  • Zinc ended lower for the third day, ended 1.45 percent lower.
  • Nickel ended lower for the third day, down 1.4 percent.
  • Lead ended 2.5 percent lower.

Also read: How Much Is an Idea Worth? In Uber’s Case, $3.7 Billion

Data To Watch

  • 5:30pm: India March industrial production YoY; estimate 1.1 percent (prior 0.1 percent)

Indian ADRs

All You Need To Know Going Into Trade On May 10

Stocks To Watch

  • Reliance Industries’ arm signed a definitive agreement to acquire 100 percent stake in British toy retailer Hamleys for GBP 67.96 million (Rs 620 crore).
  • Welspun Corp said it will consider share buyback proposal on May 14.
  • Indian Overseas Bank board approved capital plan for financial year 2020 to issue up to 300 crore equity shares and to raise tier II capital up to Rs 1,500 crore by issuing Basel III compliant bonds. It also kept its MCLR rate unchanged.
  • Mcleod Russel promoter Williamson Magor & Company created a pledge of 78.32 lakh shares (7.5 percent) in favour of IndusInd Bank on April 30.
  • Eveready Industries: Promoter Williamson Magor & Company created a pledge of 56.83 lakh (7.82 percent) in favour of IndusInd Bank on April 30
  • Edelweiss Financial Services announced Rs 300 crore public issue of NCDs by its arm ECL Finance.
  • Quess Corp completed acquisition of 100 percent stake in Greenpiece Landscape.
  • Lakshmi Vilas Bank: RBI extended tenure of its General Manager Rajnish Kumar as Additional Director of Lakshmi Vilas Bank till 2021.
  • Karnataka Bank appointed Balachandra YV as chief operating officer.
  • Larsen & Toubro acquired 33.05 lakh shares of Mindtree on May 9.
  • Welspun Corp: Received additional pipe orders of 103 KMT which will be serviced from India. Order book stood at 1,698 KMT valued at Rs 14900 crore.
  • Yes Bank: CARE Ratings and Brickwork Ratings downgraded ratings on various credit instruments.
  • NIIT Technologies: Company received approval of the Competition Commission of India and the anti-trust authorities in Germany and in United States of America for sale of promoter group holding to Hulst B.V.

Also read: India’s Super Rich Commit $30 Billion To Real Estate And Private Equity Funds

Nifty Earnings To Watch

  • State Bank of India
  • Larsen & Toubro
  • Eicher Motors

Other Earnings To Watch

  • PVR
  • Kajaria Ceramics
  • Merck
  • Nocil
  • Asian Hotels (East)
  • Canara Bank
  • Chalet Hotels
  • Prism Johnson
  • GlaxoSmithKline Consumer Healthcare
  • HT Media
  • Poly Medicure
  • IDFC First Bank
  • JK Agri Genetics
  • Shakti Pumps
  • Oriental Carbon & Chemicals
  • Punjab Chemicals & Crop Protection
  • Relaxo Footwears
  • Tata Investment Corporation
  • V.S.T Tillers Tractors
  • Venky's
  • V-Mart Retail
  • Quick Heal Technologies
  • Dilip Buildcon
  • Equitas Holdings
  • Oberoi Realty
  • Strides Pharma Science
  • Syndicate Bank
  • Vakrangee
  • V2 Retail

Earnings Reaction To Watch

HCL Tech (Q4, QoQ)

  • Dollar revenue up 3.5 percent at $2278 million.
  • Revenue up 1.9 percent to Rs 15,990 crore.
  • Net profit down 2.1 percent to Rs 2,550 crore.
  • Net profit down 1.7 percent to Rs 2,568 crore (adjusted).
  • EBIT down 1.5 percent to Rs 3,039 crore.
  • Margins at 18.9 percent from 19.6 percent (adjusted).
  • FY20 Revenue guidance of 14 to 16 percent (constant currency terms).

Also read: Q4 Results: HCL Technologies’ Profit Slips But Meets Street Bets

Voltas (Q4, YoY)

  • Revenue up 0.7 percent to Rs 2,062.8 crore.
  • Net profit down 27.6 percent to Rs 139.6 crore.
  • Ebitda down 43 percent to Rs 144.2 crore.
  • Margin at 7 percent versus 12.4 percent.
  • RM as percent of sales at 44 percent versus 36 percent.
  • Raw material costs up 23 percent to Rs 904.8 crore.
  • Deferred tax reversal of Rs 33.8 crore.
  • Unitary cooling segment revenue down 6 percent to Rs 997.6 crore.
  • Electro-mechanical project and services segment revenue up 12 percent to Rs 976 crore.
  • Engineering products and services revenue down 6 percent to Rs 78.5 crore.

Shankara Building Products (Q4, YoY)

  • Revenue down 18.5 percent to Rs 619.7 crore.
  • Net profit down 92.6 percent to Rs 1.6 crore.
  • Ebitda down 69.6 percent to Rs 16.4 crore.
  • Margin at 2.6 percent versus 7.1 percent.
  • Inventory gain of Rs 63.1 crore in base quarter.

Mahanagar Gas (Q4, YoY)

  • Revenue up 23.1 percent to Rs 722.5 crore.
  • Net profit up 27.4 percent to Rs 133.5 crore.
  • Ebitda up 21.5 percent to Rs 214 crore.
  • Margin at 29.6 percent versus 30 percent.
  • Total volumes up 9.2 percent to 2.95 MMSCMD.
  • Declares dividend of Rs 10.5 per share.

PNB Housing Finance (Q4, YoY)

  • Net Interest Income up 16.8 percent to Rs 465.4 crore.
  • Net profit up 51 percent to Rs 379.8 crore.
  • Declared dividend of Rs 9 per share.
  • Board approved raising Rs 10,000 crore via NCDs and raising up to $1 billion by external commercial borrowings.

South Indian Bank (Q4, YoY)

  • Net Interest Income up 1.4 percent to Rs 499.3 crore.
  • Net profit down 38.2 percent to Rs 70.5 crore.
  • Provisions up 48 percent to Rs 219.2 crore.
  • GNPA at 4.92 percent versus 4.88 percent (QoQ)
  • NNPA at 3.45 percent versus 3.54 percent (QoQ)

Indian Overseas Bank (Q4, YoY)

  • Net Interest Income down 14.7 percent to Rs 1,479 crore.
  • Net loss of Rs 1985.2 crore versus net loss of Rs 3,606.7 crore
  • Provisions down 34 percent to Rs 4,501.9 crore.
  • GNPA at 21.97 percent versus 23.76 percent. (QoQ)
  • NNPA at 10.81 percent versus 13.56 percent. (QoQ)

Hikal (Q4, YoY)

  • Revenue up 17.2 percent to Rs 457.5 crore.
  • Net profit up 31.6 percent to Rs 33.3 crore.
  • Ebitda up 17.3 percent to Rs 83.9 crore.
  • Margin flat at 18.3 percent.
  • Raw materials as percent of sales at 58 percent versus 55 percent.
  • Pharma segment revenue up 21 percent to Rs 259.2 crore.
  • Crop protection segment revenue up 13 percent to Rs 198.4 crore.

Gujarat Mineral Development Corporation (Q4, YoY)*

  • Revenue down 16.5 percent to Rs 530.5 crore.
  • Net profit up 23.9 percent to Rs 124 crore.
  • Ebitda up 25.5 percent to Rs 169.1 crore.
  • Margin at 31.9 percent versus 21.2 percent.
  • Total expenses down 22 percent to Rs 390.2 crore.
  • Deferred tax payment of Rs 16.2 crore in base quarter.

Gujarat State Petronet (Q4, QoQ)

  • Revenue down 4.4 percent to Rs 433.8 crore.
  • Net profit down 11.7 percent to Rs 153.3 crore.
  • Ebitda down 6.8 percent to Rs 329.3 crore.
  • Margin at 75.9 percent versus 77.9 percent.
  • Deferred tax payment up 5.3 times to Rs 16.9 crore.

Oracle Financial Services (Q4, QoQ )

  • Revenue up 2.4 percent to Rs 1,214.9 crore.
  • Net profit up 6.5 percent to Rs 326 crore.
  • EBIT up 3.7 percent to Rs 505.6 crore.
  • Margin at 41.6 percent versus 41.1 percent.

Dalmia Bharat (Q4, YoY)

  • Revenue up 8 percent to Rs 2,842 crore.
  • Net profit up 78 percent to Rs 228 crore.
  • Ebitda up 22.2 percent to Rs 677 crore.
  • Margin at 23.8 percent versus 21.1 percent.
  • Sales volume up 7.5 percent to 5.57 MT.

HCC (Q4, YoY)

  • Revenue down 8 percent to Rs 1,322.5 crore.
  • Net loss of Rs 428 crore versus net profit of Rs 20.1 crore.
  • Ebitda loss of Rs 24.6 crore versus Ebitda gain of Rs 159.5 crore.
  • Exceptional loss of Rs 389.17 crore due to arbitration awards and impairment loss.
  • Order book stood at Rs 18,554 crore as March 31, 2019.

*Numbers not comparable due to change in accounting policy.

Also read: Q4 Results: Titan’s Profit Hit By Lower Operating Margin

Offerings

  • Edelweiss announces Rs 300 crore public issue of NCDs by unit ECL Finance, issue open May 10 to June 7.

Pledge Share Details

  • Max Financial Services promoter group Max Ventures Investment Holdings created pledge of 50,000 shares on May 6.
  • Adani Transmission promoters created pledge of 6.42 crore shares and revoked pledge of 5.76 crore shares on May 6.
  • Sobha promoter PNC Menon created pledge of 1 crore shares and released pledge of 1 crore shares from April 22-23.

Trading Tweaks

  • Eclerx Services record date for share buyback.
  • Morepen Laboratories to move into short term ASM Framework.

Who’s Meeting Whom

  • ACC to meet Bharat Axa Life Insurance on May 10.
  • Tata Steel to meet Westwood Global Investment on May 10.

Insider Trading

  • HDFC Life Insurance promoter Standard Life sold 3.3 crore shares from May 3-6.

Money Market Update

  • The rupee on Thursday weakened for the fourth straight day to close at 69.95/$ versus Wednesday’s closing of 69.71/$.

Also read: The Dollar Dictates China’s Need for a Trade Deal

F&O Cues

Futures May Series

Nifty

  • Nifty futures closed trading at 11,334.8, premium of 33 points versus 59 points
  • Nifty open interest down 7 percent, sheds 12.7 lakh shares in open interest

Bank Nifty

  • Bank Nifty futures closed trading at 28,995, premium of 110 points versus 151 points
  • Bank Nifty open interest down 5 percent sheds 88,000 shares in open interest

Options

  • Nifty PCR at 1.02 Versus 1.03 (across all series)

Nifty Weekly Expiry (May 16)

  • Max open interest on call side at 11,500 (18.5 lakh shares)
  • Max open interest at Put side at 11,000 (10.8 lakh shares)
  • Max open interest addition seen at 11,400 Call (+12 lakh shares), 11,000 Put (+9.4 lakh shares), 11,500 Call (+9.3 lakh shares)

Nifty Monthly Expiry

  • Max open interest on call side at 12,000 (17.6 lakh shares)
  • Max open interest on Put side at 11,000 (25.6 lakh shares)

Stocks In F&O Ban

  • Jet Airways
All You Need To Know Going Into Trade On May 10

Brokerage Radar

On HCL Tech

CLSA

  • Maintained ‘Buy’ with a price target of Rs 1,380.
  • Sharp revenue beat led by organic recovery, organic guidance conservative.
  • Margins slip slightly; 2019-20 guide sharply lower from one-off IBM transition costs.
  • Digital accelerates but products impacted by seasonality.
  • Rebounding organic growth and undemanding valuation.

Morgan Stanley

  • Maintained ‘Underweight’ with a price target of Rs 931.
  • Q4 and FY20: better revenue growth but weaker margin
  • Do not expect march quarter results and 2019-20 guidance to have any material impact on earnings estimates

On Asian Paints

CLSA

  • Maintained ‘Sell’; cut price target to Rs 1,285 from Rs 1,400.
  • Weak March quarter results and a cautious management outlook.
  • Weak value growth and margins.
  • Need to watch monsoon progress as well as the easing of the credit cycle.

Jefferies

  • Maintained ‘Buy’; cut price target to Rs 1,575 from Rs 1,620.
  • March quarter: margin miss, a short term blip.
  • Softness largely led by gross margin pressure, higher ad spends and new plant ramp-up costs.
  • Remain positive on the overall top-line growth trajectory.

More Calls

Morgan Stanley on PNB Housing Finance

  • Maintained ‘Underweight’ with a price target of Rs 775.
  • Strong NIM expansion, but unlikely to be sustained.
  • Retail asset quality did not show the usual March quarter improvement.
  • GNPA ratio broadly stable QoQ.

Jefferies on Mahanagar Gas

  • Maintained ‘Underperform’ with a price target of Rs 760.
  • Q4: Volumes in-line, but earnings miss on lower-than-expected margins.
  • Valuations looks unappealing given expectation of 6 percent volume growth.

UBS on Apollo Tyres

  • Maintained ‘Buy’ with a price target of Rs 275.
  • March quarter review - Weak Europe leads to miss.
  • Stock has been quite weak lately; believe weakness largely priced in.

HSBC on Shriram Transport Finance

  • Maintained ‘Buy’; cut price target to Rs 1,350 from Rs 1,450.
  • Lower credit costs and tax write-back buoyed net income in March quarter.
  • Slower growth and lower NIMs overshadow healthy asset quality performance.
  • Risk reward still favourable despite near-term uncertainties.