All You Need To Know Going Into Trade On May 11
Commuters ride escalators at Berlin’s Central Station railway station in Berlin, Germany. (Photographer: Krisztian Bocsi/Bloomberg)

All You Need To Know Going Into Trade On May 11

Asian markets have edged higher in early trade on Monday tracking a positive close from Wall Street and major European economies reporting fewer Covid-19 deaths.

Treasuries are ticking lower as are crude oil prices as investors continue to await more details from respective governments on gradual restarting of the economies.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.6 percent to 9,313 as of 7:05 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 look at all that can influence equities in today’s trading session:

  • Markets in Japan, South Korea and Australia are edging higher in early trade while the Yen is staging a retreat.
  • Futures on the Dow Jones are currently trading higher by 90 points after the benchmark ended higher on Friday despite a historic surge in American unemployment.
  • The latest U.S. Jobs report showed a cut of 20.5 million workers for the month of April, taking the jobless rate in the world's largest economy to 14.7 percent.
  • U.K. Prime Minister Boris Johnson said that there would be no immediate end to the lockdown as he detailed the initial steps to resume the economy on Sunday.
  • China's central bank pledged 'more powerful' policies to counter the economic hit with more focus on growth and jobs. The country wil report its industrial production and retail sales data for April this Friday.
  • Yield on the 10-year treasury stood at 0.7 percent.
  • West Texas Intermediate crude fell 1.7 percent to $24.32 per barrel. OPEC will also be releasing its monthly oil market report this Wednesday.

Get your daily fix of the global markets here.

All You Need To Know Going Into Trade On May 11

Earnings Fineprint: ICICI Bank Q4FY20

  • Net profit rises 26 percent to Rs 1,221 crore
  • Net Interest Income up 17 percent to Rs 8,926 crore
  • Gross NPA at 5.53 percent from 5.95 percent in Q3FY20
  • Net NPA at 1.41 percent from 1.49 percent in the previous quarter
  • Provisions up 186 percent to Rs 5,967 crore from Rs 2,083 crore sequentially
  • Net profit and Net Interest Income numbers are compared on a year-on-year basis

Management Commentary From ICICI Bank:

  • Excluding Covid-19, provisions at Rs 3,242 crore
  • A healthcare group in West Asia and a shipping group in South-East Asia were downgraded during the quarter. Have adequately provided for these accounts.
  • Provision Coverage Ratio excluding technical write-offs at 75.7 percent
  • 32 percent of our borrowers, across retail and corporate segments have taken the moratorium
  • Very difficult to give asset quality guidance. Will have to wait till the lockdown lifts
  • Disbursements likely to get impacted as economic activity remains under pressure
  • BB and below rated book is around Rs 16,600 crore

Brokerages On ICICI Bank

Jefferies

  • Buy rating maintained
  • Price target raised to Rs 450 from 440
  • Q4 profit below estimates due to Covid-19 related provisions
  • Key disappointment was 50 percent rise in slippages led by overseas book
  • Bank is extended moratorium to 30 percent of loans and its performance will be key to watch

Elara Capital

  • Buy rating maintained
  • Price target of Rs 425
  • Core PPoP grew 26 percent compared to last year driven by strong NIMs
  • Healthy CASA growth
  • Higher slippages led by two lumpy overseas loans

Centrum

  • Buy rating maintained
  • Price target of Rs 464
  • NII beats estimates
  • Provisions rise due to Covid-19
  • Retail loans drive growth
  • Deposits see healthy accretion
  • Strong pedigree and distribution network could see market share gains in a tough FY21

Earnings Fineprint: Shree Cement Q4FY20

  • Revenue down 2 percent to Rs 3,217.5 crore
  • Net profit up 83.2 percent to Rs 588.2 crore
  • Ebitda up 27.3 percent to Rs 1,078.9 crore
  • Ebitda margin expands to 33.5 percent from 25.8 percent
  • Other income up 116.8 percent to Rs 97.8 crore from Rs 45.1 crore
  • Volumes down 5.5 percent to 6.9 MT
  • Power and fuel expenses as a percentage of net sales stood at 19.3 percent from 23.2 percent
  • Operating profit at a multi-quarter high
  • All numbers are standalone and compared on a year-on-year basis

Brokerages On Shree Cement

Morgan Stanley

  • Overweight rating maintained
  • Price target raised to Rs 20,100 from 18,000
  • Steady performance relative to peers in a tough environment
  • See resilient profitability in FY21 despite sharp fall in volumes
  • Valuation premium tends to expand in a tougher environment

IDFC Securities

  • Neutral rating maintained
  • Price target of Rs 17,500
  • Operating performance aided by strong realisations and cost efficiencies
  • Resumption of construction activity and revival of demand will be key
  • Benign cost pressures will partially offset the loss in volumes

Elara Capital

  • Downgrade to accumulate from buy
  • Price target cut to Rs 21,186 from 21,727
  • Cost surprises on the positive
  • Blended Ebitda per tonne improves almost 35 percent year-on-year
  • Improvement in industry fundamentals likely to be gradual
  • To benefit from strong presence in price remunerative North India and demand accretive East India and benign costs

Stocks To Watch

Sequent Scientific Open Offer:

  • Carlyle Group enters into binding agreement with promoters to acquire up to 74 percent equity stake.
  • Promoters to sell up to 11.15 crore shares or 44.92 percent of their stake while Ascent India Fund to sell 1.41 crore shares or 5.69 percent of expanded voting share capital respectively at Rs 86 per share.
  • The total sum aggregates to Rs 1,081.1 crore.
  • Proposed transaction to attract an obligation on the Carlyle Group for an Open Offer as per SEBI rules.
  • Promoters currently have 56.15 percent stake in the company.
  • Open Offer has been made of up to 6.46 crore shares, representing 26 percent of the expanded voting share capital at Rs 86 per share, aggregating to Rs 555.4 crore.
  • Open Offer price is a 7 percent premium to the closing price of May 8.
  • There is an option in the agreement that the promoter group can sell an extra 2.79 crore shares, which is 11.23 percent of the expanded voting share capital of the company.
  • The transaction is expected to close in the third quarter of 2020 subject to necessary approvals.
  • Reliance Industries: Saudi Arabia's sovereign wealth fund called the Public Investment Fund is considering purchasing a minority stake in Jio platforms, Bloomberg News reports citing local news agencies.
  • Hero MotoCorp: Reopens more than 1,500 customer touchpoints including authorised dealerships and service centres. These outlets contribute around 30 percent of the company's total domestic retail sales. The company has sold 10,000 units of motorcycles and scooters since the reopening of these customer touchpoints.
  • Lupin: Announced the closure of inspections carried out by the U.K. MHRA at its three manufacturing units in Pithampur. The inspection was carried out in January 2020.
  • Cipla: Gets Establishment Inspection Report (EIR) for its API facility in Bengaluru from the U.S. FDA. The inspection took place between January 20-24, 2020.
  • Minda Corp: Calls off Joint Venture with Shandong Beiqi Hai Hua Automobile Parts (China) for producing and selling automotive components. The JV had not commenced any business yet.
  • Goa Carbon: Production in April fall 74 percent to 4,436 Million Tonnes
  • Indiabulls Housing Finance: CARE reaffirms the long-term rating at CARE AA. The perpetual debt rating has been reaffirmed at CARE AA-. The rating outlook has been revised to negative. The short-term rating has been reaffirmed at CARE A1+.
  • VST Industries: Has partially resumed its manufacturing operations with restricted capacity and manpower in Telangana after obtaining necessary approvals.
  • Carborundum Universal: Resumes operations in all manufacturing facilities situated across the country except the Kolkata unit.
  • Cadila Healthcare: To manufacture Isg ELISA - the diagnostic kit for testing Covid-19 developed by ICMR-NIV, Pune. The technology has been transferred to Zydus Cadila for mass scale production.
  • J Kumar Infra: Gets Letter of Acceptance from NBCC for construction of SDMC headquarters in Delhi for a contract value of Rs 559.78 crore.
  • KPR Mills: Resumes operations of its units in Tamil Nadu and Karnataka
  • Bank Of Baroda: Reduces MCLR between 5-20 basis points across various tenors from May 12. One month MCLR now at 7.35 percent while one-year MCLR at 7.8 percent.
  • Union Bank of India: Reduces MCLR by up to 15 basis points across various tenors from May 11. One-year MCLR now at 7.7 percent while one-month MCLR at 7.25 percent.
  • India Nippon Electricals: Resumes partial operations at its Hosur, Pondicherry and Rewari plants after getting Government approval. The resumption is primarily being used to train employees and other stakeholders on Covid-19 related Standard Operating Procedures. Full fledged commercial operations will commence based on the demand and supply situation.
  • NLC India: One unit has started operations post the fire incident while the other two units will resume in a week.
  • Oracle Financial Services: Declares dividend of Rs 180 per share for FY20, sets record date at May 20.
  • Future Retail: Promoter Future Corporate Resources invoked pledge of 11.26 lakh shares on May 6
  • Rallis India: To meet Haitong Securities, First State Investments and others on May 12
  • Companies That Resumed Operations: Nocil, Plastiblends, JK Tyre, VST Tillers & Tractors, India Cements, Magma Fincorp, Pricol, India Glycols
  • Non-Nifty Earnings Today: Piramal Enterprises, ADF Foods, Godrej Agrovet, Godrej Properties, Motilal Oswal Financial Services, Orient Abrasives, Sonata Software, Subex, Wockhardt

Other Earnings After Market Hours

HDFC AMC Q4FY20

  • Revenue down 2 percent to Rs 476 crore
  • Net profit fell 10 percent to Rs 249.83 crore
  • Operating profit from core AMC business down 1 percent to Rs 359.6 crore
  • Fair Value Loss on Essel group exposure (net of tax) at Rs 71.3 crore
  • Asset Under Management as of March 2020 at Rs 3,19,000 crore
  • Board recommends dividend of Rs 28 per equity share of Rs 5 each for FY20
  • All numbers are standalone and compared on a year-on-year basis

Adani Transmission Q4FY20

  • Revenue up 25 percent to Rs 3,186.96 crore
  • Net profit down 60 percent to Rs 58.97 crore
  • Ebitda up 27 percent to Rs 1,105.6 crore
  • Ebitda Margin flat at 34.7 percent from 34.2 percent
  • All numbers are consolidated and compared on a year-on-year basis

Mahindra Holidays Q4FY20

  • Revenue down 3 percent to Rs 616.6 crore
  • Net loss of Rs 164.6 crore from net profit of Rs 46.15 crore
  • Ebitda up 38 percent to Rs 104.15 crore
  • Ebitda margins widen to 16.9 percent from 11.9 percent
  • One-time impact of change in tax rate of Rs 199.72 crore hits net profit

Brokerage Radar

CIMB On RBL Bank

  • Add rating maintained
  • Price target cut to Rs 225 from Rs 410
  • Q4 robust but FY21 can be challenging
  • One-third of loan book under moratorium but high Provision Coverage ratio provides comfort
  • Expect credit growth to be moderate
  • Deposits to be revived from here on

CIMB On SKF India

  • Add rating maintained
  • Price target cut to Rs 1,350 from Rs 2,150
  • Sharp fall in sales indicates slowdown prior to lockdown
  • Cost measures curtail extent of damage due to low sales
  • Huge special dividend of Rs 130 a positive surprise

IDFC Securities On Kansai Nerolac

  • Neutral rating maintained
  • Price target cut to Rs 383 from Rs 412
  • Double-digit growth in decorative segment in January/February
  • Severe disruption in decorative, automotive business due to Covid-19
  • Cut FY21 and FY22 EPS estimates by 15 percent and 7 percent respectively

Ambit On Cognizant

  • In-line on growth; materially weaker on margins
  • Large segments of business are sluggish
  • Growth may remain weak
  • Only positives were indications of 30 percent higher deal wins in Q1CY20

PhillipCapital On Cognizant

  • Meets guidance
  • Outlook remains weak
  • Incorrect to extrapolate Cognizant's performance/guidance to the entire sector
  • Most of the pre-covid issues with the company were specific to it

Bulk Deals

  • Laurus Labs: Eight Roads Management Mauritius sold 53.31 lakh shares or 4.99 percent stake at Rs 446.07 per shares while Bluewater Investments sold 85 lakh shares or 7.95 percent stake at Rs 441.26 per share.
  • Sobha: Anamudi Real Estates acquired 5.55 lakh shares or 0.59 percent stake at Rs 178.87 per share. Anamudi Real Estates is the promoter entity of the Godrej Group.
  • Apollo Pipes: Promoter Sameer Gupta acquired 75,000 shares or 0.57 percent take at Rs 329.98 per share.

Trading Tweaks

  • Move Into ASM Framework: TCI Developers
  • Move Out Of ASM Framework: Religare Enterprises, DHFL, MEP Infrastructure Developers, Kridhan Infra, Jain Irrigation Systems, Reliance Capital, Reliance Communications
  • Move Into Short-Term ASM Framework: Gujarat Apollo Industries
  • Move Out Of Short-Term ASM Framework: TV Today Network, Lincoln Pharmaceuticals

Money Market Update

  • The rupee ended stronger at 75.55 against the U.S. Dollar as compared to Wednesday's close of 75.77. For the truncated week, the rupee posted losses of 0.6 percent.
  • For the week, the rupee was the second worst performing currency among its EM peers, after the Malaysian Ringgit.

F&O Cues

  • Nifty May futures end at 9,236; premium widens to 15 points from 5 points
  • Nifty May futures add 0.7 percent in Open Interest and 60,000 shares
  • Nifty Bank May futures end at 19,285; a discount of 65 points as compared to a premium of 54 points
  • Nifty Bank May futures add 6.7 percent in Open Interest and 88,000 shares
  • Nifty Put-Call Ratio at 1.31 from 1.15 across all series

Nifty: May 14 Expiry

  • Maximum Open Interest on Call side at 9,500 strike (17.2 lakh shares)
  • Maximum Open Interest on Put side at 9,000 strike (11.9 lakh shares)
  • 9,000 Put (2.7 lakh shares) and 9,500 Call (8.6 lakh shares) see addition in Open Interest.

Nifty: May 28 Expiry

  • Maximum Open Interest on Call side at 10,000 strike (21.6 lakh shares)
  • Maximum Open Interest on Put side at 9,000 strike (23.4 lakh shares)

F&O Buzzers & Fund Flow Picture

All You Need To Know Going Into Trade On May 11
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