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All You Need To Know Going Into Trade On May 12
Stocks in the news, big brokerage calls of the day, complete trade setup and much more!
12 May 2020, 07:43 AM IST 
Glasses of Indian spiced chai tea sit at the feet of men resting in the cabin of a truck in New Delhi, India. (Photographer: Prashanth Vishwanathan/Bloomberg)
Asian markets have opened mixed on Tuesday morning as the assessment over the challenges faced by economies when they open from the Covid-19 pandemic continues.
Oil output cuts were beginning to show effect with easing in storage pressure and prices stabilising. Treasuries were steady this morning.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.7 percent to 9,165 as of 7:15 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 session:
- Japanese markets are fluctuating in early trade while those in Australia and South Korea are declining. Futures in Hong Kong gained.
- Futures on the S&P 500 dipped lower after the index ended flat on Monday.
- Global equities have recovered almost half of their March 23 losses even as the sustainability of the rally remains in question.
- More than 33 million Americans have lost their jobs in the seven weeks since the economy was shut to contain the spread of Covid-19.
- "When unemployment spikes, it takes years to fix, they don't fix themselves in three months," Chris Rands, a portfolio manager for fixed income at Nikko Asset Management told Bloomberg Television in an interview.
- Regional Fed presidents - James Bullard, Loretta Mester and Patrick Harker are due to speak at events on Tuesday.
- Yield on the 10-year treasury stood at 0.71 percent.
- West Texas Intermediate Crude rose 0.8 percent to $24.29 per barrel.
Get your daily fix of the global markets here.
Stocks To Watch
- Abbott India: Bloomberg News reports that parent company Abbott has announced that the U.S. Food and Drug Administration has issued Emergency Use Authorization for the company’s Covid-19 lab-based serology blood test on the Alinity-i system. The company plans to ship nearly 30 million antibody tests globally in May across its Architect and Alinity-i platforms and will have a capacity for 60 million tests in June.
- Aviation Stocks: Bloomberg News reports that the Government of India is mulling resuming commercial flights on May 18 or earlier.
- InterGlobe Aviation: Clarifies that the company has not formulated any proposal or has shown interest in Virgin Australia.
- Indian Oil Corporation: Restarted several process units at its refineries that were shut due to the lockdown. With through-puts gradually picking up pace, the refineries are currently operating at about 60 percent of their design capacities with plans to scale up to 80 percent of the design levels by the end of the month. Company has also restarted production of petrochemicals.
- Laurus Labs: Warburg Pincus decreased its stake in the company from 19.63 percent to 11.68 percent on May 8.
- Ind-Swift Laboratories: Gets Establishment Inspection Report (EIR) from the U.S. FDA, with zero form 483 observations for the Surveillance GMP inspection of its API manufacturing facility located at Derabassi in Punjab.
- Ashok Leyland: To consider raising Rs 500 crore via NCDs on May 14.
- Trident: To consider raising funds on May 16.
- Great Eastern Shipping: Clarified on the reports of a fire in its vessel, stating that the concerned vessel has been safe and sailing. The vessel was sold to an Indonesian company in July 2013.
- Seamec: Said that its vessel ‘SEAMEC-III’ is likely to be deployed around end-July or early-August after completing the dry docking. The aggregate value of the contract is $23 million. Another vessel of the company has contracted with L&T Hydrocarbon Engineering for working at Mumbai High Offshore for Rs 8.07 crore.
- SBI Cards & Payment Services: Promoter SBI Life Insurance sold 1.12 lakh shares between May 7-8.
- PSP Projects: To meet IDFC MF on May 12.
- Companies That Resumed Operations: Federal Mogul, Elgi Equipments, Tata Chemicals, Vascon Engineers, Century Plyboards, Electrotherm, Kirloskar Industries, Acrysil.
- Non-Nifty Earnings Today: Bandhan Bank, Blue Star, Havells, Indiamart Intermesh, Prism Johnson, Sterlite Tech, Syngene, JK Paper, SeQuent Scientific.
Earnings Reported After Market Hours
Motilal Oswal Financial Services Q4FY20
- Revenue rose 2 percent to Rs 624 crore
- Ebitda fell 4 percent to Rs 277 crore
- Ebitda margin narrowed to 44.4 percent from 47.1 percent
- Net loss of Rs 254 crore as compared to a net profit of Rs 147 crore
- Mark-to-market losses of Rs 356 crore due to fair valuation of investments led to net loss
- Other than broking business, all other key segments reported a year-on-year decline in revenue
- All numbers are consolidated and compared on a year-on-year basis
Piramal Enterprises Q4FY20
- Revenue down 2 percent to Rs 3,341 crore
- Net loss of Rs 1,701.9 crore as compared to a net profit of Rs 455.3 crore
- MAT Credit of Rs 1,758 crore written-off in the current quarter
- Expected credit loss on financial assets at Rs 2,109 crore from Rs 107.1 crore
- Declares dividend of Rs 14 per share
- Created additional provision of Rs 1,903 crore to mitigate potential contingencies in the financial services business
- All numbers are consolidated and compared on a year-on-year basis
Godrej Agrovet Q4FY20
- Revenue up 17 percent to Rs 1,627.7 crore
- Net profit down 34.4 percent to Rs 74.6 crore
- Ebitda up 68.5 percent to Rs 126.2 crore
- Ebitda margin expands to 7.8 percent from 5.4 percent
- Exceptional gain of Rs 88.3 crore in the base quarter
- Low raw material cost aid margins
- All numbers are consolidated and compared on a year-on-year basis
Earnings Expectations: Nestle India Q1CY20
- Revenue seen 3.2 percent higher at Rs 3,098 crore
- Ebitda seen 3.7 percent lower at Rs 720 crore
- Ebitda Margin seen narrowing to 23.2 percent from 24.9 percent
- Net profit seen 10.6 percent higher at Rs 512 crore
- All estimates are standalone and compared on a year-on-year basis
Key Factors At Play For Nestle India:
- Weakness likely in exports
- Company does not report volume growth
- Muted cues seen from key brands like Maggi and Nescafe
- High input costs may impact gross margins
- Input costs higher mainly due to dairy segment
- Lower corporate tax may aid profit
Brokerage Radar
CLSA On Building Materials
- Negatives: Slow new housing start, sharp movement in commodities and currencies and changing customer priorities on discretionary spending
- Companies with ability to support channel funding and supply chain investment will be key differentiator
- Prefer companies with strong brand equity, less exposure to B2B and new housing starts along with ability to take market share and extended working capital
- Top Picks: Crompton Consumer, TTK Prestige, Astral Poly, Asian Paints, Pidilite & Voltas
- Downgrade Havells India to underperform from outperform and cut price target to Rs 505 from Rs 590
- Downgrade Supreme Industries to underperform from buy and cut price target to Rs 1,000 from Rs 1,295
- Downgrade Century Ply to sell from buy and cut price target to Rs 100 from Rs 156
UBS On Indian Real Estate
- Residential real estate finds itself in a storm
- Realisations to be under pressure
- Expect state interventions given high stakes
- During Global Financial Crisis, it took 16 months for aggregate property volume to recover
- Downgrade Oberoi Realty to sell from buy and cut price target to Rs 300 from Rs 670
- Downgrade Godrej Properties to sell from buy and cut price target to Rs 550 from Rs 1,160
- Downgrade Prestige Estates to sell from buy and cut price target to Rs 150 from Rs 350
- Maintain buy rating on DLF but cut price target to Rs 195 from Rs 240
Morgan Stanley On Godrej Properties
- Underweight rating maintained
- Price target of Rs 682
- Q4 earnings were a beat
- Next few months remain challenging due to subdued demand and slow construction activity
- Company expects a demand revival beyond that
- Godrej continues to augment its new project pipeline and next wave of new launches
Goldman Sachs On Asian Paints
- Downgrade to sell from neutral
- Price target cut to Rs 1,111 from Rs 1,387
- Expect volume growth to slow to an average of 6 percent over the next 3 years
- Expect price/mix to be challenged due to price cuts and down trading by customers
- Valuations look demanding with lowest revenue growth expectations
Antique On DLF
- Initiate coverage with buy rating
- Price target of Rs 200
- Strong market position across segments
- Largest portfolio of marquee office assets
- Sizeable and healthy rental portfolio
- Debt overhang an old story
- Stock is attractive due to steady cashflow cushion from rental arm and monetisation of large completed inventory
Pledged Share Details
- Jamna Auto: Promoter Map Auto created pledge of 23.21 lakh shares on May 5
- Emami: Promoters created pledge of 22 lakh shares between May 5-8
(As Reported On May 11)
Trading Tweaks
- Price Band Revised From 20 Percent To 10 Percent: Astec LifeSciences
- Move Into ASM Framework: Empee Distilleries, Alok Industries
- Move Into Short-Term ASM Framework: DB Realty
- Move Out Of Short-Term ASM Framework: Orient Green Power, SMS Pharmaceuticals, Hester Biosciences, Shivalik Rasayan, Mangalam Organics
Money Market Update
- The currency ended weaker at 75.73 against the U.S. Dollar as compared to Friday's close of 75.55. It was the fourth worst performing currency among Emerging Market peers on Monday.
F&O Cues
- Nifty May futures closed at 9,225; premium narrows to 14 points from 15 points
- Nifty May futures shed 7.5 percent in Open Interest and 5.9 lakh shares
- Nifty Bank May futures closed at 19,285; discount narrows to 35 points from 65 points
- Nifty Bank May futures add 0.7 percent in Open Interest and 10,000 shares
- Nifty Put-Call Ratio at 1.26 from 1.31 across all series
- Securities in F&O Ban: Vodafone Idea
Nifty Weekly Expiry: May 14
- Maximum Open Interest on Call side at 9,500 strike (19.4 lakh shares)
- Maximum Open Interest on Put side at 9,000 strike (15.3 lakh shares)
- Active Options: 9,200 Put (+3.4 lakh shares) and 9,500 Call (+4.4 lakh shares)
Nifty Monthly Expiry: May 28
- Maximum Open Interest on Call side at 10,000 strike (23 lakh shares)
- Maximum Open Interest on Put side at 9,000 strike (24.7 lakh shares)
