All You Need To Know Going Into Trade On May 23

Asian stocks fluctuated at the open on Wednesday as investors weighed renewed geopolitical tensions against easing trade strains.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.1 percent lower at 10,536 as of 7:00 a.m.

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BQ Live

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

U.S. Market Check

U.S. stocks erased early gains and turned lower on Tuesday as optimism over improving trade relations with China gave way to renewed concerns about geopolitical tensions with North Korea.

Europe Check

European stocks climbed to the highest level in almost four months on Tuesday due to the optimism about reduced trade tensions between the U.S. and China.

• The euro declined 0.1 percent to $1.1779.
• The pound gained less than 0.1 percent to $1.3433.
• Germany’s 10-year yield increased four basis points to 0.56 percent.
• Britain’s 10-year yield rose five basis points to 1.523 percent.
• Italy’s 10-year yield declined six basis points to 2.328 percent, the largest drop in more than a week.

Asian Cues

• Japan’s Topix Index fell 0.3 percent.
• S&P/ASX 200 Index rose 0.1 percent.
• Kospi Index fell 0.1 percent.
• Hang Seng Index futures dropped 0.2 percent.
• S&P 500 Index futures fell less than 0.1 percent.

Commodities Check

• West Texas Intermediate crude added 0.1 percent to $72.20 a barrel.
• Brent crude traded flat at $79.53 per barrel.
• Gold rose 0.3 percent to $1,294.85 an ounce.
• LME copper fell 0.2 percent to $6,962 a metric ton after rallying 1.5 percent.

Fuel Price Update

State-run oil marketers hiked petrol and diesel prices for the tenth day in a row.

The price of petrol was hiked by 29 paise today to Rs 84.9 a litre in Mumbai and diesel was raised by 28 paise to Rs 72.76 a litre, according to data released by Indian Oil Corporation Ltd.

Stories That You Might Have Missed

• SBI announces a two-year turnaround plan to retain its top spot.
• Anti-Sterlite protests: At least 11 killed, over a dozen injured.
• India’s Congress Party is running out of cash.
• Coffee waste is now fetching a 480 percent premium over coffee itself!
• Trump casts doubt on North Korea summit in meeting with Moon.
• Trump says he’s ‘not really’ pleased with China trade talks so far.
• U.S. Air Force reviews the upgraded rocket that Elon Musk’s SpaceX plans to use to boost it into orbit.
• Fear of robot rides rises following high-profile road deaths.
• For stock traders, the number 16 is especially sweet.
• With recipes, the key to making millions is not about the food.

Here are some key events coming up this week:

• The Federal Reserve releases minutes of the May 1-2 meeting today; U.S. new home sale are also due, so as are euro-area and Japan PMIs.
• Thursday sees the Bank of England Markets Forum at Bloomberg London. Speakers include BOE Governor Mark Carney and New York Fed President William Dudley.
• At the St. Petersburg Forum on Friday, Russian President Vladimir Putin, French President Emmanuel Macron, Japan Prime Minister Shinzo Abe, and IMF Managing Director Christine Lagarde, participate on a panel moderated by Bloomberg News Editor-in-Chief John Micklethwait.
• Also on Friday, European Union finance ministers discuss the latest on Brexit talks, in Brussels.

Indian ADRs

Stocks To Watch

• CCI approves acquisition of Monsanto by Bayer AG, subject to compliance of certain modifications.
• Minda industries board approves 2:1 bonus issue.
• Majesco gets contract from Gibraltar BSN Life for distribution management solution.
• Gravita India enters into contract with Amara Raja Batteries to collect/purchase lead acid battery scrap and supply pure lead, alloys in return.

Nifty Earnings To Watch

• Grasim
• Tata Motors

Other Earnings To Watch

• Apollo Pipes
• Bajaj Electricals
• Bayer Cropscience
• CESC
• IGL
• Jet Airways
• Kolte-Patil Developers
• KPIT Technologies
• Larsen & Toubro Infotech
• Motherson Sumi Systems
• Natco Pharma
• Repco Home Finance

Earnings Reactions To Watch

Bata India (Q4, YoY)

• Revenue up 7 percent at Rs 632 crore.
• Net profit up 44 percent at Rs 52 crore.
• Ebitda up 43 percent at Rs 82 crore.
• Margin at 13 percent.

Future Consumer (Q4, YoY)

• Revenue up 51 percent at Rs 807 crore.
• Net loss of Rs 4 crore.
• Ebitda at Rs 17 crore from Rs 2 crore.
• Margin at 2.1 percent.

L&T Technology Services (Q4, YoY)

• Revenue up 30 percent at Rs 1,055 crore.
• Net profit up 66 percent at Rs 159 crore.
• Other income of Rs 75.5 crore in current quarter.
• Ebitda up 21.5 percent at Rs 164 crore.
• Margin at 15.5 percent.

Minda Industries (Q4, YoY)

• Revenue up 53 percent at Rs 1,371 crore.
• Net profit up 122 percent at Rs 140 crore.
• Profit higher due to exceptional gain of Rs 38 crore in current quarter.
• Ebitda up 62 percent at Rs 170 crore.
• Margin at 12.4 percent.

Music Broadcast (Q4, YoY)

• Revenue up 13.4 percent at Rs 76 crore.
• Net profit up 3.55 times at Rs 16 crore.
• Ebitda up 54 percent at Rs 27 crore.
• Margin at 35.5 percent.

HPCL (Q4, QoQ)

• Revenue up 6 percent at Rs 60,810 crore.
• Net profit down 10 percent at Rs 1,748 crore.
• EBITDA down 8 percent at Rs 2,923 crore.
• Margin at 4.8 percent.
• FY18 GRM at $7.40/barrel versus $6.20/barrel (YoY).

Healthcare Global Enterprises (Q4, YoY)

• Revenue up 22 percent at Rs 222 crore.
• Net profit down 57 percent at Rs 3 crore.
• Ebitda up 7 percent at Rs 32 crore.
• Margin at 14.4 percent.

TV Today Network (Q4, YoY)

• Revenue up 2 percent at Rs 181 crore.
• Net profit down 11 percent at Rs 33 crore.
• Ebitda up 8 percent at Rs 52 crore.
• Margin at 28.7 percent.

Cipla (Q4, YoY)

• Revenue up 3 percent at Rs 3,698 crore.
• Net profit of Rs 179 crore.
• Ebitda up 10 percent at Rs 557 crore.
• Margin at 15.1 percent.

Igarashi Motors India (Q4, YoY)

• Revenue down 19 percent at Rs 106 crore.
• Net profit down 13 percent at Rs 16.5 crore.
• Ebitda down 7 percent at Rs 27 crore.
• Margin at 25.5 percent.

Sonata Software (Q4, QoQ)

• Revenue down 18 percent at Rs 626 crore.
• Net profit up 10 percent at Rs 54 crore.
• Other income of Rs 12 crore in current quarter.
• Ebit flat at Rs 61 crore.
• Margin at 9.7 percent.

Bulk Deals

Strides Shasun

• BNP Paribas Arbitrage bought 4.85 lakh shares or 0.5 percent equity at Rs 365.25 each.
• Brookdale Mauritius International bought 10 lakh shares or 1.1 percent equity at Rs 375.27 each.

Who’s Meeting Whom

• TVS Motor to meet funds including Birla Sun Life AMC and Goldman Sachs between May 23 – 24.
• BSE to meet Banyan Tree Advisors on May 23.
• Asian Granito to meet Edelweiss Broking on May 23.
• Jyothy labs to meet CIMB on May 23.

Trading Tweaks

• Amtek Auto under additional surveillance.
• Indostar Capital Finance Limited added to BSE IPO Index.

F&O Cues

• Nifty May futures closed at 10,553, premium of 16 points versus 22 points earlier.
• Maximum call open interest at 10,800 strike; open interest at 64.8 lakh shares.
• Maximum put open interest at 10,500 strike; open interest at 52.4 lakh shares.

F&O Ban

• In ban: BEML, DHFL, Jet Airways, Just Dial, Reliance Communications
• New in ban: BEML
• Out of ban: Balrampur Chini, PC Jewellers, Wockhardt

Only intraday positions can be taken in stocks under F&O ban. There is a penalty in case of a rollover of these positions.

Active Stock Futures

Put Call Ratio

• Nifty PCR at 1.23 versus 1.28.
• Nifty Bank PCR at 0.83 versus 0.75.

Insider Trades

• Century Ply promoters acquired 3 lakh shares on May 21.
• Career Point promoter Pramod Maheshwari acquired 30,301 shares on May 21.

(As reported on May 22)

Rupee

• Rupee closed at 68.04 per dollar on Tuesday versus 68.12 per dollar on Monday.

Brokerage Calls On SBI

Credit Suisse

• Maintained ‘Underperform’; cut price target to Rs 322 from Rs 381.
• Residual stress contracting, but further capital required.
• Gross NPAs have likely peaked at 10.9 percent this quarter.
• Cut FY19 EPS by 3 percent and FY20 EPS by 20 percent on higher provisions.

Bank of America Merrill Lynch

• Maintained ‘Buy’ with a price target Rs 380.
• Recognition now behind; recovery and loan growth to drive sharp rebound.
• March-quarter weakness led by new NPL norms, treasury losses.
• SBI is the key beneficiary of asset quality cycle.

Other Brokerage Calls

CLSA On HPCL

• Maintained ‘Sell’ with a price target of Rs 300
• Core Ebitda and net profit above estimates but Ebit misses.
• Macro risks in election-heavy 2018-19 to keep buyers away.

CLSA On Bharat Forge

• Maintained ‘Buy’ with a price target Rs 915.
• Solid Q4 performance while growth outlook remains strong.
• New orders to provide a boost over the next 2-3 years.
• 27 times FY19 PE is not cheap but justified given the strong outlook.

Credit Suisse On Bharat Forge

• Maintained ‘Neutral’, cut price target to Rs 750 from Rs 780.
• A decent quarter but below estimates due to sluggish India non-autos.
• Continued strong performance in the India CV and PV businesses.
• Strong momentum in the exports business, but growth rates to slow as base gets tougher.

Bank of America Merrill Lynch On Dr. Reddy’s Laboratories

• Cut price target to Rs 2,388 from Rs 2,573.
• Q4 miss on most fronts but overall thesis intact.
• Complex generics catalysts are near but binary.
• Have moved generic Copaxone to 2HFY20 and generic NuvaRing to 1HFY20

CLSA On Dr. Reddy’s Laboratories

• Maintained ‘Outperform’; cut price target to Rs 2,260 from Rs 2,720.
• Q4 results impacted by shift in channel purchasing pattern in Russia.
• Nuvaring launch delayed by another six months to 4QFY19.
• Believe earnings have bottomed in growth markets like India and Russia.

CLSA On Cipla

• Maintained ‘Buy’; cut price target to Rs 650 from Rs 750.
• Q4 results weak despite adjusting for one-time items.
• U.S. growth impacted by supply issues but will revive in Q2FY19.
• Muted Ebitda margin expansion in FY19, but expect pick-up in FY20.

Macquarie On Cipla

• Maintained ‘Outperform’ with a price target of Rs 636.
• Ebitda margins were impacted by seasonally weak sales mix in India.
• Cipla remains our preferred large-cap pharma pick.
• Management optimistic about 2018-19; U.S. business on growth track.