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All You Need To Know Going Into Trade On May 6
Stocks in the news, big brokerage calls of the day, complete trade setup and much more!
06 May 2020, 07:50 AM IST 
Nearly empty roads are seen outside the Licenciado Gustavo Diaz Ordaz International Airport in Puerto Vallarta, Jalisco state, Mexico. (Photographer: Cesar Rodriguez/Bloomberg)
Markets in Asia have opened on a mixed note as investors weigh opening up of economies from the lockdown with caution.
Oil prices have extended their rebound with Brent Crude touching $30 per barrel for the first time since April as production cuts began to kick in.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, was flat at 9,187 as of 6:55 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 Australia have opened lower while those in South Korea are advancing. Japanese markets remain shut due to holiday. Chinese markets will open for trade for the first time this week.
- The S&P 500 ended higher for the second straight day, managing to weather a late pullback where it almost gave up gains of as much as 2 percent. Futures in the U.S. are currently flat.
- China's onshore Yuan fixing will be in focus after the offshore currency slipped during the Chinese holiday.
- U.S. President Donald Trump continues to blame China for the global pandemic, stoking fears of reigniting the trade war.
- Fed Vice Chairman Richard Clarida has warned that the economy will need more government support to emerge from the impact of Covid-19.
- Yield on the 10-year treasury stood at 0.66 percent.
- West Texas Intermediate Crude rose 2 percent to $25.06 per barrel.
Get your daily fix of the global markets here.
Earnings Fineprint: Adani Ports & SEZ Q4FY20
- Revenue falls 5.2 percent to Rs 2,921 crore
- Ebitda down 15 percent to Rs 1,644 crore
- Ebitda Margin narrows to 56.3 percent from 62.7 percent
- Net profit falls 74 percent to Rs 334 crore
- All numbers are consolidated and compared on a year-on-year basis
- Handled Cargo Volumes up 7 percent to 58 MMT
- Other expenses up 32 percent to Rs 204 crore
- Forex loss of Rs 1,004 crore as compared to forex gain of Rs 109 crore in the base quarter
- Tax gains of Rs 83.5 crore this quarter as compared to tax expense of Rs 269 crore in base quarter
- Port revenue up 1 percent while SEZ revenue falls 89 percent
- Gross debt at Rs 29,463 crore Vs Rs 27,188 crore
- Capex to be curtailed to Rs 1,800 crore - Rs 2,000 crore in FY21 Vs Rs 3,615 crore in FY20
Opinion
Adani Ports Q4 Results: Profit Plunges 74%, Margins Narrow As Covid-19 Stalls Economy
Stocks To Watch
- Oil Marketing Companies: Excise duty on petrol and diesel has been hiked by Rs 10 and Rs 13 respectively. This is the steepest such hike in excise duty. Retail fuel prices remain unchanged which means that OMCs will have to bear the brunt of the hike. HPCL, BPCL and Indian Oil were earning a gross marketing margin of Rs 18-20 on retail fuel which now stands reduced.
- Reliance Industries: To redeem debt notes due in 2035 along with interest on June 5, 2020. The principal amount payable is $200 million and interest will be close to $5 million.
- Adani Ports & SEZ: The company plans to reduce operating costs in FY21. It is expecting a slow pick-up in cargo volumes in Q2FY21. It is also anticipating a V-shaped recovery in H2FY21 post complete lifting of the lockdown.
- VST Tillers Tractors: Power Tillers sales up 2.6 times at 761 units while Tractors sales down 24 percent at 328 units in April
- Piramal Enterprises: Clarifies that no proposal has been placed before the board. Newspaper reports on Tuesday suggested that KKR looks to buy 20 percent stake in the company for Rs 3,500 crore.
- Wipro: Signs MoU with Maharashtra to re-purpose its I.T. facility in Pune to a 450-bed Covid-19 hospital. Hospital to be converted back to an I.T. facility in a year.
- Punjab & Sind Bank: To seek shareholders nod to raise Rs 500 crore of equity capital through QIP route in one or more tranches within the next 12 months.
- United Breweries: Breweries have resumed its operations with a limited workforce in a phased manner.
- United Spirits: Has resumed operations at majority of its manufacturing facilities with reduced capacity.
- HIL: Has received permission from authorities to start operations in Maharashtra, Uttar Pradesh, Andhra Pradesh, Haryana and Telangana.
- GE T&D India: Has partially resumed operations at most of its manufacturing locations and some of the project sites.
- Greenply Industries: Supreme Court of India upheld the Special Leave Petition filed by the Union of India in civil appeal in respect of availing of area-based exemption under Central Excise.
- Prince Pipe & Fittings: Has resumed manufacturing operations at various locations where the restrictions have been eased.
- Pricol: Operations at two units in Coimbatore to resume from May 6.
- Jindal Stainless: Resumed its operations at its Jajpur plant in Odisha.
- Shilpa Medicare: Board approved establishing wholly-owned arms in Canada and Spain for business operations.
- Titagarh Wagons: Italian arm has started operations from May 4.
- Rallis India: Capacity expansion at Dahej slightly delayed amid Covid-19 lockdown.
- NIIT Tech: Revenue up 3.3 percent to Rs 1,109.3 crore in the current quarter. Net profit falls 7.9 percent sequentially while Ebitda margins were flat at 17.9 percent from 18.1 percent in Q3. The company reported an exceptional loss of Rs 12.8 crore this quarter. It has said that it has $468 million of firm business executable over the next 12 months. The company's board has also approved changing the company name to Coforge Ltd.
- Non-Nifty Earnings Today: Adani Enterprises, Yes Bank, JM Financial, Kansai Nerolac, TCI Developers.
Brokerage Radar
Morgan Stanley On Upstream Companies
- Upgrades ONGC to equalweight from underweight. Price target hiked to Rs 84 from Rs 72
- Upgrades Oil India to equalweight from underweight. Price target cut to Rs 100 from Rs 150
- New price target implies long-term oil price of $45 per barrel with slow demand recovery beyond September 2020
- Upgrade on combination of capital efficiency, potential demand improvement and cheap valuation
- ONGC's price target now has 55 percent value from downstream investments in refining and gas value chain
- Not turning overweight as oil price recovery will be demand driven and will benefit fuel retailers and refiners first
- Oil inventories may take time to clear up and hence crude discounts may stay
Jefferies On Indian Auto
- Indian PV industry awash with competition with 100 models from 16 OEMs
- Volumes fairly concentrated with top-10 models forming 50 percent of the industry
- Share of top models has been stable for a decade despite some changes to the list
- High segment-wise concentration also suggests consumers lean towards select few vehicles
- Maruti now holds seven out of the top-10 spots; Have a buy recommendation on Maruti
Haitong On Consumer Durables
- Share of online sales of durables and electrical goods after lockdown may rise
- India may take one or two quarters for demand to normalise
- Expect supply side to recover with a lag post lifting of the lockdown
- Expect labour shortage along with logistics and supply chain issues
- Financial impact on companies in consumer electricals and durables industries imminent
Equirus On NBFCs
- Critical role in financing the underserved
- Stronger balance sheet to address ALM issues
- See macro rural tailwinds
- Calibrated opening up a prudent step
- Borrowing costs to improve with a lag
- Prefer rural-focussed models among NBFCs
- Initiate coverage on Ujjivan Small Finance Bank with an add rating and price target of Rs 28
Emkay On SBI Life
- Initiate coverage with buy rating
- Price target of Rs 892
- Best in-class operating efficiency maintained
- Improvement in VNB Margins likely; pricing is the key
- See gradual shift towards profitable product mix
- Valuations are relatively comfortable
JPMorgan On Adani Ports
- Overweight rating maintained
- Price target of Rs 340
- Port Ebitda a miss
- Strong free cash flow generation
- No volume guidance for FY21
- Management focused on cash conservation
JPMorgan On Metals
- Downgrade Vedanta to neutral from overweight. Price target cut to Rs 90 from Rs 125
- Volume growth story has taken a back seat with collapse in oil prices
- No liquidity issue for Vedanta even in current commodity price environment
- Upgrade Hindustan Zinc to overweight from neutral. Price target raised to Rs 210 from Rs 159
- Upgrade as Zinc is relatively better placed and on dividend per share upside
Bulk Deals
- Apollo Pipes: Promoter Sameer Gupta acquired 1.25 lakh shares (0.95 percent) at Rs 309.98 per share.
- Majesco: Amansa Holdings acquired 8.1 lakh shares (2.82 percent) at Rs 245.5 per share and DSP Mutual Fund sold 8.43 lakh shares (2.94 percent) at Rs 245.5 per share.
Pledged Share Details
- Forbes & Company: Promoter Shapoorji Pallonji created pledge of 38.7 lakh shares on April 30
- Future Consumer: Promoter Future Capital Investment invoked pledge of 94 lakh shares on April 30
(As Reported On May 5)
Trading Tweaks
- Move Into ASM Framework: STI India
- Move Into Short-Term ASM Framework: Apollo Micro Systems, Rushil Decor
- Move Out Of Short-Term ASM Framework: Hathway Cable & Datacom, La Opala RG, Ahluwalia Contracts, KDDL, Ramky Infrastructure
Insider Trading
- Mindtree: Promoter NS Parthasarathy sold 20,000 shares on May 4
- Apollo Tricoat Tubes: Promoter Lakshmi Metal Udyog acquired 40,000 shares on May 5
(As Reported On May 5)
Money Market Update
- The rupee saw marginal gains in Tuesday's trading session, ending at 75.64 against the U.S. Dollar as compared to Monday's close of 75.72.
F&O Cues
- Nifty May futures closed at 9,208; Premium narrows to 3 points from 7 points
- Nifty May futures shed 6.3 percent in Open Interest and 5.5 lakh shares
- Nifty Bank May futures closed at 20,676; Premium narrows to 25 points from 110 points
- Nifty Bank May futures add 7.4 percent in Open Interest and 1 lakh shares
- Nifty Put-Call Ratio at 1.23 from 1.35 across all series
Nifty: May 7 Expiry
- Maximum Open Interest on Call side at 10,000 strike (27.3 lakh shares)
- Maximum Open Interest on Put side at 9,000 strike (14.2 lakh shares)
- Active Options: 9,400 Call (+6.7 lakh shares), 9,100 Put (+3.9 lakh shares)
Nifty Monthly Expiry: May 28
- Maximum Open Interest on Call side at 9,500 strike (12.1 lakh shares)
- Maximum Open Interest on Put side at 9,000 strike (24.4 lakh shares)
