All You Need To Know Going Into Trade On May 6

The equity markets were roiled after President Donald Trump’s threat to increase tariffs on Chinese imports cast a cloud over talks this week that were expected to finalise a trade deal.

Futures on the S&P 500 Index sank more than 2 percent. Contracts on the FTSE China A50 equity index fell more than 4 percent at the open.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.5 percent to 11,703 as of 7:25 a.m.

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

U.S. Market Check

• The rally in U.S. stocks picked up pace after the long-awaited jobs report boosted optimism in the world’s largest economy.
• U.S. Treasury futures soared, with the cash market closed due to a holiday in Japan.

Asian Cues

• Futures on the S&P 500 Index slid 1.7 percent.
• Contracts on the Nikkei 225 Stock Average fell 2 percent.
• Australia’s S&P/ASX 200 Index dropped 0.4 percent.

Commodity Cues

• Brent crude traded 2.7 percent lower at $68.96 per barrel.
• West Texas Intermediate crude fell 2.2 percent to $60.58 a barrel.
• Gold added 0.4 percent to $1,283.73 an ounce.

London Metal Exchange

• Copper ended a two-day fall, closed 1.12 percent higher.
• Aluminium ended lower after gaining for two days, down 1.13 percent.
• Copper halted a four-day losing streak, closed 0.45 percent higher.
• Tin halted a four-day losing streak, closed 0.26 percent higher.
• Zinc halted a two-day losing streak, closed 1.46 percent higher.
• Lead ended higher for the second day, closed 1.3 percent higher.

Key Events To Watch This Week

• Chinese Vice Premier Liu He is scheduled to return to Washington for trade talks on Wednesday.
• The Reserve Bank of Australia meets to set interest rates Tuesday, while New Zealand central bank does the same the following day.
• China releases trade data Wednesday, and the U.S. does so on Thursday.
• South Africa holds national elections Wednesday.
• European Union leaders gather Thursday to discuss policy priorities for the coming five years.
• China reports on inflation Thursday. The U.S. releases the April CPI report Friday.

Nifty Results To Watch

• Bharti Airtel
• ICICI Bank

Other Results To Watch

• Mahindra CIE Automotive
• Marico
• Bharat Bijlee
• Navin Fluorine International
• Firstsource Solutions
• Thirumalai Chemicals
• Wockhardt
• Expleo Solutions
• Fortis Malar Hospitals
• Godrej Agrovet
• Great Eastern Shipping
• Gujarat Gas
• Hindustan Composites
• Pitti Engineering

Earnings Reaction To Watch

HUL (Q4, YoY)

• Revenue up 9.3 percent to Rs 9,945 crore.
• Net profit up 13.8 percent to Rs 1,538 crore.
• Ebitda up 13.2 percent to Rs 2,314 crore.
• Margin at 23.3 percent versus 22.5 percent.
• Volume growth at 7 percent.

L&T Technology Services (Q4, QoQ)

• Revenue up 2 percent to Rs 1,343.1 crore.
• Net profit up 3.2 percent at Rs 191.5 crore.
• EBIT up 1.4 percent to Rs 220.3 crore.
• EBIT margin at 16.4 percent versus 16.5 percent
• Declared dividend of Rs 13.5 per share

Tata Chemicals (Q4, YoY)

• Revenue up 8 percent to Rs 2,759.4 crore.
• Net profit down 65 percent to Rs 408.7 crore.
• Ebitda up 3.6 percent to Rs 530.9 crore.
• Margin at 19.2 percent versus 20.1 percent
• Declared dividend of Rs 12.5 per share
• Exceptional gain of Rs 1,266.7 crore in base quarter.

Deepak Nitrite (Q4, YoY)

• Revenue up 23.7 percent to Rs 485.9 crore.
• Net profit up 2.8 times to Rs 56.6 crore.
• Ebitda up 2.2 times to Rs 108.9 crore.
• Margin at 22.4 percent versus 12.5 percent.
• Inventory gain of Rs 18.4 crore.

Birla Corporation (Q4, YoY)

• Revenue up 13.4 percent to Rs 1,872.8 crore.
• Net profit down 2.2 percent to Rs 128.2 crore.
• Ebitda up 20 percent to Rs 309.6 crore.
• Margin at 16.5 percent versus 15.6 percent.
• Power and fuel expenses up 29 percent to Rs 412.3 crore.
• Board approved raising Rs 150 crore via NCDs
• Declares dividend of Rs 7.5 per share.

Akzo Nobel (Q4, YoY)

• Revenue up 0.7 percent to Rs 705.6 crore.
• Net profit up 52.2 percent to Rs 70.3 crore.
• Ebitda up 48.2 percent to Rs 103.6 crore.
• Margin at 14.7 percent versus 10 percent.
• Employee expenses down 26 percent to Rs 59.9 crore.
• Declares dividend of Rs 24 per share.

Central Depository Services (Q4, YoY)

• Revenue up 1 percent to Rs 50.4 crore.
• Net profit up 30.2 percent to Rs 33.6 crore.
• Other income up 51 percent to Rs 17.7 crore.

Cholamandalam Financial Holdings (Q4, YoY)

• Revenue at Rs 36.45 crore versus Rs 35.59 crore
• Net profit at Rs 34.26 crore Versus Rs 33.6 crore

Federal Bank (Q4, YoY)

• Net interest income up 17.49 percent to Rs 1,096.53 crore.
• Net profit up 163 percent to Rs 381.51 crore.
• Net NPAs at 1.48 percent versus 1.72 percent (QoQ)
• Gross NPAs at 2.92 percent versus 3.14 percent (QoQ)
• Provisions at Rs 178 crore versus Rs 190 crore (QoQ)

NIIT Tech (Q4, QoQ)

• Revenue up 0.1 percent to Rs 972 crore.
• Profit up 27.7 percent to Rs 114.4 crore.
• EBIT at Rs 141.4 crore versus RS 149 crore.
• EBIT margin at 14.5 percent versus 15.3 percent.

PTC India Financial Services (Q4, YoY)

• Revenue up 11.5 percent to Rs 330.81 crore.
• Net profit at Rs 36.75 crore versus net loss of Rs 264.67 crore.
• Gross NPA reduced to 6.04 percent versus 6.85 percent (QoQ).
• Net NPA reduced to 3.12 percent versus 3.29 percent (QoQ).

Bulk Deals

• ITD Cementation: Franklyn Templeton MF acquired 25 lakh shares or 1.46 percent equity at Rs 122 each
• Ruchi Soya Industries: JM Financial Products sold 25 lakh or 0.75 percent equity at Rs 8.95 each

Pledge Share Details

• Sun Pharma promoter group Shanghvi Finance revoked pledge of 36 lakh shares on April 26

(As Reported On May 3)

Trading Tweaks

• Goldiam International to move into short term ASM Framework
• Williamson Magor & Company, Roto Pumps price band revised to 10 percent
• Dilip Buildcon, 63 Moons Technologies price band revised to 5 percent

Insider Trading

• Mindtree: Larsen Toubro acquired 88,000 shares on May 3
• Dhanuka Agritech promoters sold 1.02 lakh shares from April 23-May 3

(As Reported On May 3)

Money Market Update

• The Indian rupee was the best Asian currency last week. The domestic unit appreciated 1.15 percent against the U.S. dollar—the most since March 15, 2019—to end at 69.22.

F&O Cues

Futures: May Series

• Nifty futures closed trading at 11,764.3, premium of 52 points versus 40.7 points
• Nifty open interest up 0.5 percent, adds 99,000 shares in open interest

Bank Nifty

• Bank Nifty futures closed trading at 30060.7, premium of 106.6 points versus 90.7 points
• Bank Nifty open interest up 3 percent, adds 45k,000 shares in open interest

Options

• Nifty PCR at 1.49 (across all series)

Nifty Weekly Expiry May 9

• Max open interest concentration at 11,800C (23.5 lakh shares), 11,700P (16.8 lakh shares)
• Max open interest addition seen at 11,800C (+6.9 lakh shares) and 11,850C (+5 lakh shares)

Nifty Monthly Expiry May 30

• Max open interest on Put side at 11,000 (22 lakh shares)
• Max open interest on call side at 12,500 (13.2 lakh shares)
• Max open interest addition seen at 12,500C (+2.4 lakh shares)

Stocks In F&O Ban

• Jet Airways

Brokerage Radar

On Hindustan Unilever

Jefferies

• Maintained ‘Hold’; hiked price target to Rs 1,820 from Rs 1,770.
• March quarter review: better than peers but not good enough.
• The 7 percent volume growth on a high base was a positive surprise; pace of margin expansion was tad below.
• Valuation remains rich given rural demand slowdown and slower pace of margin expansion.

Kotak Securities

• Maintained ‘Reduce’; cut price target to Rs 1,575 from Rs 1,600.
• March quarter earnings were below expectations but ahead of peers.
• Home care shines again, food & refreshment steady, personal care weak.
• Commentary confirming short-term demand pressures; remain absolute-cautious.

CLSA

• Maintained ‘Outperform’; cut price target to Rs 1,950 from Rs 2,010.
• March quarter was slightly below estimates; stellar home care, but weak personal care.
• Volume growth of 7 percent looks good in the context of peer performance.
• Marked shift in near-term outlook as growth rates have moderated.

On Federal Bank

Kotak Securities

• Maintained ‘Buy’; hiked price target to Rs 130 from Rs 115.
• The best in 16 quarters; solid performance across the board.
• Loan growth healthy at 18 percent; asset quality showing improving trends.
• Few more quarters of consistent performance should aid RoA/RoE recovery.

Citi on Federal Bank

• Maintained ‘Neutral’; hiked price target to Rs 110 from Rs 90.
• Healthy growth and asset quality.
• Margin outlook stable; CASA slow.
• Fee income, gain on sale aid pre-provisioning operating profit growth.

More Calls

Morgan Stanley on LIC Housing

• Maintained ‘Equal-weight’ with a price target of Rs 500.
• March quarter review: NIM surprised; but sharp rise in NPLs is the key concern.
• Non-housing loans continue to drive growth which will be viewed negatively.
• Valuation looks cheap, but growth mix and rising NPLs led to Equal-weight rating.

CLSA on Godrej Consumer

• Upgraded to ‘Buy’ from ‘Underperform’; maintained price target at Rs 800.
• March quarter earnings were much below estimates; Upgraded to ‘Buy’ due to fall in stock price.
• Weak domestic, but international gradually stabilising.
• Worst seems behind and confident of management’s strategy to revive growth rates.
• Stock may stay rangebound near term until there is pick-up in growth and earnings.

Citi on L&T Infotech

• Maintained ‘Buy’; cut price target to Rs 2,010 from Rs 2,050.
• Weak finish to a strong 2018-19.
• Expect company to deliver better growth rates in the current financial year.
• Weakness in top client is a sign of worry.

Citi on United Breweries

• Maintained ‘Buy’ with a price target of Rs 1,620.
• Positive read-through on quarterly volumes from Carlsberg conference call.
• Mid-single digit volume growth impacted by slower March.
• Volumes strong in Jan and Feb, slowdown in March, April volumes characterised as ‘ok’.