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All You Need To Know Going Into Trade On May 8

Stocks in the news, big brokerage calls of the day, complete trade setup and much more! 

Entrance signs are displayed outside a Walmart Supercenter in Nuevo Vallarta, Nayarit state, Mexico. (Photographer: Cesar Rodriguez/Bloomberg)
Entrance signs are displayed outside a Walmart Supercenter in Nuevo Vallarta, Nayarit state, Mexico. (Photographer: Cesar Rodriguez/Bloomberg)

Asian markets have opened with modest gains on Friday morning as investors continue to weigh moves to reopen economies against the data describing the Covid-19 has inflicted on them.

Futures in the U.S. have edged higher after a positive session on Thursday. The two-year treasury yields steadied after falling to a record low.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 1.2 percent to 9,305 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 have opened with steady gains, as have those in Australia and South Korea.
  • Futures on the Dow Jones are currently trading higher by 200 points. The Nasdaq composite turned positive for the year once again, wiping out losses that reached as low as 24 percent from its record high.
  • Filings for unemployment continued to remain at historically high levels in the U.S., although they were lower from the previous week. The official payrolls data will be reported today.
  • JPMorgan Chase wrote in a note that they expect risky assets to continue to recover as economies reopen, although the pace of gains will be slow.
  • U.S. and China are planning to hold a call as soon as next week on trade in an effort to de-escalate the situation.
  • Yield on the 10-year treasury stood at 0.64 percent.
  • West Texas Intermediate crude rose 1 percent to $23.8 per barrel.

Get your daily fix of the global markets here.

All You Need To Know Going Into Trade On May 8

Stocks To Watch

  • Reliance Industries: Bloomberg News reports that the company is considering selling its stake in Asian Paints valued at about $989 million as the conglomerate steps up efforts to trim its debt, said people familiar with the matter. The company is in discussions with banks for the same. In a separate statement, the company said that Vista Equity Partners will be investing Rs 11,367 crore in Jio platforms at an equity value of Rs 4.91 lakh crore. The investment will translate into a 2.32 percent stake on a fully diluted basis.
  • Tata Motors: The company has withdrawn its NCD issue of Rs 1,000 crore in view of the higher cost expectations from the market participants due to the tight money market conditions. The company says it has sufficient liquidity and would consider issuance of NCDs at an appropriate time and under normalized market conditions with necessary approvals.
  • Zydus Cadila: Gets final approval from the U.S. FDA for Deferasirox Tablets for oral suspension. It is used to treat iron overload caused by blood transfusions.
  • Eicher Motors: VE Commercial Vehicles segment has received the required government permissions to restart manufacturing operations in six of its plants located in Pithampur, Dewas, Thane and Baggad.
  • GMR Infra: Clarifies that none of its group companies have approached banks for restructuring of loans and State Bank of India is not the largest lender to the group.
  • NLC India: 8 workmen are injured an explosion in the company’s thermal plant at Neyveli. Post the incident, the company has also shut two other power generating units for safety measures.
  • Nath Bio-Genes: Has launched a new cotton hybrid (Cotton BG-II) for the Indian market. The product will be launched this kharif season.
  • Zydus Wellness: Board approves reappointment of Tarun Arora as CEO for a period of five years.
  • PNB Gilts: Seeks shareholder nod increase borrowing powers of the company from to Rs 20,000 crore from Rs 12,000 crore.
  • CG Consumer Electricals: Board approved issuing NCDs worth Rs 300 crore on a private placement basis.
  • Wockhardt: To consider raising capital on May 11.
  • Cyient: Board approves increasing investment limit of Foreign Portfolio Investors to 74 percent from 49 percent.
  • Future Enterprises: Acuite Ratings & Research has placed the company’s short-term and long-term debt on credit watch with negative implications on account of significant increase in liquidity pressure faced by the company due to the Covid-19 crisis and material disruptions in its operations due to the lockdown.
  • Endurance Tech: To consider raising capital on May 12.
  • Welspun Corp: Resumes production at pipe facilities in Karnataka.
  • Uflex: Promoters released pledge of 15 lakh shares between May 5-7.
  • Neuland Labs: Gets Establishment Inspection Report (EIR) from the U.S. FDA for its manufacturing facility in Hyderabad. The facility was inspected between February 3-7. The inspection now stands closed.
  • Mindtree: Promoters sold 66,000 shares on May 6.
  • Other Companies That Resumed Operations: Hawkins Cookers, Kokuyo Camlin, Jindal Stainless (Hisar), S Chand, Indo Amines, Bosch, Astral Poly, Endurance Technologies.
  • Non-Nifty Earnings Today: Adani Gas, P&G Hygiene, SBI Cards, TCI Express, Swaraj Engines.

Earnings Announced After Market Hours

RBL Bank: Q4FY20

  • Net Interest Income rises 38.2 percent to Rs 1,020.9 crore
  • Net profit fell 53.7 percent to Rs 114.4 crore
  • Gross NPA at 3.62 percent from 3.33 percent sequentially
  • Net NPA at 2.05 percent from 2.07 percent in Q3FY20
  • Provisions at 614.1 crore from 638.3 crore in the previous quarter
  • Expect higher pressure in retail segment but customer profile is superior
  • Cleaned up the wholesale book a lot in FY20
  • Credit costs in FY21 estimated will not be higher or materially higher than FY20
  • 1/3rd of the bank's loan book in terms of value has availed of the moratorium
  • In some segments like rural and agri loans, the extent of moratorium was 100 percent

SKF India Q4FY20

  • Revenue down 18.5 percent to Rs 610.2 crore
  • Net profit down 8.4 percent to Rs 75.3 crore
  • Ebitda down 44.2 percent to Rs 6.9 crore
  • Ebitda margin contracts to 10.1 percent from 14.8 percent
  • Declared dividend of Rs 130 per share
  • All numbers are standalone and compared on a year-on-year basis

ICICI Securities Q4FY20

  • Revenue up 12.5 percent to Rs 481.9 crore
  • Net profit up 28.3 percent to Rs 155.9 crore
  • Retail equities segment revenue up 35 percent to Rs 292 crore
  • Added 1.1 lakh new clients this quarter
  • Company opened its platform to non-ICICI Bank account holders this quarter
  • All numbers are consolidated and compared on a year-on-year basis

Cyient Q4FY20

  • Revenue in dollar terms down 3.8 percent to $149.2 million
  • Revenue in rupee terms down 2.9 percent to Rs 1,073.6 crore
  • Net profit down 58.3 percent to Rs 45.2 crore
  • Ebit down 56.9 percent to Rs 45.4 crore
  • Ebit margins at 4.2 percent from 9.5 percent
  • Impairment of non-current assets at Rs 40.4 crore this quarter
  • All numbers are consolidated and compared on a sequential basis

Earnings Estimates: Shree Cement Q4FY20

  • Net sales seen 3.5 percent lower at Rs 3,169.6 crore
  • Ebitda seen 18.2 percent higher at Rs 1,002 crore
  • Net profit seen 31.1 percent higher at Rs 420.71 crore
  • High realisations, lower costs may aid bottomline
  • Volumes seen 5.5 percent lower at 6.9 MT
  • Ebitda per tonne seen 25 percent higher at Rs 1,452
  • Realisations seen 2.1 percent higher at Rs 4,594 per tonne
  • Higher prices in East and North India may aid realisations despite lower volumes
  • Lower fuel costs, higher realisations may aid operational performance

Brokerage Radar

Morgan Stanley On India Gas

  • Gas demand doing better than expected
  • Surprisingly, gas demand from industrials rose 2 percent year-on-year
  • With lockdown restrictions easing; gas demand recovering from industrial, power and fertiliser segments
  • Top picks: Indraprastha Gas, Petronet LNG, GAIL

Jefferies On HCL Tech

  • Hold rating maintained
  • Price target raised to Rs 510 from Rs 480
  • Better margins drive beat in Q4FY20
  • Guidance suspended by strong order wins comforting
  • Management indicated supply issues have largely been addressed

Daiwa Capital On Indian Consumer Durables

  • Long-term fundamentals not shaken by Covid-19
  • Extended lockdown likely to have a severe impact on sales of seasonal products like room ACs and air coolers
  • Consumer business likely to see a sharp demand recovery after the lockdown as spending on home improvements picks up
  • Top Picks: Havells India and positive on Voltas, Crompton Consumer

Daiwa Capital On Voltas

  • Outperform rating maintained
  • Price target cut to Rs 527 from Rs 715
  • Expect weak aircon sales season this summer
  • Delay in execution and payments likely to impact EMP business
  • Post lockdown, believe that demand recovery will be sharp

UBS On HUL

  • Upgrade to buy from neutral
  • Price target raised to Rs 2,400 from Rs 2,150
  • GSK merger to be accretive on multiple counts
  • Balanced portfolio key to resilience
  • Believe HUL's agility and channel dominance will enable it to recover faster than peers as the lockdown eases
  • Cost focus it has demonstrated should benefit minority shareholders
  • Valuations look expensive
  • Believe the negative catalyst around the stake sale surplus is now behind

Trading Tweaks

  • Move Into ASM Framework: Chalet Hotels
  • Move Into Short-Term ASM Framework: TCI Developers, Astec LifeSciences, Spandana Sphoorty Financial
  • Move Out Of Short-Term ASM Framework: Infibeam Avenues, Panacea Biotec, Sequent Scientific

F&O Cues

  • Nifty May futures closed at 9,205; premium narrows to 5 points from 10 points
  • Nifty May futures add 25 percent in Open Interest up and 19.3 lakh shares
  • Nifty Bank May futures closed at 19,545; premium widens to 54 points from 22 points
  • Nifty Bank May futures shed 4 percent in open interest and 59,000 shares
  • Nifty Put-Call Ratio at 1.15 versus 1.3 across all series

Nifty Weekly Expiry: May 14

  • Maximum Open Interest on Call side at 9,500 strike (8.6 lakh shares)
  • Maximum Open Interest on Put side at 9,000 strike (9.2 lakh shares)
  • Active Options: 9,500 Call (+4.6 lakh shares), 8,900 Put (+5.5 lakh shares)

Nifty Monthly Expiry: May 28

  • Maximum Open Interest on Call side at 10,000 strike (18.7 lakh shares)
  • Maximum Open Interest on Put side at 9,000 strike (25 lakh shares)
<i>*Institutional net buy figures include HUL blocks sold by GSK Group.</i>
*Institutional net buy figures include HUL blocks sold by GSK Group.