All You Need To Know Going Into Trade On May 9
Asian stocks were mixed amid dissonant signals on U.S.-China trade, with a deadline for the imposition of new tariffs just one day away.
Shares were modestly lower in Japan and South Korea, while Australia’s stock index opened flat. Futures on the S&P 500 Index edged lower after U.S. shares fluctuated for much of Wednesday.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded little changed at 11,399 as of 7 a.m.
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Here’s a quick look at all that could influence equities today.
U.S. Market Check
- U.S. stocks fell for a third day as an escalation in trade tensions prompted investors to question whether China and America will make progress as talks resume this week.
- The yield on 10-year Treasuries fell to 2.46 percent.
- Japan’s Topix index slid 1.4 percent.
- Australia’s S&P/ASX 200 Index was little changed.
- South Korea’s Kospi index dipped 0.6 percent.
- Hang Seng Index futures earlier dropped 0.5 percent.
- Futures on the S&P 500 Index slid 0.3 percent.
- Brent crude fell 0.7 percent to $69.88 per barrel.
- West Texas Intermediate fell 0.6% to $61.73 a barrel.
- Gold edged up 0.1 percent to $1,282.33 an ounce.
London Metal Exchange
- Copper ended lower for the second day, down 0.5 percent.
- Aluminium ended 1.05 percent lower.
- Tin ended higher for the third day, up 0.13 percent.
- Zinc ended lower for the second day, down 1.6 percent.
- Nickel ended 0.79 percent lower.
- Lead ended 1.4 percent lower.
Key Events To Watch This Week
- The U.S. releases trade data Thursday.
- China reports on inflation Thursday. The U.S. releases the April CPI report Friday.
Stocks To Watch
- Hindalco: Unit Novelis’ fourth quarter net sales up 1 percent at $3.1 billion and net income up 29 percent at $130 million (excluding special items). Adjusted Ebitda up 12 percent at $357 million. The company said sales were driven by the higher total shipments which was partially offset by lower average aluminium prices.
- Vodafone Idea: Vodafone Group’s international and domestic promoters pledged 44.39 percent stake of the company to a group of seven international banks.
- Deepak Fertilizers and Petrochem: Board approved May 8 as the day of issuance for FCCBs aggregating to $30 million at a floor price of Rs 139.59 per share. They also approved raising debentures worth Rs 210 crore to World Bank’s arm.
- Glenmark Pharma: Says Ryaltris Phase III study met primary endpoint and positive results were seen. Ryaltris is a nasal spray used for treatment of seasonal allergic rhinitis. This study was carried in patients from six-to-twelve years of age. This drug is under the U.S. FDA review in patients who are above 12 years of age.
- Dilip Buildcon’s arm received financial closure for hybrid annuity model project in Maharashtra worth Rs 1,141 crore.
- Jet Airways’ clarified it is not in a position to comment on offer of Rs 250 crore being made by Naresh Goyal towards the company.
- Great Eastern Shipping Company said it has delivered a large gas carrier to buyers. The vessel was contracted for sale in January 2019.
- TVS Motor’s Singapore arm to invest Rs 11.2 crore in Tagbox Solutions. The target company provides supply chain solutions.
- Reliance Communications: As per the resumption of insolvency proceedings, management of affairs to vest in the administrator and power of Board of Directors stands suspended.
- Religare Enterprises: India Ratings downgraded Religare Finvest to ‘D’ from ‘B+’ while resolving rating watch negative. The downgrade reflects the company’s delay in meeting its debt servicing obligations and the company is facing deepened stress in its liquidity situation.
- Yes Bank: India Ratings downgraded long-term issuer rating to IND ‘AA-‘ from IND ‘AA+’ with a negative outlook.
- MCX: Mrugank Paranjape ceased to be MD and CEO of the exchange with immediate effect, on expiry of his term.
- CCI approved acquisition of 6.5 percent stake of PNB Housing Finance by General Atlantic Singapore HF.
- Shree Renuka Sugars’ Mauritius arm entered a term-sheet with a potential investor to explore a transaction, which may result in the company ceasing to hold more than 50 percent stake in its Mauritius arm.
- Bharat Financial Inclusion completed its first direct assignment transaction worth Rs 1,107.4 crore for the financial year 2020.
Nifty Earnings To Watch
- Asian Paints
- HCL Technologies
Other Earnings To Watch
- Mahanagar Gas
- Apollo Tyres
- Mangalam Drugs And Organics
- Oracle Financial Services Software
- Plastiblends India
- PNB Housing Finance
- Shankara Building Products
- South Indian Bank
- Sundram Fasteners
- Astra Microreowave Products
- Datamatics Global Services
- Dai-Ichi Karkaria
- Dalmia Bharat
- Esab India
- Granules India
- Solar Industries India
- Gujarat State Petronet
- Hindustan Construction Company
- Hindustan Media
- Hinduja Ventures
- Huhtamaki PPL
- Indian Overseas Bank
- Kalpataru Power Transmission
- McDowell Holdings
- Fairchem Speciality
- Gujarat Mineral Development Corporation
- Saint-Gobain Sekurit
- Sutlej Textiles and Industries
- Timex Group
- Satia Industries
Earnings Reaction To Watch
Titan (Q4, YoY)
- Revenue up 20.7 percent to Rs 4,671 crore.
- Net profit up 4.4 percent to Rs 294.6 crore.
- Ebitda up 11.3 percent to Rs 455 crore.
- Margin at 9.7 percent versus 10.6 percent.
- Exceptional loss of Rs 70 crore.
KEC International (Q4, YoY)
- Revenue up 4.9 percent to Rs 3,841.2 crore.
- Net profit down 0.9 percent to Rs 193.9 crore.
- Ebitda up 7.9 percent to Rs 399.2 crore.
- Margin at 10.4 percent versus 10.1 percent.
- Deferred tax reversal of Rs 24.9 crore in base quarter
- Material costs down 19 percent to Rs 1,736.3 crore.
- Erection and Subcontracting expenses up 54 percent to Rs 1,048.2 crore.
- Board approves reappointment of Vimal Kejriwal as MD and CEO till March 2020.
Tata Communications (Q4, QoQ)
- Revenue down 0.6 percent to Rs 4,243.5 crore.
- Net loss at Rs 198.5 crore versus net profit at Rs 173.8 crore.
- Ebitda down 18.7 percent to Rs 685.3 crore.
- Margin at 16.1 percent versus 19.7 percent.
- Loss in associates to Rs 160.7 crore.
- Other expenses up 38 percent to Rs 1,105.1 crore.
- Deferred tax reversal of Rs 29.6 crore in base quarter.
Shriram Transport Finance (Q4, YoY)
- Net Interest Income up 5 percent to Rs 1,931.2 crore.
- Net profit down 22.4 percent to Rs 746 crore.
- Exceptional gain of Rs 139.7 crore in base quarter.
- Deferred tax payment of Rs 453 crore in base quarter.
- Declares dividend of Rs 7 per share.
Saregama India (Q4, YoY)
- Revenue up 17.6 percent to Rs 124 crore.
- Net profit down 25.1 percent to Rs 16.1 crore.
- Ebitda up 4.5 percent to Rs 16.3 crore.
- Margin at 13.1 percent versus 14.8 percent.
- Royalty expense up 3.2 times to Rs 14.6 crore.
CreditAccess Grameen (Q4, YoY)
- Net Interest Income up 27.5 percent to Rs 209.7 crore.
- Net profit up 6.4 percent to Rs 76.3 crore.
Gillette India (Q4, YoY)
- Revenue up 3.1 percent to Rs 465.5 crore.
- Ebitda up 23.8 percent to Rs 146.2 crore.
- Margin at 31.4 percent versus 26.1 percent.
- Net profit up 23.1 percent to Rs 87.8 crore.
- Lower employee and advertising cost aid Ebitda.
- Other income was up three times to Rs 3.3 crore.
- Zee Entertainment Enterprises: Catalyst Trusteeship sold 86 lakh shares or 0.9 percent equity to Rs 342.3 each.
Pledge Share Details
- Future Lifestyle Fashions promoter Ryka Commercial Ventures created pledge of 27.5 lakh shares on May 7.
- Eros International Media promoter Eros Worldwide created pledge of 27.5 lakh shares from May 3-6.
- Emami promoters created pledge of 19.4 lakh shares from April 20-May 7.
- Eclerx Services ex-date for share buyback
- Prakash Industries price band revised to 20 percent
- Eveready Industries price band revised to 5 percent
- Mindtree: Larsen & Toubro acquires 37.6 lakh shares on May 8. The company has acquired 65 lakh shares in Mindtree since April 30.
Money Market Update
- The rupee on Wednesday weakened for the third straight session to close at 69.71/$ versus Tuesday’s closing of 69.43/$.
Futures –May Series
- Nifty futures closed trading at 11,418.6, premium of 59 points versus 44 points.
- Nifty open interest up 2 percent adds 3.2 lakh shares in open interest.
- Bank Nifty futures closed trading at 29,145.7, premium of 151 points versus 130 points.
- Bank Nifty open interest down 1 percent sheds 18,000 shares in open interest.
- Nifty PCR at 1.03 versus 1.13 (across all series)
Nifty Weekly Expiry 9 May
- Max open interest on call side at 11,500 (27.1 lakh shares)
- Max open interest at Put side at 11,400 (10.3 lakh shares)
- Max open interest addition seen at 11,400 Call (+21 lakh shares), 11,500 Call (+18 lakh shares), 11,450 Call(+14.9 lakh shares)
- Max open interest shedding seen at 11,800 Call (-7.7 lakh shares), 11,500 Put (-6.6 lakh shares), 11,700 Put (-6 lakh shares)
Nifty Monthly Expiry 30 May
- Max open interest on call side at 12,000 (16 lakh shares)
- Max open interest on Put side at 11,000 (24.6 lakh shares)
Stocks In F&O Ban
- Jet Airways
- Maintained ‘Outperform’; hiked price target to Rs 1,225 from Rs 1,100.
- March quarter were impacted by one-offs – inventory valuation hit and ex-gratia pay-outs to employees.
- Jewellery: strong growth, record margin and positive outlook.
- Mixed performance for other segments.
- Maintained ‘Overweight’ with a price target of Rs 1,200.
- Good March quarter; positive outlook and start to 2019-20.
- Jewelry – All round impressive performance.
- Titan remains one of the higher growth companies in our coverage universe.
- Maintained ‘Buy’ with a price target of Rs 1,250.
- Sustained strong performance in jewellery business.
- Optically depressed performance due to one-offs.
- Formalisation and wedding jewellery expansion continues.
On Shriram Transport
- Maintained ‘Sell’ with a price target of Rs 960
- Growth moderates to sub-10 percent; expect normalisation towards the second half.
- Asset quality better but watch out for aggressive rural and business growth.
- Group reorganisation can be an overhang.
- Maintained ‘Buy’; cut price target to Rs 1,450 from Rs 1,550.
- Strong asset quality, weak loan growth.
- Management guiding for 18-20 percent AUM growth in the current financial year.
- Liquidity position comfortable; NIMs likely to improve going forward.
- Maintained ‘Overweight’ with a price target of Rs 330.
- Novelis continues to see strong performance across segments and markets.
- Continues to see strong demand across key markets.
- Expect more positive contract reset environment.
- Novelis expects to remain FCF positive even after large capex.
- Strong earnings delivery from Novelis; record high Ebitda driven by higher shipments.
- Robust performance at North America; other regions margin impacted by inventory reduction.
- Softening spreads to be offset by operating efficiencies.
- Expansion projects on track; Aleris acquisition to be completed by September 2019.
Morgan Stanley on Cement Sector
- Recent cement price hikes are sustaining well.
- May-19, the industry has raised prices further in the North and East.
- Costs still flattish vs. Q4 with potential upside risk from freight rates.
- Price hike reflects rising capacity utilisation and industry focus on profitability.
UBS on Indian Aviation
- InterGlobe Aviation: Upgraded to ‘Buy’ from ‘Sell’; hiked price target to Rs 1,940 from Rs 940.
- SpiceJet: Initiated ‘Buy’ with a price target of Rs 175.
- Industry dynamics turn more attractive.
- Significant international growth opportunity for domestic LCCs.
- Indigo: international growth not priced in.
- SpiceJet: cost structure improvement could drive further rerating.
CIMB on Indian Pharma
- U.S. generics pricing pressure eases but structural constraints remain.
- India’s branded generics market undergoing deep transformation.
- Indian policy makers to monitor pricing dynamics in U.S./China.
- Strong structural tailwinds from changing CDMO industry dynamics.
- Aurobindo Pharma: Initiated ‘Add’ with a price target of Rs 950.
- Dr. Reddy’s: Initiated ‘Add’ with a price target of Rs 3,260.
- IPCA Lab: Initiated ‘Add’ with a price target of Rs 1,190.
- Syngene International: Initiated ‘Add’ with a price target of Rs 680.
- Divi’s Lab: Initiated ‘Hold’ with a price target of Rs 1,850.
HSBC on Alembic Pharma
- Maintained ‘Hold’; cut price target to Rs 575 from Rs 600.
- U.S. sales remain steady QoQ on new launches and few supply benefits; India sales remain sluggish.
- Upward trend to continue for operating costs on R&D pipeline and start-up costs.
- Look for progress in R&D efforts for U.S. market and recovery in India.
Morgan Stanley on Reliance Industries
- Downgraded to ‘Equal-weight’ from ‘Overweight’; hiked price target to Rs 1,349 from Rs 1,230.
- Expect RIL’s two-year earnings upswing to reverse.
- Rising glut in gas and polyster markets could also slow growth in 2020.
- Upside limited amid core business drags with no material capacity adds.