Employees walk through the atrium of the National Stock Exchange of India Ltd. (NSE) building in Mumbai. (Photographer: Dhiraj Singh/Bloomberg)

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.

Short on time? Well, then listen to this podcast for a quick summary of the article.

BQ Live

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.

Also read: Trump's China Tariff Threat Has Republicans Praying for a Deal

Asian Cues

  • 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.

Also read: A $5.9 Billion Market in China Is Finally Getting Some Attention

Commodity Cues

  • 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.

Also read: Steel Giant Says U.S., China Have Two Days Left to Make Deal

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.

Also read: ‘Crazy Premiums’ for Gold Assets Are Over, Says Mining CEO

Indian ADRs

All You Need To Know Going Into Trade On May 9

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.

Also read: Shadow Banks Feel Sting as Indian Mutual Funds Cut Debt Exposure

Nifty Earnings To Watch

  • Asian Paints
  • HCL Technologies

Other Earnings To Watch

  • Voltas
  • Mahanagar Gas
  • Apollo Tyres
  • Mangalam Drugs And Organics
  • Matrimony.com
  • 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
  • Hikal
  • Hindustan Construction Company
  • Hindustan Media
  • Hinduja Ventures
  • Huhtamaki PPL
  • ICRA
  • 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.

Also read: Q4 Results: Titan’s Profit Hit By Lower Operating Margin

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.

Bulk Deals

  • 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.

Trading Tweaks

  • Eclerx Services ex-date for share buyback
  • Prakash Industries price band revised to 20 percent
  • Eveready Industries price band revised to 5 percent

Also read: Why Eveready Lost 75% Of Its Market Cap In 15 Months

Insider Trading

  • 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/$.

Also read: The Bond Market Just Sent a Disturbing Message

F&O Cues

Futures –May Series

Nifty

  • 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

  • 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.

Options

  • 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
All You Need To Know Going Into Trade On May 9

Brokerage Radar

On Titan

CLSA

  • 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.

JPMorgan

  • 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.

UBS

  • 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

CLSA

  • 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.

UBS

  • 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.

On Hindalco

JPMorgan

  • 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.

JM Financial

  • 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.

On Sectors

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.

More Calls

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.