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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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.

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.

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.

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.

Indian ADRs

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

• 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.

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

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/$.

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

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.