All You Need To Know Going Into Trade On Nov. 2

Asian stocks built on the best weekly rally since September, stoked by hopes for trade talks and China stimulus. That offset underwhelming news from Apple Inc. that weighed on Nasdaq futures.

South Korean stocks led the advance, and along with rising Japanese shares took this week’s rally close to 3 percent. Gains came after a phone call between Presidents Donald Trump and Xi Jinping showed the door is still open for U.S.-China trade talks.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, gained 0.8 percent to 10,495 as of 7:15 a.m.

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

BQ Live

U.S. Market Check

U.S. stocks rose for a third day, continuing a torrid rebound from the October sell-off as investors greeted the latest batch of earnings optimistically amid signs of easing trade tension.

Europe Market Check

European shares followed global markets in extending a recovery after October’s sell-off, bolstered by signs U.S.-China trade tensions may ease.

• The Stoxx 600 Index advanced with telecoms and travel companies leading the way.
• While strong results from the likes of ING Groep NV helped buoy sentiment, not all the news was positive, with Royal Dutch Shell Plc declining after profit fell short of expectations.

Asian Cues

• Japan’s Topix index rose 0.6 percent.
• Australia’s S&P/ASX 200 slid 0.1 percent.
• South Korea’s Kospi index surged 1.5 percent.
• Futures on the FTSE China A50 surged 2.9 percent earlier.
• Futures on the Hang Seng Index rose 2.1 percent earlier.
• Futures on the S&P 500 were up 0.2 percent, while Nasdaq futures declined 0.8 percent.

Commodity Cues

• West Texas Intermediate crude slid 0.1 percent to $63.61 a barrel.
• Gold was flat at $1,232.65 an ounce, little changed on the week.
• All base metals ended higher on the LME as China signals more stimulus to come. Copper, Zinc, Nickel and Lead gained between 1.5-2.5 percent.

Here are some key events to come on Friday:

• Australian retail sales are due.
• The final U.S. jobs report before next Tuesday’s congressional elections may show that hiring improved and that the unemployment rate held at a 48-year low.

Indian ADRs

Nifty Earnings To Watch

• Axis Bank
• Hindalco
• Indian Oil Corporation
• NTPC

Other Earnings To Watch

• Alkem Laboratories
• Allahabad Bank
• Bata India
• Bharat Forge
• BSE
• Equitas Holdings
• Godrej Consumer Products
• JSW Energy
• Oracle Financial Services Software
• Petronet LNG
• Power Finance Corporation
• Punjab National Bank
• Steel Authority of India
• Sun TV Network
• Tata Chemicals
• Whirlpool

Earnings Reactions To Watch

HPCL Standalone (Q2, QoQ)

• Revenue down 0.2 percent to Rs 67,518 crore
• Ebitda down 33.5 percent to Rs 2,122 crore
• Ebitda margin at 3.1 percent versus 4.7 percent
• Net profit down 36.5 percent to Rs 1,092 crore

GlaxoSmithKline Consumer Healthcare (Q2, YoY)

• Revenue up 14.4 percent at Rs 1,272 crore
• Net profit up 43.2 percent at Rs 275.5 crore
• Ebitda up 36.6 percent at Rs 353.7 crore
• Margin at 27.8 percent versus 23.3 percent

Aarti Industries (Q2, YoY)

• Revenue up 46.4 percent at Rs 1,299.5 crore
• Net profit up 56.6 percent at Rs 122.9 crore
• Ebitda up 51 percent at Rs 242.1 crore
• Margin at 18.6 percent versus 18.1 percent

Trent Standalone (Q2, YoY)

• Revenue up 18 percent at Rs 615.9 crore
• Net profit up 13.4 percent at Rs 32.9 crore
• Ebitda up 19.9 percent at Rs 59.1 crore
• Margin at 9.6 percent versus 9.4 percent

Tata Communications (Q2, YoY)

• Revenue down 4.2 percent at Rs 4,068.2 crore
• Net profit at Rs 1.7 crore versus net loss at Rs 248.4 crore
• Ebitda up 6 percent at Rs 630.2 crore
• Margin at 15.5 percent versus 14 percent

SRF Consolidated (Q2, YoY)

• Revenue up 48.9 percent at Rs 1,915.4 crore
• Net profit up 47.1 percent at Rs 151.2 crore
• Ebitda up 63.4 percent at Rs 332.7 crore
• Margin at 17.4 percent versus 15.8 percent

DLF (Consolidated; YoY)

• Net profit up 26 percent to Rs 375 crore
• Revenue up 35 percent to Rs 2,139 crore
• Ebitda margins at 30.8 percent versus 49.6 percent
• Higher share of profits from associates and JVs, lower interest cost and lower depreciation aided bottomline

Bulk Deals

• 8K Miles Software Services: IFCI sold 14.1 lakh shares (4.61 percent) at Rs 67.89 each

Trading Tweaks

• Vakrangee to move into ASM framework
• DFM Foods record date for share split from Rs 10 to Rs 2
• Mishtann Foods record date for share split from Rs 10 to Re 1
• Laxmi Machine Works buyback starts
• Dhanlaxmi Bank price band revised to 10 percent
• Bombay Dyeing & Manufacturing Company price band revised to 5 percent
• Texmo Pipes and Products price band revised to 5 percent
• STI India price band revised to 5 percent

Who’s Meeting Whom

• Shriram Transport Finance to meet Skale Investment on Nov. 2

Money Market Update

Rupee closed at 73.45/$ on Thursday from 73.96/$ on Wednesday.

F&O Cues

• Nifty October Futures ended at 10413, premium of 33 points.
• Nifty November open interest down 0.2 percent; Nifty Bank November open interest up 7.1 percent.
• Maximum open interest for November series at 10,700 Call (open interest at 24.7 lakh shares).
• Maximum open interest for November series at 10,000 Put (open interest at 50.8 lakh shares).

Put-Call Ratio

• Nifty PCR at 1.53 from 1.56.
• Nifty Bank PCR at 1.42 from 1.27.

Brokerage Radar

On HPCL

Deutsche Bank Research

• Maintained ‘Hold’; hiked target price to Rs 240 from Rs 230, indicating a potential upside of 5 percent from last regular trade.
• Second-quarter net profit and Ebitda below estimates.
• Headwinds ahead in the marketing business.

IDBI Capital

• Downgraded to ‘Accumulate’ from ‘Buy’; Maintain target price at Rs 248; indicating a potential upside of 8 percent from last regular trade.
• Second-quarter below expectation led by lower than expected sales volume, weaker GRM and higher forex losses.
• Lower crude price and regular price hike to improve marketing margins.
• Expect crude oil price to soften and election year would continue to act as an overhang.

Morgan Stanley On HDFC

• Maintained ‘Overweight’ with target price of Rs 2,400; indicating a potential upside of 36 percent from last regular trade.
• Net profit below estimates driven by lower net interest income and higher provisions.
• Loan spread was stable at 2.28 percent

Morgan Stanley On Marico

• Maintained ‘Equal-weight’ with target price of Rs 320.
• Second-quarter steady; in-line with estimates.
• Rise in input cost material impacted Q2 margins.
• Positives: Steady performance in domestic coconut oil segment and new launches in hair care segment.

IDFC Securities on Indraprastha Gas

• Maintained ‘Outperform’ for target price of Rs 345; Potential Upside 24 percent.
• Finally, Gurugram to come under IGL control.
• Material growth opens for IGL.
• IGL’s volume visibility extending comfortably till FY25 by this move.

Deutsche Bank Research on October Auto Sales

• Heavy truck growth moderates, light truck remain strong.
• Passenger vehicles growth continues to moderate.
• Maruti - volume growth muted as expected.
• Mahindra - SUV growth improves marginally; Expect revival in remainder of FY19.

Nomura on Somany Ceramics

• Maintained ‘Buy’ with target price of Rs 610; indicating a potential upside of 67 percent from last regular trade.
• Weak Q2FY19 driven mainly by weak volume growth.
• Remain positive on growth outlook/pricing/profitability.
• Think worst of price correction in tiles is now behind.

Nomura on AIA Engineering

• Maintained Neutral; Cut target price to Rs 1,945 from Rs 1,955.
• Q2FY19 witnessed strong volume growth.
• Margins to improve as volume picks up.
• Stock rally appears to price in the growth; valuations expensive.