All You Need To Know Going Into Trade On Oct. 03

Asian stocks began the day mixed Wednesday following a volatile U.S. session as investors weighed continuing concerns in Indonesia and Italy and strength in commodity prices.

Japanese shares edged lower, while equities in Australia ticked higher. Shares in Hong Kong are seen recovering from the biggest one-day slide in a month, with the local dollar trading at the weak end of its band with the greenback.

While the Indian markets were shut, the Singapore-traded SGX Nifty closed 1.4 percent or 160 points lower yesterday. The early indicator of NSE Nifty 50 Index’s performance in India rose 0.5 percent to 11,015 as of 7:45 a.m. today.

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U.S. Market Check

• U.S. stocks ended an up-and-down session mostly lower as Amazon’s wage increase pressured retailers and small caps slumped to a two-month low as trade tensions eased.
• The yield on 10-year Treasuries was at 3.06 percent.

Europe Market Check

• European stocks fell to a two-week low amid general investor dismay over a looming showdown between the EU and Italy’s populist government on fiscal spending.

Asian Cues

• Japan’s Topix index slipped 0.2 percent.
• Futures on Hong Kong’s Hang Seng rose 0.4 percent.
• Australia’s S&P/ASX 200 Index added 0.1 percent.
• The MSCI Emerging Market Index declined 1.2 percent Tuesday.

Commodity Cues

• West Texas Intermediate fell 0.1 percent to $75.20 a barrel after hitting the highest in almost four years.
• Gold rose 0.3 percent to $1,207.11 an ounce.

Indian ADRs

Stocks To Watch

• IL&FS: NCLT allowed appointment of a new board and approves induction of six directors with Uday Kotak acting as the non-executive chairman. The new board is tasked with the responsibility of preparing a robust and time bound resolution.
• Vedanta plans to spend Rs 4,000 crore in exploration. The company may spend up to $4 billion in 41 blocks if it finds oil. Chairman Anil Agarwal also said that company wants to expand oil output to 40,000 barrel per day in two years, according to Bloomberg report.
• Coal India’s coal production for September up 3.8 percent at 40.24 MT versus 38.76 MT on a year to year basis and for the April to September quarter up 10.6 percent at 256.47 MT versus 231.88 MT. The offtake was also up 0.8 percent at 43.91 MT versus 43.57 MT for September and for the April-September quarter up 8.1 percent at 290.81 MT versus 269 MT.
• Minda Corporation’s board approved merger of four domestics Indian wholly-owned subsidiaries with self. The company said that the rationale for this merger to access better financial sources, creating synergies amongst all entities and to increase managerial efficiencies.
• NALCO’s chairman Tapan Kumar Chand unveiled new business plan “NALCO:3-4-5”. The main objective being to increase the company’s three-digit profit figure to five-digit profit number. The company will use artificial intelligence and internet of things in its business. Foundation stone of alumina refinery was also laid by him, which will increase the productivity of the plant and reduce the consumption of caustic soda as stated in the press release.
• MOIL revised manganese ore prices with effect from Oct. 1. Ferro grade, SMGR, Chemical Grade and Fines prices have increased by about 10 percent on existing prices. Basic price of Electrolytic Manganese Dioxide has also been increased by Rs. 9,000 per metric ton.
• Edelweiss Financial Services reported that the company’s current liquidity stands at Rs 5,400 crores and the liquidity cushion of 9 percent to 10 percent of balance sheet has been maintained all times. All contractual liabilities over next six months can be met without any roll-overs, the press release stated.
• Glenmark Pharma completed the sale of its orthopaedic and pain management business in India and Nepal to Private Equity firm True North.
• Future Enterprises to acquire majority stake in Mumbai-based Digital payment startup Livquik for Rs 20 crore.
• Mphasis board approved share buyback at Rs 1,350 per share.

Auto Sales

• Hero Motocorp sold 769,138 units of two wheelers for the month of September.
• Maruti Suzuki India’s sales fell for the third month in a row. The country’s largest automaker sold 1.62 lakh units last month, a decline of 0.5 percent.
• Tata Motors domestic market sales for September up by 20 percent at 64,598 units versus 53,694 units on a year on year basis.
• Eicher Motors monthly motorcycles for September up 2 percent to 71,662 units year-on-year.
• TVS Motors monthly sales for September up 18 percent to 423,978 units.
• Mahindra and Mahindra’s total sales rose 1 percent to 51,268 units as passenger and utility vehicle sales fell.
• Ashok Leyland’s sales rose 28 percent on a yearly basis to 17,386 units.
• Bajaj Auto reported a 17 percent year-on-year increase in sales at 5.02 lakh units.

Media Reports

• Reliance Industries in talks to buy Hathway Cable, bring broadband home; deal still at an exploratory stage (Economic Times).
• Raymond puts 20-acre land parcel in Thane up for sale (Economic Times).

Offerings

• Garden Reach Shipbuilders & Engineers gets 102 percent demand for shares offered on last day. The IPO was extended from its earlier closing date of Sept. 26 to Oct. 1. (Bloomberg News)
• Dinesh Engineers IPO was subscribed 8 percent on the second day sale, offer closes today.

Bulk Deals

• Lakshmi Vilas Bank: Nomura Singapore sold 14.9 lakh shares or 0.58 percent equity at Rs 74.91 each.

Infibeam Avenues

• The Ezrah Charitable Trust acquired 41.4 lakh shares or 0.62 percent equity at Rs 61.34 each.
• IIFL Wealth Finance sold 50 lakh shares or 0.75 percent equity at Rs 55.51 each.

Who’s Meeting Whom

• HPCL to meet Edelweiss Securities and HSBC Global Asset Management from Oct. 5-10.
• TVS Motor Company to meet Capital World Investors on Oct. 3.
• Tata Steel to meet JP Morgan, Prabhudas Lilladher and other investors from Oct. 3-9.

Insider Trades

• JSW Steel promoter groups acquired 19.6 lakh shares from Sept. 26-28.
• Greaves Cotton promoters acquired 1l akh shares on Sept. 28.
• Trident promoter group acquired 17.2 lakh shares on Sept. 28.
• Waterbase promoter acquired 65,400 shares on Sept. 28.
• Marcator promoter HK Mittal acquired 10 lakh shares on Sept. 28.
• Liberty Shoes promoter group sold 13,000 shares on Sept. 27.
• IRB Invit Fund promoter and director Virendra Mhaiskar acquired 25 lakh shares on Sept. 27.

Trading Tweaks

• J. Kumar Infraprojects’ circuit filter revised to 10 percent.

• Sequent Scientific’s circuit filter revised to 5 percent,
• IRCON International added to BSE IPO Index.
• JMC Projects last trading day before stock split to Rs 2 from Rs 10 per share.

(As reported on Oct. 1)

Money Market Update

• Rupee ends at 72.91 per dollar versus 72.49 per dollar on Friday

F&O Cues

• Nifty October Futures closed trading at 11062,  premium of 43 points.
• Nifty October OI down 3 percent; Nifty Bank September OI up 18 percent.
• Maximum open interest for October series at 11,500 call option, OI at 26.1 lakh shares.
• Max open interest for October series at 10,800 put option, OI at 31.9 lakh shares.

Put-Call Ratio

• Nifty PCR at 1.41 versus 1.33.
• Nifty Bank PCR at 1.08 versus 0.88.

Fund Flows

Brokerage Radar

Investec on Mindtree

• Upgraded to ‘Buy’ from ‘Hold’; raised price target to Rs 1,285 from Rs 1,175, implying a potential upside of 20 percent from the last regular trade.
• Poised to deliver operating income growth ahead of revenue growth over the next two years.
• Large client headwinds appear to be behind.
• Company believes it can win large deals at better margins going forward.

Investec on Persistent Systems

• Maintained ‘Buy’; raised price target to Rs 955 from Rs 840, implying a potential upside of 26 percent from the last regular trade.
• Persistent is amongst the cheapest Tier-2 IT firm.
• See potential for a pickup in growth.
• Expect margin expansion of 150 basis points and 70 basis points in the current and the next financial year due to weaker rupee.

Investec on V-Guard Industries

• Maintained ‘Buy’; cut price target to Rs 240 from Rs 255, implying a potential upside of 35 percent from the last regular trade.
• Impact of Kerala floods to be limited at Rs 30-40 crore revenue loss.
• Cut net profit estimates by 4-6 percent to build-in Kerala floods impact and lower stabiliser revenue.
• Operating leverage in non-South India, new and premium products to expand margin.

Deutsche Bank Research on Yes Bank

• Maintained ‘Buy’ with a price target of Rs 310, implying a potential upside of 54 percent from the last regular trade.
• Loan growth excessively high at 61 percent due to higher demand.
• Management was confident on asset quality; divergence report awaited.
• Capital and liquidity management is key.

Deutsche Bank Research on Indian Passenger Vehicles

• September 2018 - a weak month as expected.
• Channel checks indicate rising inventories and increase in discounts on popular models.
• Maruti - Volume growth tapers as expected; rising pressures on margins.
• Mahindra - Tractor growth pauses on strong base; SUV growth to pick up in the second half.

Nomura on Indian Passenger Vehicle

• Two-wheelers surprised positively.
• Medium and heavy commercial vehicles were largely in line while passenger vehicles remain soft
• Healthy new launch pipeline in the second half and growth seen in enquiry levels
• Expect volumes to bounce back in the second half.

Nomura on Coal India

• Maintained ‘Buy’ with a price target of Rs 320, implying a potential upside of 17 percent from the last regular trade.
• Rains hamper offtake growth in September.
• Implied run rate to meet 2018-19 target now seems optimistic, but achievable.
• Power plants coal inventory down to seven days as of Sept. 27 versus 10 days in August.

CLSA on Havells India

• Maintained ‘Buy’; raised price target to Rs 710 from Rs 655, implying a potential upside of 19 percent from the last regular trade.
• Smooth execution of key strategic changes.
• Expect Lloyd margins to stabilise post near-term challenges.
• Import duty hikes and rupee depreciation pose headwinds.