A trader talks on the phone while working on the trading floor at an exchange. (Photographer: Michael Nagle/Bloomberg)

All You Need To Know Going Into Trade On Oct. 15

A rebound in global equities Friday saw no traction at the start of the week, with markets opening lower in Asia today.

Equities in Japan, Australia and South Korea fell, following a weekend of warnings on global economic fragility from finance chiefs meeting at an annual IMF gathering. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, erased early gains and fell 0.2 percent 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

  • Stocks rose the most in six months Friday as technology shares, which led the longest rout in U.S. stocks in almost two years, bounced back to power major indexes higher.
  • The yield on 10-year Treasuries ticked more than one basis point lower to below 3.15 percent after closing Friday at 3.16 percent, down about 7 basis points on the week.
All You Need To Know Going Into Trade On Oct. 15

Also read: Trump Threatens Another Round of China Tariffs 

Europe Market Check

  • A rebound in European equities quickly faded as bank and oil stocks pared gains.
  • Europe’s heavily weighted banking sector erased earlier gains to fall as their American peers showed a mixed reaction to earnings from JPMorgan Chase & Co. and Wells Fargo & Co. Oil stocks also pared gains, following crude prices.
All You Need To Know Going Into Trade On Oct. 15

Also read: Brexit Talks Put on Hold as Stalemate Deepens

Asian Cues

  • Japan’s Topix index fell 1.3 percent.
  • Australia’s S&P/ASX 200 Index slid 1.5 percent.
  • South Korea’s Kospi index lost 0.7 percent.
  • Futures on the FTSE China A50 Index earlier rose 0.5 percent.
  • Futures on Hong Kong’s Hang Seng Index fell 0.5 percent.

Also read: Emerging-Market Bulls Start to Overtake the Bears, Survey Shows

Commodity Cues

  • West Texas Intermediate crude rose 1.1 percent to $72.15 a barrel.
  • Brent crude traded 1.3 percent higher at &81.50 per barrel.
  • Gold rose 0.2 percent to $1,220.50 an ounce.

Shanghai Exchange:

  • Copper traded higher for the second day, up 0.5 percent.
  • Zinc snapped a two-day decline, up 0.6 percent.
  • Steel extended gains for the second day, up 0.6 percent.
  • Aluminium snapped a three-day decline, up 0.1 percent.
  • Rubber snapped a three-day decline, up 0.6 percent.

Also read: World’s Longest Flight Is a Triumph Over Oil Prices

Here are the key events to watch out for this week:

  • On Monday, the U.S. retail sales report will give clues about consumer sentiment in September. Consensus sees healthy pick-ups in both the core and headline readings.
  • APEC finance ministers meet in Port Moresby, Papua New Guinea
  • China’s new yuan loans may have risen to 1.36 trillion yuan ($196 billion) in September from August’s 1.28 trillion yuan as officials sought to buoy economic growth. On Tuesday, consensus is for CPI to pick up to 2.5 percent and PPI to slow to 3.6 percent.
  • Third-quarter GDP for China comes Friday, with headline growth forecast to slow to 6.6 percent year on year from 6.7 percent, in addition to last month’s retail sales and factory output.

Stocks To Watch

  • 8K Miles Software Services said that 25.7 lakh shares, representing 8.42 percent of total equity holding held by promoter Suresh Venkatachari in his demat accounts held with Quantum Global Securities Ltd. and Kumar Share Brokers Limited, had been wrongfully and illegally transferred through off-market transactions on various dates to various parties without his knowledge/consent. The company also informed that the promoter had taken legal action and filed a police complaint on Sept.17 against the aforementioned parties and others for fraudulent and unlawful transactions by wrongfully and illegally transferring his shares of the Company.
  • Bandhan Bank got the SEBI’s exemption on one-year lock-in in equity shares held by promoter shares post the IPO. The Reserve Bank of India had imposed penalties on the Bank for not diluting promoter shareholding in line with rules.
  • Info Edge said that its stake in Zomato reduced to 27.68 percent from 30.91 percent after Zomato signed a definitive agreement to raise $210 million from existing shareholder Ali Baba Group’s Alipay Singapore Holding.
  • Indian Oil Corporation Chairman Sanjiv Singh said that the company will not stop its aviation turbine fuel supply to Air India. He said that the national carrier was paying for less fuel than it buys on a daily basis. (Bloomberg News)
  • Saregama India set up its arm in UAE to start business of distribution of music players and pre-recorded songs player ‘Carvaan’ and dealing with related music and films right in Gulf countries and other geographies.
  • CESC to go ahead with part demerger plan which will result into three instead of earlier planned four businesses. For now the company to keep its power generation and distribution businesses in single entity and demerger the retail and venture companies. Each shareholder holding 10 shares of CESC to get six shares in retail and two shares in venture company. Record date for eligibility is set at Oct. 31. It will continue to actively seek the PPA and eventually demerge the power generation and distribution businesses.
  • NALCO board approved share buy back of 67.3 crore equity shares representing 3.48 percent of the equity paid-up share capital at a price of Rs 75 apiece. The company will spend a maximum of Rs 504.8 crore in the buy back
  • United Breweries forayed into a new line business of non-alcoholic beverages segment with launch of ‘Kingfisher Radler’. The company invested Rs 12 crore in the product for the carbonated malt based non-alcoholic beverage. The company also confirmed that officers from the Director General’s Office of Competition Commission of India visited the company seeking certain business-related information on Oct. 10. The company said that it is currently reviewing its legal risks and potential implications.
  • French energy giant Total is in talks to buy up to half of Adani Group's stake in LNG projects in Gujarat and Odisha. The group will also buy stake in an under-construction LPG import facility and in its city gas projects, sources privy to the development told PTI.

Also read: How To Make Public Sector Bank Mergers Work

Data To Watch

  • 12 noon: India September wholesale prices inflation (YoY), estimate 5.0 percent, prior 4.53 percent.
  • India September trade balance, estimate. $17.35 billion deficit, prior $17.39 billion deficit
    • India September exports YoY, prior 19.21 percent.
    • India September imports YoY, prior 25.4 percent.

New Offerings

  • Emami Cement files for Rs 1,000 crore IPO with SEBI. The IPO comprises fresh issuance of shares worth Rs 500 crore. The company said net proceeds raised through the issue will be used for re-payment of certain indebtedness and for other general corporate purposes.

(Source PTI)

Also read: Bandhan Bank Promoters Get Exemption On Post-IPO Lock-In Of Shares

Nifty Earnings To Watch

  • IndusInd Bank
  • Indiabulls Housing Finance

Other Earnings To Watch

  • Delta Corp
  • Network18
  • Pitti Engineering
  • Reliance Industrial Infrastructure
  • South Indian Bank
  • Zee Learn
  • Zee Media Corporation
  • MT Educare
  • Monnet Ispat & Energy
  • Trident
  • TV18 Broadcast

Earnings Reactions To Watch

HUL (Q2, Standalone YoY)

  • Revenue up 11 percent at Rs 9,234 crore.
  • Net profit up 19 percent at Rs 1,525 crore.
  • Ebitda up 20 percent at Rs 2,012 crore.
  • Margin at 21.8 percent versus 20.2 percent.
  • Underlying volume growth at 10 percent.

Also read: Q2 Results: HUL’s Profit Meets Estimates Amid Growing Challenges

Jay Bharat Maruti (Q2, YoY)

  • Revenue up 25.6 percent at Rs 549.8 crore.
  • Net profit down 1.2 percent at Rs 16.4 crore.
  • Ebitda up 16.1 percent at Rs 48.3 crore.
  • Margin at 8.8 percent versus 9.5 percent.

Avenue Supermarts (Q2, YoY)

  • Revenue up 38 percent at Rs 4,872 crore.
  • Net profit up 18 percent at Rs 226 crore.
  • Ebitda up 22 percent at  Rs 389 crore.
  • Margin at 7.9 percent versus 9 percent.

AU Small Finance Bank (Q2, YoY)

  • Net Interest Income up 46.2 percent at Rs 321.1 crore.
  • Net profit up 34 percent at Rs 91.4 crore.
  • Provisions at Rs 35 crore versus Rs 35.1 crore (QoQ).
  • GNPA at 2.03 percent versus 2.17 percent (QoQ).
  • NPA at 1.28 percent versus 1.38 percent (QoQ).

Bulk Deals

  • Just Dial: New York State Common Retirement Fund acquired 4.16 lakh shares or 0.62 percent equity at Rs 471.39 each.

Who’s Meeting Whom

  • Mahindra & Mahindra to meet Systematix Group on Oct.16 .

Insider Trades

  • Sequent Scientific promoter Rajith Gopalakrishnan acquired 25,000 shares on Oct. 10.
  • Waterbase promoter acquired 29,000 shares on Oct. 9.
  • Confidence Petroleum promoter acquired 1.56 lakh shares on Oct. 11.
  • Cox & Kings promoter acquired 25.400 shares on Oct. 10.

(As reported on Oct. 12)

Trading Tweaks

  • Larsen & Toubro record date to determine buyback eligibility.

Money Market Update

  • The Indian rupee on Friday closed at 73.57 per dollar. It closed at 74.13 per dollar in trade on Thursday.

Also read: IL&FS Crisis, Rupee Plunge Indicate Government Unable To Manage Economy: Chidambaram

F&O Cues

  • Nifty October futures closed trading at 10,486, premium of 14 points.
  • Nifty October open interest down 2.3 percent; Nifty Bank October open interest up 4 percent.
  • Max open interest for October series at 11,000 strike value call option (Open interest at 47.8 lakh shares)
  • Max open interest for October series at 10,000 strike value put option (Open interest at 42.1 lakh shares)

F&O Ban

Stocks In Ban: IDBI Bank
New In Ban: Adani Power

Put-Call Ratio

  • Nifty PCR at 1.21 versus 1.08.
  • Nifty Bank PCR at 1.14 versus 0.92.

Fund Flows

All You Need To Know Going Into Trade On Oct. 15

Brokerage Radar

On Hindustan Unilever

CLSA

  • Maintained ‘Outperform’; cut price target to Rs 1,750 from Rs 1,950, implying a potential upside of 12 percent from the last regular trade.
  • Strong Homecare and pick-up in personal care.
  • Recent surge in crude oil prices and rupee depreciation risk margins.
  • Cut price target due to margin risk and market correction.

Morgan Stanley

  • Maintained ‘Underweight’ with a price target of Rs 1,260, implying a potential downside of 12 percent from the last regular trade.
  • September Quarter Review: Strong operating margin and expansion continues.
  • Continue to expect gradual recovery in underlying volume growth in 2018-19.
  • Valuation and potential disruption from small brands a concern.

More Brokerage Calls

B&K on Karnataka Bank

  • Maintained ‘Outperform’ with a price target of Rs 130, implying a potential upside of 32 percent from the last regular trade.
  • Healthy September quarter led by strong growth and lower Opex.
  • NIMs declined mainly on pressure on CoD and lower CASA.
  • Entire IL&FS exposure (1 percent of loans) are standard.

IDFC Securities on CESC

  • Maintained ‘Outperform’ with a price target of Rs 1,184, implying a potential upside of 32 percent from the last regular trade.
  • Restructuring will lead to value unlocking in retail and BPO businesses.
  • Dhariwal’s tie-up to help reduce losses in the current financial year.
  • Trades at an attractive valuation.

Macquarie on Maruti Suzuki

  • Maintained ‘Outperform’; cut price target to Rs 9,000 from Rs 11,500, implying a potential upside of 24 percent from the last regular trade.
  • Lower valuation multiple and cut EPS estimates by 6-8 percent for FY19-21 to factor in the rupee depreciation.
  • Concerns: increase in cost of ownership, competition, premium valuations and rising input cost.
  • Maruti best positioned to mitigate these concerns.

Also read: Prime Securities’ Jayakumar Says Pharma A Safe Bet Amid Volatility