All You Need To Know Going Into Trade On Oct. 22

Asian stocks declined at the open Monday alongside U.S. futures as investors focused on whether a recovery in China on Friday can be sustained amid calls for calm from the country’s top finance officials.

Stocks fell in Japan, Australia and South Korea, while Hong Kong futures tipped a muted open. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India fell 0.2 percent to 10,307 as of 7:20 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 edged lower as investors assessed the latest batch of corporate earnings and simmering geopolitical tensions ahead of the weekend.
• The yield on 10-year Treasuries was at 3.19 percent.

Europe Market Check

• European stocks wrap up weekly gains with a slight drop on Friday.

Asian Cues

• Japan’s Topix index fell 0.8 percent.
• Futures on Hong Kong’s Hang Seng Index were little changed.
• Australia’s S&P/ASX 200 Index dipped 0.4 percent.
• South Korea’s Kospi index lost 0.8 percent.
• S&P 500 Index futures slid 0.3 percent.

Commodity Cues

• West Texas Intermediate crude was little changed at $69.22 a barrel.
• Brent crude traded 0.1 percent lower at $79.70 per barrel.
• Gold added 0.2 percent to $1,228.53 an ounce.

Shanghai Exchange:

• Copper snapped a four-day decline, up 0.8 percent.
• Zinc traded lower for the second day, down 0.5 percent.
• Steel snapped a two-day decline, up 1.3 percent.
• Aluminium traded lower for the third day, down 0.5 percent.
• Rubber snapped a two-day decline, up 0.4 percent.

Indian ADRs

Stocks To Watch

• Lupin Neurosciences, a specialty pharma division of Lupin Ltd., announced that the Committee for Medicinal Products for Human Use (CHMP), the scientific committee of the European Medicines Agency (EMA), has adopted a positive opinion recommending the marketing authorization of NaMuscla™ (mexiletine hydrochloride) for the symptomatic treatment of myotonia in adults with non-dystrophic myotonic (NDM) disorders.
• Biocon and Mylan announced positive CHMP opinion for Ogivri, Biosimilar Trastuzumab. The CHMP positive opinion will now be considered by the European Commission. The decision on approval is expected by the end of 2018.
• SH Kelkar & Co. said that it has undertaken price increase to partially offset higher raw material costs. See revenue growth in core fragrance division to remain healthy.
• Sasan Power, 100 percent subsidiary of Reliance Power bagged an arbitration award against North American Coal Corporation (NACC). Subsequently, Sasan Power is required to pay only Rs 17 crore towards outstanding invoices as against NACC’s claims of Rs 235 crore.
• Srei Infra dismissed reports of layoffs; says it’s false.
• Jet Airways said that the report of talks with Tata speculative.
• Tata Sponge Iron’s board to meet on Oct. 24 to discuss on growth and consequent funding options for the same.
• Piramal Enterprises refuted to have any loan exposure to developers like Aristo, Nahar, Supertech, Radius and Amrapali. Developers like Lodha, Omkar, Vatika and Embassy are part of lending portfolio but have never defaulted on any interest or repayment obligation, according to the company.
• Puravankara completed acquisition of Mumbai land from Foods & Inns worth Rs 147.5 crore. Puravankara now would also acquire additional 843 sq mt area of land from Foods & Inns worth Rs 15.5 crore.

Nifty Earnings To Watch

• Asian Paints

Other Earnings To Watch

• Can Fin Homes
• CCL Products
• Glaxosmithkline Pharmaceuticals
• Hatsun Agro Product
• Hindustan Oil Exploration
• Hindustan Zinc
• Inox Leisure
• Jubilant Life Sciences
• Kansai Nerolac Paints
• Lumax Industries
• Maharashtra Scooters
• Lakshmi Machine Works
• Oberoi Realty
• Omax Autos
• Schaeffler India
• Welspun India

Earnings Reactions To Watch

HDFC Bank (Q2, YoY)

• Net interest income up 20.6 percent at Rs 11,763.40 crore.
• Net profit up 20.6 percent at Rs 5,006 crore.
• Net NPA at 0.40 percent versus 0.41 percent (QoQ).
• Gross NPA unchanged at 1.33 percent (QoQ).

SBI Life Insurance (Q2, YoY)

• Net premium income up 42 percent at Rs 7,662 crore.
• Total income up 25 percent at Rs 9,638 crore.
• Net profit up 11 percent at Rs 251 crore.
• Thirteenth month persistency ratio up 80.03 percent versus 77.48 percent.
• 61st month persistency ratio up 55.45 percent versus 51.05 percent.

ICICI Securities (Q2, YoY)

• Revenue up 0.5 percent at Rs 458 crore.
• Net profit up 2.4 percent at Rs 133 crore.
• Ebit up 2 percent at Rs 217 crore.
• Margin at 47.3 percent versus 46.7 percent.

Bhansali Engineering Polymers (Q2, YoY)

• Revenue up 41 percent at Rs 350 crore.
• Net profit down 33 percent at Rs 17 crore.
• Ebitda down 27 percent at Rs 28 crore.
• Margin at 7.9 percent versus 15.3 percent
• Forex loss Rs 11 crore and higher cost of goods impacted financials.

Persistent Systems (Q2, QoQ)

• Revenue up 0.2 percent at Rs 835.5 crore.
• Profit up 0.9 percent at Rs 88.1 crore.
• EBIT up 3.7 percent at Rs 103.4 crore.
• EBIT margins at 12.4 percent versus 11.98 percent.

Bhageria Industries (Q2, YoY)

• Revenue up 35 percent to Rs 121.6 crore.
• Net profit up 165 percent to Rs 28 crore.
• Ebitda up 86 percent to Rs 42 crore.
• Margin at 35 percent versus 25 percent.
• Lower raw material cost, depreciation, finance cost, tax expense and higher other income aid numbers.

Bulk Deals

• Dewan Housing: Jasmine Capital Investments sold 82.5 lakh shares at Rs 213.13 per share.
• Indiabulls Housing Finance: William Blair EM Fund sold 24.8 lakh shares at Rs 691.84 per share.
• Repco Home Finance: Taiyo Greater India Fund sold 4.3 lakh shares at Rs 312.7 per share.
• Sudarshan Chemicals: Akash Bhansali bought 55.7 lakh shares at Rs 300.2 per share.

Trading Tweaks

• Den Network in ASM framework as of Oct. 22.

F&O Cues

• Nifty October Futures closed trading at 10303, discount of 0.35 points.
• Nifty October open interest down 3.9 percent; Nifty Bank October open interest up 15.6 percent.
• Max open interest for October series at 11,000 Call, open interest at 50.7 lakh shares.
• Max open interest for October series at 10,000 Put, open interest at 33.5 lakh shares.

Stocks In F&O Ban

• Adani Power
• DHFL
• Jet Airways

Put-Call Ratio

• Nifty PCR at 1.07 versus 1.19
• Nifty Bank PCR at 0.79 versus 0.54

Fund Flows

Brokerage Radar

On HDFC Bank

JPMorgan

• Maintained ‘Overweight’ with a price target of Rs 2400, implying a potential upside of 22 percent from the last regular trade.
• The company reported a steady performance during September quarter with a 21 percent profit growth and asset quality maintained.
• Continued to gain market share both on the asset and deposit side.
• Robust loan growth of 24 percent led by all round performance.

Edelweiss

• Maintained ‘Buy’ with a price target of Rs 2454, implying a potential upside of 25 percent from the last regular trade.
• Yet another consistent quarter with improved traction in core operating profitability.
• Sound fundamentals bolstering market share and spurring loan growth.
• Asset quality steady; Outlook stable.

Morgan Stanley

• Maintained ‘Overweight’ with a price target of Rs 2550, implying a potential upside of 30 percent from the last regular trade.
• Compounding engine continues to thrive on strong revenue growth and improving cost to income ratios.
• Net interest income and fee income growth were strong and better than estimates.
• Liquidity position is strong; Asset quality was good.

On Ultratech

Edelweiss

• Maintained ‘Buy’; cut price target to Rs 4411 from Rs 4779, implying a potential upside of 22 percent from the last regular trade.
• Inability to take price hikes despite decent volume gains is disheartening.
• With cement prices continuing to be weak, cut 2018-19 Ebitda estimates by 9 percent.
• Stay optimistic on price hikes, which would come back from January 2019.

Axis Capital

• Maintained ‘Hold’ with a price target of Rs 3,885, implying a potential upside of 8 percent from the last regular trade.
• September quarter was a weak quarter; Miss primarily on lower-than-expected volumes and higher costs.
• Higher cost was due to weak rupee, higher diesel intake and higher other cost.
• Expect positive demand momentum.

Nomura

• Maintained ‘Buy’ with a price target of Rs 5,150, implying a potential upside of 43 percent from the last regular trade.
• September quarter was a miss driven by lower volume and higher costs.
• Management believes prices to move-up in December quarter and power/fuel costs likely peaked.
• UltraTech best geared for cement cycle upturn that has begun.

On Mphasis

Morgan Stanley

• Maintained ‘Overweight’ with a price target of Rs 1,185, implying a potential upside of 11 percent from the last regular trade.
• Macro environment for spending remains robust.
• Margin band for the current financial year remains unchanged even with currency tailwinds.
• Management indicated that sustaining Direct Core business growth in mid-teens is possible.

Macquarie

• Maintained ‘Neutral’ with a price target of Rs 1,220, implying a potential upside of 14 percent from the last regular trade.
• Growth remains strong in HP business; Digital Risk business remains volatile.
• Deal win momentum remains strong, with 71 percent YoY growth at $210 million
• Top picks in midcap IT space are Larsen & Toubro Infotech and Hexaware Technologies.