Financial traders monitor data on computer screens on the trading floor at Amsterdam Stock Exchange (AEX). (Photographer: Jasper Juinen/Bloomberg)

All You Need To Know Going Into Trade On Oct. 24 

Asian stocks traded mixed Wednesday after a late-in-the-day rally dragged U.S. stocks off their lows amid concerns about the corporate earnings outlook.

Benchmarks were little changed in Japan, Australia and South Korea as U.S. equity futures slipped. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.6 percent to 10,234.50 as of 7:25 a.m.

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Here’s a quick look at all that could influence equities today.

U.S. Market Check

  • U.S. stocks closed lower for a fifth day, as an afternoon rally from the lowest levels for the S&P 500 since May fell short of pushing benchmark indexes back into positive territory.
  • The yield on 10-year Treasuries were little changed at 3.16 percent.

Also read: Fear of Trump Helps Bring Rivals China and Japan Closer Together

Europe Market Check

  • European stocks retreated in a broad sell-off, spurred by investor anxiety about Italy, disappointing earnings, Brexit and a range of other geopolitical concerns after U.S. President Donald Trump vowed to outspend any other nation in building up nuclear arms.
All You Need To Know Going Into Trade On Oct. 24 

Also read: Italy Refuses to Back Down on Budget Deficit in Response to EU

Asian Cues

  • Japan’s Topix index was flat.
  • FTSE China A50 Index futures advanced 0.8 percent.
  • Australia’s S&P/ASX 200 Index was little changed.
  • South Korea’s Kospi index rose 0.2 percent.
  • Futures on Hong Kong’s Hang Seng Index fell 0.3 percent.
  • S&P 500 futures lost 0.1 percent.

Also read: One of China's Biggest Asset Managers Prepares to Dump Stocks

Commodity Cues

  • West Texas Intermediate crude fell 0.2 percent to $66.31 a barrel, extending a 4.2 percent slide.
  • Gold was steady at $1,231.18 an ounce.

Shanghai Exchange:

  • Copper snapped a two-day rally, down 0.4 percent.
  • Zinc traded higher for the second day, up 0.9 percent.
  • Steel snapped a two-day gain, down 0.2 percent.
  • Aluminium extended gains for the second day, up 0.4 percent.
  • Rubber traded lower for the second day, down 0.8 percent.

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

  • Earnings season rolls on with notable highlights including Twitter, UBS, Deutsche Bank, Barclays and Total.
  • Monetary policy decisions are due in Sweden and Canada.
  • ECB policy makers could on Thursday confirm that asset purchases will end this year, reiterating its pledge to keep interest rates at record lows through summer 2019. President Mario Draghi will hold a press conference.
  • U.S. gross domestic product growth may have slowed in the third quarter, yet remained near its best pace since mid-2015, according to forecasts ahead of Friday’s release.

Also read: Saudi Crown Prince All Smiles at Summit as Erdogan Cries Murder

Indian ADRs

All You Need To Know Going Into Trade On Oct. 24 

Stocks To Watch

  • Bharti Airtel to raise $1.25 billion by diluting stake in African unit
  • Sun Pharmaceuticals launched psoriasis treatment drug Ilumya in the U.S.
  • DCM Shriram started commercial production at additional 168 TPD chlor-alkali line at Rajasthan unit.
  • Laurus Labs transferred ownership of its U.S. FDA approved Tenofovir Disoproxil Fumarate (TDF) ANDA to CASI Pharmaceuticals.
  • Salzer Electronics withdrew proposal to acquire two overseas companies – Advanced ID Asia Engineering, Thailand and United Marketing and Trading Ltd, Hong Kong.
  • Jaypee Infratech creditors approved proposal to invite bids.
  • ICICI Bank said it will conduct fresh inquiry in Kochhar case.
  • Essar lenders voted to approve $5.4 billion ArcelorMittal Bid. (Bloomberg)
  • Shalby Hospitals, Surat (Gujarat) granted certificate under Pre‐accreditation Entry level–Hospitals programme for a period of two years, valid up to Sept. 15, 2020 by National Accreditation Board for Hospitals and Healthcare Providers.

Also read: ICICI Bank: Top Law Firm Cyril Amarchand Mangaldas Withdraws Report That Cleared Kochhar

Nifty Earnings To Watch

  • Bajaj Auto
  • Bharti Infratel
  • Kotak Mahindra Bank
  • Wipro

Other Earnings To Watch

  • Bharat Financial Inclusion
  • Everest Industries
  • Hexaware Technologies
  • IDFC Bank
  • Jubilant Foodworks
  • Jyothy Laboratories
  • Interglobe Aviation
  • KPIT Technologies
  • L&T Finance Holdings
  • Larsen & Toubro Infotech
  • Mahindra & Mahindra Financial Services
  • Radico Khaitan
  • Security And Intelligence Services (India)
  • SKF India
  • Sterlite Technologies
  • Sundaram-Clayton
  • Syngene International
  • Tamil Nadu Newsprint & Papers
  • TTK Prestige
  • International Paper APPM

Earnings Reactions To Watch

HCL Tech (Q2, QoQ)

  • Dollar revenue up 2.1 percent at $2,099 million.
  • Profit up 5.7 percent at Rs 2,540 crore.
  • EBIT up 8.7 percent at Rs 2,966 crore.
  • EBIT margin at 19.8 percent versus 19.7 percent.

Also read: Q2 Results: HCL Tech’s Earnings Meet Estimates

Adani Ports and SEZ (Q2, YoY)

  • Revenue down 4 percent to Rs 2,608 crore.
  • Net profit down 39 percent to Rs 606 crore.
  • Ebitda down 9 percent to Rs 1,703 crore.
  • Ebitda margin at 65.3 percent versus 68.8 percent.

Also read: Q2 Results: Falling Rupee Hits Adani Ports’ Profit, Misses Estimates

Rallis India (Q2, YoY)

  • Revenue up 11.8 percent at Rs 613.2 crore.
  • Net profit up 6.1 percent at Rs 87 crore.
  • Ebitda up 1.8 percent at Rs 129.2 crore.
  • Margin at 21.1 percent versus 23.1 percent.

Bajaj Corp (Q2, YoY)

  • Revenue up 4.2 percent at Rs 212.7 crore.
  • Net profit up 1.8 percent at Rs 51.6 crore.
  • Ebitda up 3.6 percent at Rs 60.6 crore.
  • Margin at 28.5 percent versus 28.6 percent.

Aksh OptiFibre (Q2, YoY)

  • Total income up 22 percent to Rs 178 crore.
  • Profit at Rs 17 crore versus Rs 5 crore.
  • Ebitda up 147 percent to Rs 40 crore.
  • Margin at 23 percent versus 11 percent.

HDFC Standard Life ( Q2, YoY)

  • Net premium income up 26 percent to Rs 6,778 crore.
  • Net profit up 20 percent to Rs 287 crore.
  • 13th month persistency ratio down 84.8 percent versus 86.2 percent.
  • 61st month persistency ratio up 52.4 percent versus 50.5 percent.

Sasken Technologies (Q2, QoQ)

  • Revenue down 16 percent to Rs 113 crore.
  • Net profit down 40 percent to Rs 16.9 crore.
  • EBIT down 39 percent to Rs 12 crore.
  • EBIT Margins at 10.4 percent versus 14.3 percent.

Bajaj Finserv (Q2, YoY)

  • Revenue up 17 percent to Rs 9,698 crore.
  • Revenue from insurance business up 9.2 percent to Rs 4633 crore.
  • Net profit up 1 percent to Rs 704 crore versus Rs 698 crore.

Also read: Q2 Results: Bajaj Finserv’s Profit Growth Slows As IL&FS Crisis Hurts

ICICI Prudential Life Insurance (Q2, YoY)

  • Net premium income up 16 percent to Rs 7601 crore.
  • Net profit down 29 percent to Rs 301 crore.
  • 13th month persistency ratio down 82.7 percent versus 83.5 percent.
  • 61st month persistency ratio up 58.7 percent versus 54.4 percent.

Zensar Technologies (Q2, QoQ)

  • Revenue up 7 percent to Rs 969 crore.
  • Net profit up 14 percent to Rs 93 crore,
  • EBIT up 2.4 percent to Rs 100.5 crore.
  • EBIT Margins at 10.4 percent versus 10.8 percent.

Tata Metaliks (Q2, YoY)

  • Revenue up 21.5 percent to Rs 547 crore.
  • Net profit up 42 percent to Rs 47.5 crore.
  • Ebitda up 28 percent to Rs 85.7 crore.
  • Margin at 15.7 percent.

Ambuja Cements (Q3, YoY)

  • Revenue up 12.6 percent at Rs 2,613.9 crore.
  • Net profit down 34.4 percent at Rs 178.6 crore.
  • Ebitda up 1.1 percent at Rs 358.1 crore.
  • Margin at 13.7 percent versus 15.3 percent.

Bulk Deals

  • Den Networks: MSD India Fund sells 16 lakh shares at Rs 66.29 apiece.

Trading Tweaks

  • Bhansali Engineering Polymers circuit changed to 10 percent.
  • Goa Carbon, Edelweiss Financial circuit changed to 5 percent.

Insider Trades

  • Centrum promters bought 66,000 shares from open market on Oct. 17.
  • Kwality promoter sold 12.5 lakh shares on Oct. 17.

(As reported on Oct. 23)

Money Market Update

  • Rupee closed at 73.57/$ on Tuesday versus 73.56/$ on Monday.

Also read: How Much Has The Rupee Really Depreciated?

F&O Cues

  • Nifty October futures closed trading at 10,148,  premium of 1 point.
  • Nifty October open interest down 24 percent; Nifty Bank Oct OI down 4 percent.
  • Max open interest for October series at 10500, strike value call option (Open interest at 37.1 lakh shares).
  • Max open interest for October series at 10,000, strike value put option (Open interest at 36.7 lakh shares).

Stocks In F&O Ban

  • Adani Enterprises
  • Adani Power

Put-Call Ratio

  • Nifty PCR at 1.04 from 1.10.
  • Nifty Bank PCR at 0.79 from 0.78.
All You Need To Know Going Into Trade On Oct. 24 

Brokerage Radar

On Bajaj Finance

Morgan Stanley

  • Maintained ‘Equalweight’ with a price target of Rs 2,300.
  • September quarter’s net profit ahead of estimates led by lower provisions.
  • NII and AUM growth in-line with estimates.

JPMorgan

  • Maintained ‘Overweight’ with a price target of Rs 2,800.
  • September quarter review: Another earnings beat driven by opex performance.
  • Asset quality saw a marginal blip sequentially largely driven by the rural and LAP book.
  • Loan growth momentum intact; Funding profile solid with growing deposit base.

Credit Suisse

  • Maintained ‘Underperform’ with a price target of Rs 1,500.
  • Experience on festive sales has been encouraging so far and Management expects similar growth.
  • Management confident on liquidity situation and has been able to raise funds from banks and debt markets.
  • Asset quality largely stable, except for some caution on two wheeler loans.

On ICICI Prudential

CLSA

  • Maintained ‘Buy’; cut price target to Rs 490 from Rs 560.
  • VNB growth led by margin expansion; Marketing spend lowers profit.
  • Fall in persistency disappointing; Improvement will be key.
  • Cut VNB estimates as weaker capital markets can affect the sales of ULIPS.

Macquarie

  • Maintained ‘Outperform’ with a price target of Rs 462.
  • September quarter’s net profit was in line; Dragged down by lower investment income and higher opex.
  • Rising interest rates drag embedded value growth down.
  • Recent volatility in equity markets an important monitorable given heavy reliance on ULIPs.

On HCL Tech

CLSA

  • Maintained ‘Buy’ with a price target of Rs 1500.
  • Revenues in-line; Organic growth momentum recovering in the second half.
  • Margin gains are being traded for growth.
  • Buy on returning organic growth, IP value and undemanding valuation.

Credit Suisse

  • Maintained ‘Outperform’ with a price target of Rs 1,275.
  • No surprises in September quarter; Growth guidance maintained as expected.
  • Expect potential double-digit growth with steady margins.
  • Valuations remain extremely attractive.

On Ambuja Cements

CLSA

  • Maintained ‘Buy’; cut price target to Rs 255 from Rs 300.
  • Weak September quarter results; Lowest unit Ebitda in over a decade.
  • Slight miss in realisation along with higher costs led to margin pressure.
  • Sector fortunes solely rest on ability to raise prices and the near-term outlook is uncertain.

Macquarie

  • Maintained ‘Neutral’ with a price target of Rs 230.
  • Strong volume fails to offset cost pressure.
  • Weak rupee, strong crude oil and stubborn coal prices keeping cost pressures elevated.
  • No capacity expansion to constrain volume growth.

On Adani Ports

CLSA

  • Maintained ‘Buy’; cut price target to Rs 475 from Rs 490.
  • Solid core led by coal and crude.
  • Dollar debt impacted net profit by 40 percent on MTM of rupee depreciation.
  • Adani Ports to deliver 16 percent growth in port Ebitda over FY18-21.

Credit Suisse

  • Maintained ‘Outperform’ with a price target of Rs 480.
  • September quarter was in-line led by volume growth.
  • See several positives - contained capex, strong free cash flows, cargo diversification, etc.
  • Positive outlook on container growth and capacity expansion; Valuations attractive.

Macquarie

  • Upgraded to ‘Outperform’ from ‘Neutral’; cut price target to Rs 358 from Rs 385.
  • Adjusted earnings better than consensus on a volume surprise.
  • Expect growth to normalize in the second half as the base catches up.
  • Upgrade on valuation; Concerns on financial health of group companies remain.

On TVS Motor

Credit Suisse

  • Maintained ‘Underperform’; cut price target to Rs 420 from Rs 470.
  • September quarter was ahead largely on operating leverage on staff costs.
  • Gross margin expanded on better export realisation.
  • Company remains hopeful of 10% growth for industry in the second half.

Macquarie

  • Maintained ‘Underperform’ with a price target of Rs 450.
  • Good September quarter performance, but already priced in.
  • Market share improvement led by new model launches.
  • Continue to believe there is downside risk to expectations of operating margin improvement.

More Brokerage Calls

CLSA on HDFC Life

  • Maintained ‘Buy’; cut price target to Rs 510 from Rs 600.
  • VNB growth led by premium and margin expansion.
  • See scope to improve persistency, but potential slowdown in NBFCs could be a drag.
  • Smooth transition under new CEO will be key, especially given its premium valuation.

Macquarie on Indiabulls Housing Finance

  • Maintained ‘Outperform’ with a price target of Rs 1,400.
  • Promoter over-collateralised his borrowings to maintain sufficient margin money.
  • Growth/margins may come under pressure in near term due to liquidity concerns.
  • See no risk of insolvency or widespread defaults by borrowers.

Morgan Stanley on RBL Bank

  • Maintained ‘Underweight’ with a price target of Rs 450.
  • September quarter’s net profit above estimates helped by good pre-provisioning operating profit growth.
  • Loan growth strong and coverage ratio broadly stable.