All You Need To Know Going Into Trade On Oct. 29

Stocks in Asia are set to advance after U.S. equities climbed to a record as optimism for a trade deal combined with encouraging earnings and bets the Federal Reserve will cut interest rates.

Futures on Japanese and Hong Kong stocks were higher. Australian stocks opened with modest gains. U.S. futures were flat. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.08 percent to 11,675 as of 6:40 a.m.

Short on time? Well, then listen to this podcast for a quick summary of All You Need To Know before the opening bell.

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

• U.S. stocks climbed to a record as rising optimism for a trade deal with China combined with solid earnings and bets the Federal Reserve will cut rates.
• Oil fell for the first time in a week amid renewed signs of swelling crude inventories in the world’s biggest economy.

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Earnings To Watch

• DCM Shriram Industries
• Hindustan Zinc
• Petronet LNG
• SKF India
• Tata Metaliks
• Wonderla Holidays

Indian ADRs

Stocks To Watch

• Bharti Airtel: Deferred September quarter results to Nov. 14. The company seeks more clarity from DoT on the AGR matter arising out of recent judgement of Supreme Court. Besides, the company is approaching DoT to seek clarity on the total amounts involved and request for their support to deal with this adverse outcome.
• GVK signed an agreement with ADIA, PSP Investments and NIIF for investment of Rs 7614 crore in its airports business. Proceeds will be used to pare debt and purchase additional shares in Mumbai International Airports Ltd.
• Mahindra & Mahindra delivered close to 13,500 vehicles on the day of Dhanteras. The number was substantially higher than deliveries last year.
• Shriram EPC disclosed pledge of 18.5 percent of promoter holding in SVL Ltd at periodic intervals in favour of Oriental Bank of Commerce. Shares pledged to secure credit facility availed by Shriram EPC Ltd.
• Aurobindo Pharma: Meeting of unsecured creditors to be held on Nov. 30; to consider and approve amalgamation of some of wholly owned subsidiaries of the company.
• APL Apollo Tubes allotted 5 lakh shares of Rs 10 each, pursuant to conversion of warrants into equity shares. The paid-up share capital stands increased to Rs 24.75 crore.
• Tata Power’s JV acquired gas-based power plant and diesel generating station at Kalinganagar from Tata Steel Ltd. The combined value of this transaction is Rs 920 crore.
• Ujjivan Financial Services clarifies that there has been no ‘red flags’ raised by the RBI in respect of its operations as mentioned in a media article

Brokerage Radar

Macquarie on HPCL

• Maintained ‘Outperform’; hiked price target to Rs 500 from Rs 375.
• See material upside potential if there is stake sale in HPCL.
• Government’s divestment agenda hopefully implies limited interference.
• Hike EPS estimates by 26 percent as we partly relax handicapped corporate margin.

CLSA on Tata Motors

• Upgraded to ‘Buy’ from ‘Sell’; hiked price target to Rs 190 from Rs 120.
• JLR’s volume is showing signs of bottoming-out; margins started to recover.
• Indian business will likely remain weak in FY20-21 on weak truck sales.
• Up FY21-22 earnings by 4-16 percent factoring in a higher margin at JLR.

Citi on NMDC

• Upgraded to ‘Buy’ from ‘Neutral’; hiked price target to Rs 125 from Rs 95.
• Mining industry changes in 2020 to benefit; mining lease expiry positive for NMDC.
• Expiry to be disruptive for ore supply in FY21.
• Hike net profit estimates by 8-30 percent for FY21/22 on resilient prices and slightly better volumes.

CLSA on SBI

• Maintained ‘Buy’; hiked price target to Rs 390 from Rs 380.
• Manageable asset quality in the second quarter, but watch out for the third quarter.
• Healthy CASA growth despite rate cut but loan growth weakens.
• Remains our preferred pick among PSUs.

CLSA on ICICI Bank

• Maintained ‘Buy’; hiked price target to Rs 580 from Rs 530.
• Manageable rise in NPL and higher additions to watch-list.
• Healthy top-line growth being reinvested in retail franchise.
• Key disappointment was larger additions to its watch-list; trends need to be watched.

On Reliance Industries

CLSA

• Maintained ‘Buy’ with a price target of Rs 1,710.
• Repositioning Jio as a digital major ahead of a potential stake sale.
• Indicative optionally convertible preference shares conversion price suggests a value of $65-70 billion - much higher than our value of $45 billion.
• Cleaner structure maybe a precursor to stake monetisation in the digital business.

Morgan Stanley

• Maintained ‘Overweight’ with a price target of Rs 1,469.
• Restructuring of telecom/digital business raises the focus on asset monetisation and debt reduction.
• Consolidated debt remains unchanged; platform apps move onto investor radar.
• Clarity on the corporate structure improves and interest capitalisation concerns lessen.
• If RIL were to own less than 100% in its key business, there is potential for holdco discount to emerge.

HSBC

• Maintained ‘Buy’ with a price target of Rs 1,565.
• New subsidiary positioned as a digital services platform.
• No impact on consolidated financials.
• Such structure could help in early monetisation and unlock value of its digital services.

F&O Cues

Futures

• Nifty October futures closed at 11,625, discount of 2 points versus premium of 25 points
• Nifty October futures up 0.2 percent, adds 23,000 shares in OI
• Nifty Bank October futures closed at 29,497.3, discount of 19 points versus premium of 35.9 points
• Nifty Bank October futures OI down 0.3 percent, sheds 3,200 shares in OI

Options

• Nifty PCR at 1.22 versus 1.21 (across all series)

Nifty Monthly Expiry: Oct. 31

• Max OI on call side at 12,000 (35.9 lakh shares)
• Max OI on put side at 11,000 (28.8 lakh shares)
• OI addition seen at 11,600P (+3 lakh shares), 11,850C (2 lakh shares), 11.650P (1.9 lakh shares)