All You Need To Know Going Into Trade On Oct. 31
A spoonful of white sugar is added to cup of chai tea in Mumbai, India. (Photographer: Shirish Shete/Bloomberg News)

All You Need To Know Going Into Trade On Oct. 31

Stocks in Asia were mixed after the Federal Reserve indicated that it’s unlikely to move in either direction any time soon following its latest interest-rate cut, while corporate results continued to roll in.

Japanese shares opened flat, while equities in Sydney slipped. Seoul saw gains. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.3 percent to 11,882 as of 7 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.

  • The S&P 500 turned higher to end at record high when Chairman Jerome Powell said rate hikes won’t occur as long as inflation remains persistently cool.
  • Oil fell for a third day as a U.S. government report showed a bigger-than-expected build in domestic crude supplies and Chile canceled a summit where the U.S. and China were expected to sign a preliminary trade accord.

Get your daily fix of global markets update here

Economic Data To Watch

  • India fiscal deficit data for April-September
  • 5 p.m.: India eight infrastructure industries index for September, prior -0.5 percent.

Earning Reactions To Watch

Container Corporation of India (Q2, YoY)

  • Revenue fell 4.6 percent to Rs 1,738.7 crore.
  • Net loss stood at Rs 322 crore versus net profit of Rs 336.1 crore.
  • Ebitda fell 15.6 percent to Rs 425.5 crore.
  • Margin stood at 24.5 percent versus 27.7 percent.
  • Other operating expenses rose 9 percent to Rs 225.1 crore.

CreditAccess Grameen (Q2, YoY)

  • Net interest income rose 23.3 percent to Rs 259.4 crore.
  • Net profit rose 37.3 percent to Rs 100.9 crore.
  • GNPA at 0.52 percent versus 0.55 percent quarter-on-quarter.
  • NIM at 12.1 percent versus 12.6 percent QoQ.
  • Gross loan portfolio rose 36.4 percent at Rs 7,905 crore.

Tata Global Beverages (Q2, YoY)

  • Revenue rose 4.2 percent to Rs 1834.1 crore.
  • Net profit fell 18.9 percent to Rs 137.7 crore.
  • Ebitda rose 41 percent to Rs 234.7 crore.
  • Margin stood at 12.8 percent versus 9.5 percent.

JK Tyre & Industries (Q2, YoY)

  • Revenue fell 13.6 percent to Rs 2,155 crore.
  • Net profit rose 3.3 times to Rs 170.1 crore.
  • Ebitda rose 12.8 percent to Rs 296.4 crore.
  • Margin stood at 13.8 percent versus 10.5 percent.

Quess Corp (Q2, YoY)

  • Revenue rose 26.7 percent to Rs 2,650.3 crore.
  • Net profit fell 2 percent to Rs 60.6 crore.
  • Ebitda rose 44.1 percent to Rs 161.4 crore.
  • Margin stood at 6.1 percent versus 5.4 percent.

Nifty Earnings To Watch

  • Indian Oil Corporation

Other Earnings To Watch

  • Manappuram Finance
  • Spandana Sphoorty Financial
  • BF Utilities
  • Blue Dart Express
  • Dhanlaxmi Bank
  • Foseco India
  • Garden Reach Shipbuilders & Engineers
  • IFB Agro Industries
  • JBM Auto
  • Jindal Saw
  • Laurus Labs
  • LG Balakrishnan & Bros
  • Ramco Industries
  • Srikalahasthi Pipes
  • Syndicate Bank
  • Thirumalai Chemicals
  • Tube Investments of India
  • Vaibhav Global

Indian ADRs

All You Need To Know Going Into Trade On Oct. 31

Stocks To Watch

  • Reliance Industries: Reliance Jio has objected to telcos seeking relief from DoT after the AGR judgement.
  • Fitch Ratings has placed Bharti Airtel’s ‘BBB-’ Long Term Foreign Currency Issuer Default Rating  on rating watch negative due to the Supreme Court ruling of Oct. 24.
  • International Paper completed the sale of its controlling interest (21.87 million shares) in India-based International Paper APPM to West Coast Paper Mills for about $85 million and intends to pursue suitable alternatives to divest its remaining 20 percent stake in APPM. (BN)
  • HDFC said that it has been allotted 15.93 crore shares or 9.9 percent stake in Bandhan Bank post the merger of Gruh Finance and Bandhan Bank.
  • CreditAccess Grameen: MN Gopinath resigned from the post of Chairman and Independent Director citing his disengagement from all corporate activities upon crossing the age of 70 years. Paolo Brichetti has been appointed at Non-Executive Chairman. Board authorized to raise up to Rs 1,000 crore via NCDs.
  • Intellect Design Arena has signed a multi-million deal with UK’s Commonwealth Trade Bank for digital solutions.
  • UFO Moviez: The National Company Law Appellate Tribunal has allowed company’s appeal and set aside National Company Law Tribunal order against the amalgamation between the company and PJSA, Qube Cinema Technologies, Qube Digital Cinema and Moviebuff.
  • Quess Corp to subscribe debentures in its arm Trimax Smart Infra for an amount not exceeding Rs 129 crore and Board approved investment of Rs 12 crore in its arm Qdigi Services and to acquire 18.7 percent stake in its subsidiary Vedang Cellular Services for Rs 10 crore. Besides, Krishna Suraj Moraje has been appointed as executive director and Group Chief Executive Officer designate with effect from Nov. 4. Also, the company has expected that it will receive Rs 81 crore from Trimax Resolution in Fiscal year 2020 and the demerger of Thomas Cook is expected to be completed by December.
  • ICICI Lombard General Insurance to acquire proprietary software from Unbox Technologies , along with ancillary movable assets for housing the software and employees for operation, maintenance and development of the software, for an aggregate cash consideration of Rs 225 crore. Transaction is expected to be completed in the Q3 FY20. Company has also entered in to a Bancassurance tie-up with Karur Vyasa Bank.
  • Jindal Worldwide said that a fire accident occurred in its factory premises in Ahmedabad and the company had a major loss of its stock. Loss of the stock is adequately insured and the total insurance cover of the stock of the company amounts to Rs 188 crore. Reason of the fire accident and the actual loss is under investigation.
  • TVS Motor to partner with South America’s Cadisa Group which will facilitate the opening of 15 flagship outlets of the company in Guatemala and El Salvador.
  • Balaji Amines has started manufacturing of fungible products and commenced commercial production at company’s subsidiary plant and is expected environmental clearance for 90-acre Greenfield project in the month of November.
  • Vodafone Idea’s long-term bank facilities and debenture have been cut to A- from A by Care Ratings on account of Supreme Court Ruling. Outlook has also been revised from Negative to Credit Watch with Negative Implications.
  • Aviation Stocks: IndiGo has planned 572 international flight per week, while SpiceJet has planned 229 international flights for the winter schedule, respectively. (Directorate General of Civil Aviation Release-BN)
  • Future Retail said that promoters have 47 percent stake in the company, out of which 73.95 percent of the promoter shareholding is encumbered.
  • Sonata Software: P Srikar Reddy has been re-appointed as Managing Director and CEO for three years till February 2023.

Brokerage Radar

On SBI

Edelweiss

  • Maintained ‘Buy’ with a price target of Rs 390.
  • Core profitability key focus; right approach will ensure sustainability.
  • Subsidiaries to harness group synergies to drive growth.
  • Given the substantial risk aversion, we believe the stock is well placed to do well.

UBS

  • Maintained ‘Buy’ with a price target of Rs 375.
  • SBI expects RoA to improve to 1 percent in FY21.
  • Expects loan growth primarily driven by retail and higher rated corporate loans.
  • Digitalisation to improve the operating metrics going ahead.

HSBC

  • Maintained ‘Buy’ with a price target of Rs 400.
  • Bank showcases its revamped credit underwriting, retail/digital franchise and subsidiaries scale-up.
  • Plans to lift RoA in FY21, led mainly by credit cost but also improving operating profit.

On Container Corp

JPMorgan

  • Maintained ‘Overweight’ with a price target of Rs 600.
  • Stable margin performance despite weak volumes.
  • Realisations growth offsets volume decline; not a substantial sequential recovery yet.
  • Export incentives write-off translates into headline net loss.

Nomura

  • Maintained ‘Buy’ with a price target of Rs 670.
  • Q2FY20 results are broadly in-line to marginally ahead of estimates.
  • Realisations continue to remain strong from the first quarter.
  • Due to weak EXIM volumes in H1, await mgmt.’s view on revision in guidance and market share changes.

More Calls

CLSA on Ramco Cements

  • Maintained ‘Buy’; hiked price target to Rs 1,050 from Rs 970.
  • Strong results; 10% volume growth is a big positive surprise.
  • Growth drivers in place; balance sheet fairly strong.
  • Remains top pick in cement space.

CLSA on Bharti Airtel

  • Maintained ‘Buy’ with a price target of Rs 415.
  • Second quarter’s revenue was surprise in India mobile and Africa operations.
  • Enterprise and DTH businesses ramping up.
  • Potential reliefs of IUC extension and cut in annual licence fees by 3 percent to boost Ebitda by 6 percent.

Morgan Stanley on Tata Global Beverages

  • Maintained ‘Underweight’ with a price target of Rs 165.
  • Strong top line but weak operational performance in domestic tea business.
  • Plantation and instant coffee business report strong top-line performance.
  • International coffee and tea business report weak revenues, but improving profitability.

Jefferies on Graphite India

  • Maintained ‘Buy’ with a price target of Rs 400.
  • September quarter was a weak quarter.
  • Despite poor operational performance, balance sheet remains strong.
  • Hopeful of revival in domestic demand, driven by increased spending.

Nomura on BHEL

  • Downgraded to ‘Reduce’ from ‘Neutral’; cut price target to Rs 54 from Rs 56.
  • Latent liabilities make strategic sale tough; street optimism ahead of fundamentals.
  • Expect weak thermal ordering until FY22 and anticipate challenges in proposed asset sale.
  • BHEL unlikely to be a good fit for strategic buyer; benefits of land monetization look exaggerated.
  • Cutting FY20 EPS by 27 percent on a weak near-term outlook.

Trading Tweaks

  • Paramount Communications, Astron Paper & Board Mill, Sintex Plastics Technology to move into short term ASM Framework.
  • Hotel Leela Venture to move out of short term ASM Framework.
  • Vishwaraj Sugar Industries, Gujarat Fluorochemicals price band revised to 20 percent.
  • Astron Paper & Board Mill price band revised to 10 percent.
  • ITD Cementation, New India Assurance, Kirloskar Electric, Mangalam Drugs & Organics price band revised to 5 percent.

Who’s Meeting Whom

  • Shriram City Union Finance to meet Haitong Securities on Nov. 1.
  • Tata Elxsi to meet First Pacific Advisors on Nov. 11.
  • Hindalco to meet Capital Research Global Investors and Amundi AMC on Nov. 1.

Money Market Update

  • The rupee closed at 70.90/$ versus 70.84/$ on Tuesday.

F&O Cues

Futures

  • Nifty Oct futures closed at 11840.2, discount of 3.8 points versus premium of 8.6 points.
  • Nifty futures across series OI down 3.3 percent, sheds 5.5 lakh shares in OI.
  • Nifty Bank Oct futures closed at 29,986.4, discount of 1 point versus premium of 27 points.
  • Nifty Bank futures across series OI up 3.7 percent, adds 49,900 shares in OI.
  • Rollover: Nifty 53 percent, Nifty Bank 45 percent

Options

  • Nifty PCR unchanged at 1.48 (across all series)

Nifty Monthly Expiry: Oct 31

  • Max OI on call side at 12,000 (32.7 lakh shares)
  • Max OI on put side at 11,800 (29 lakh shares)
  • OI addition seen at 11,800P (+14 lakh shares), 11,850P (+8 lakh shares), 11.850C (7.3 lakh shares)
All You Need To Know Going Into Trade On Oct. 31
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