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All You Need To Know Going Into Trade On October 14
Stocks in the news, big brokerage calls of the day, complete trade setup and much more!
14 Oct 2020, 07:44 AM IST 
A shop window reflects pedestrians wearing protective face masks on New Bond Street in central London, U.K. (Photographer: Simon Dawson/Bloomberg)
Asian markets have opened lower in mid-week trade, following their peers on Wall Street lower, as earnings season begins and there is no sign of an end to the fiscal stimulus stalemate.
Benchmark indices in Japan and South Korea declined and were little changed in Australia.
The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, fell 0.5% to 11,881 as of 7:20 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.
Let's take a look at the factors that may influence equities in today's session:
- Futures on the Dow Jones are currently trading little changed. The index ended 0.6% lower on Tuesday.
- Trading resumes in Hong Kong after markets were shut on Tuesday due to a tropical storm.
- Traders will await a speech from Xi Jinping where he is expected to lay out a vision for China's growth.
- House Speaker Nancy Pelosi demanded that the Trump administration revamp its latest offer, further extending the stimulus stalemate.
- Covid-19 cases continue to rise in Europe with the Dutch Prime Minister ordering a partial lockdown and France reporting a surge in patients needing intensive care.
- Yield on the 10-year treasuries stood at 0.73%.
- West Texas Intermediate crude was flat at $40.23 per barrel.
Get your daily fix of the global markets here.
Earnings Fineprint: Wipro Q2FY21
- U.S. Dollar revenue up 3.7% to $1,992.4 million
- Revenue up 1.2% to Rs 15,096.7 crore
- Net profit up 3.1% to Rs 2,465.7 crore
- Ebit up 8% to Rs 2,780 crore
- Ebit margin at 18.4% from 17.2%
- I.T. services revenue guidance for Q3 between 1.5-3.5%
- The company sees I.T. Services revenue in Q3 between $2,022-$2,062 million
- Constant currency growth at 2%
- Announces share buyback worth Rs 9,500 crore
- To buyback 23.75 crore shares or 4.1% of total equity at Rs 400 per share
- Buyback price is a 6.45% premium to Tuesday's closing price
- Members of the promoter group have indicated their intention to participate in the proposed buyback
Opinion
Wipro Q2 Results: Profit Rises 3.15%, Margin Continues To Recover
Stocks To Watch
- Wipro: Enters into definitive agreement to acquire engineering services company Eximius Design. It has expertise in semiconductor, software and systems design. Wipro will acquire the company and its Indian arm for $80 million. The acquisition is subject to customary closing conditions and regulatory approvals. The acquisition is likely to be completed in the December quarter.
- Bharti Airtel: Group entities have moved the Supreme Court, challenging the NCLAT order, directing them to pay more than Rs 100 crore to Aircel. NCLAT had directed Bharti Airtel & Bharti Hexacom to pay Rs 112 crore to Aircel. The Supreme Court has asked Aircel's resolution professional to reply within four weeks.
- NTPC: To raise Rs 4,000 crore via issue of NCDs.
- Tube Investments: Gets approval from Competition Commission of India to acquire shares of CG Power.
- Adani Green Energy: Gets approval from Competition Commission of India to acquire solar energy generation assets through its JV with Total Solar, Singapore.
- Future Enterprises: Defaulted on payment of interest on NCDs worth Rs 15.14 crore which was due on October 12.
- Jindal Polyfilms: The company has clarified that the proposed BOPP Film Line in Nasik will be worth 44,000 MTPA and will be added by March 2022. Similarly, the BOPP Capacitor Line at the Nasik plant will be worth 5,800 MTPA and will be added by January 2022. The funding for the same is to be done through a mix of internal accruals and borrowings.
- IRCTC: Bloomberg News reports that the Railways has approved running 196 pairs of trains in the upcoming festive season.
- Punjab and Sind Bank: Three NPA accounts worth 133.46 crore declared as fraud. Bank has made 100% provisioning as per the prudential norms.
- Wockhardt: Board has approved redemption of certain preference shares before its due date.
- Non-Nifty Earnings Today: Aditya Birla Money, CHD Chemicals, Den Networks, Goa Carbon, Tata Elxsi, Tata Steel BSL, Titagarh Wagons
Earnings Reported After Market Hours
Karnataka Bank Q2FY21
- Net Interest Income up 15.3% to Rs 574.9 crore
- Net profit up 12.7% to Rs 119.3 crore
- Total Covid-19 provisions at Rs 97.99 crore
- Gross NPA at 3.97% from 4.64% in the previous quarter
- Net NPA at 2.21% from 3% in the previous quarter
- Total deposits up 4% to Rs 72,922.6 crore
- Total Advances up 1.2% to Rs 54,098 crore
- Numbers other than asset quality are compared year-on-year
Tata Steel Long Products Q2FY21
- Revenue up 52.5% to Rs 1,185.9 crore
- Net profit of Rs 59.1 crore from net loss of Rs 196.9 crore
- Ebitda gain of Rs 183.6 crore from Ebitda loss of Rs 41.8 crore
- Numbers are not comparable as it acquired the steel business of Usha Martin and related iron ore and coal mines in different periods
- Raw Material cost as a % of sales at 55.8% from 70.3%
- Numbers are compared on a year-on-year basis
Brokerage Radar
Citi On Wipro
- Downgrade to neutral from buy
- Price target raised to Rs 400 from Rs 355
- Focus will shift to initiatives and execution under new CEO
- Valuations will limit further upside
- Key Upside Risk: Better than expected acceleration in growth, continued margin improvement
- Key Downside risk: Growth gap Vs peers, pressure on margins, strong rupee
JPMorgan On Wipro
- Underweight rating maintained
- Price target raised to Rs 270 from Rs 250
- Print and guidance surprised positively
- Plans for change in strategic direction more important given rich valuations
- Strong margin execution continues
- Current valuations build in the structural recovery
- Upgrade earnings estimates by 2-8%
IDBI Capital On IRCTC
- Initiate coverage with buy rating
- Price target of Rs 1,800
- One-of-its-kind company
- Strong entry barriers in its top two segments - internet ticketing and catering services
- Covid-19 to impact FY21 performance; expect strong pick-up in FY22/23E
- Forecast revenue/Ebit/EPS CAGR of 9.2%/14.4%/15.9% respectively over FY20-23E
- Net-cash balance sheet and RoE over 40%+ is impressive
- Private trains, in-direct benefit from dedicated freight corridor to aid long-term growth
Motilal Oswal On Tata Consumer Products
- Buy rating maintained
- Price target of Rs 558
- Lower supply, higher demand drives Indian tea prices higher
- Gross margins will be impacted in the short-term
- Higher tea prices to drive value growth in FY21
Earnings Expectations: Infosys Q2FY21
- U.S. Dollar revenue seen 2.8% higher at $3,210 million as per a BloombergQuint poll.
- Revenue seen 2% higher at Rs 24,131 crore
- Net profit seen 4.7% higher at Rs 4,474 crore
- Ebit seen flat at Rs 5,369 crore
- Ebit margins seen at 22.2% from 22.7%
- All estimates other than U.S. Dollar revenue are Bloomberg Estimates and compared on a quarter-on-quarter basis
Factors At Play For Infosys:
- May raise revenue guidance to 1-3% and retain margin guidance
- Constant Currency growth seen at 2.5% driven by strong deal wins
- Operational gains, lower costs to aid margins
- Indication of wage hikes, deal pipeline, progress in Vanguard deal will be key factors to watch
Pledged Share Details
- Max Financial Services: Promoter Max Ventures Investment Holdings created pledge of 90,000 shares between October 9-10.
(As Reported On October 13)
Bulk Deals
- Gayatri Projects: GMO Fund sold 67.81 lakh shares (3.62%) at Rs 17.3 per share.
Trading Tweaks
- AGM: MEP Infra Developers, SAIL.
- Price Band Revised From 20% To 10%: Cybertech Systems And Software, Saven Tech.
- Move Into ASM Framework: Granules India, Shakti Pumps.
- Move Into Short Term ASM Framework: Izmo, Kwality, Siti Networks.
- Move Out Of Short Term ASM Framework: Electrosteel Castings, MBL Infrastructures, Precision Wires.
Money Market Update
- The rupee ended weaker for the second straight day, ending at 73.36 against the U.S. Dollar as compared to Monday's close of 73.27.
- It was the fourth worst performing currency in Asia on Tuesday.
F&O Cues
- Nifty October futures closed at 11,937; premium of 2 points from 6 points
- Nifty October futures add 1.5% and 1.7 lakh shares in Open Interest
- Nifty Bank October futures closed at 23,500; premium of 8 points from 56 points
- Nifty Bank October futures add 2% and 38,000 shares in Open Interest
- Nifty Put-Call Ratio at 1.5
Nifty Weekly Expiry: October 15
- Maximum Open Interest on Call side at 12,500 strike (37.5 lakh shares)
- Maximum Open Interest on Put side at 11,800 strike (24.8 lakh shares)
- Active Options: 11,900 Put (5.2 lakh shares) and 12,250 Call (8.3lakh shares)
Nifty Monthly Expiry: October 29
- Maximum Open Interest on Call side at 12,500 strike (23.6 lakh shares)
- Maximum Open Interest on Put side at 10,500 strike (34.5 lakh shares)
