All You Need To Know Going Into Trade On October 20
Traffic moves along a highway during morning rush hour in Delhi, India. (Photographer Kuni Takahashi/Bloomberg)

All You Need To Know Going Into Trade On October 20

Asian stocks slipped after a weak session on Wall Street overnight. Shares dipped in Japan, Australia and South Korea, and fluctuated in Hong Kong.

The 10-year Treasury yield steadied around 0.77% and the dollar held losses versus major peers. The yen declined and the offshore yuan rose to the strongest since July 2018.

The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, fell 0.4% to 11,861 as of 6:55 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 140 points higher after House Speaker Nancy Pelosi said that differences were narrowing in the stimulus talks. The index ended 1.5% lower on Monday.
  • The Australian Dollar declined after comments from the RBA's assistant governor that short-term rates can fall below zero.
  • "The QE for life trade appears like it is not going away anytime soon, but that is not enough of reason to buy stocks now," Edward Moya, a senior market analyst at Oanda told Bloomberg.
  • Yield on the 10-year treasuries stood at 0.77%.
  • West Texas Intermediate crude fell 0.3% to $40.69 per barrel. Oil prices fell after an OPEC+ meeting made no mention of any changes to a plan to further ease output cuts from January.
  • Gold traded flat at $1,902.1/Oz.

Get your daily fix of the global markets here.

All You Need To Know Going Into Trade On October 20

Earnings Fineprint: Britannia Q2FY21

  • Revenue up 12% to Rs 3,419.1 crore
  • Net profit up 23% to Rs 494.9 crore
  • Ebitda up 37% to Rs 675.4 crore
  • Ebitda margin at 19.8% from 16.1%
  • Sustained large part of efficiency gains it saw in the previous quarter such as those in supply chains, wastage reductions and fixed-cost leverage
  • Witnessed moderate inflation in prices of key raw materials
  • Raw Material costs including those of wheat and sugar up 16.2% to Rs 1,812.4 crore
  • Expect prices to remain stable following positive outlook on monsoon and harvest season
  • All numbers are consolidated and compared on a year-on-year basis

Also read: Britannia Q2 Results: Revenue, Profit Rise As Sales Jump Amid Unlocking

Earnings Fineprint: HDFC Life Q2FY21

  • Gross Premium up 35% to Rs 10,183 crore
  • Net profit up 6% to Rs 326 crore
  • VNB Margins at 25% in H1FY21 from 28% in H1FY20
  • 13th month persistency at 91% from 89%
  • Annual Premium Equivalent down 4% in H1FY21 to Rs 3,334 crore
  • Increased traction in retail business backed by marginal uplift in household income and spends aided premium growth
  • Strong growth in individual businesses led to premium growth
  • Annuity product continues to trend up very well
  • Received 418 Covid-19 claims and a sum worth Rs 22 crore at risk
  • Will comfortably beat industry performance going forward and continue to gain market share: Management during concall
  • All numbers are compared on a year-on-year basis

Stocks To Watch

  • Wipro: Awarded five-year application management and services integration and management contract by Fortum. Fortum is one of the leading clean-energy companies in Finland. Wipro will manage Fortum's application portfolio for more than 11,500 users across 18 countries and provide 24/7 support for business-critical applications.
  • Sunteck Realty: Acquires nearly 50 acres land parcel in Vasind. The land has a potential to develop nearly 2.6 million square feet integrated residential township under the 'SunteckWorld' Brand. The company has envisaged a revenue generation potential of Rs 1,250 crore over the next 4-5 years.
  • KIOCL: Announces share buyback worth Rs 155.92 crore. To buyback 1.42 crore shares or 2.28% of the total equity. Buyback price of Rs 110 per share is a 19.3% discount to Monday's closing price. The record date for the buyback is set at October 30. The government holds 99% stake in the company.
  • Textile Stocks: Bloomberg News reports that the government has extended the anti-dumping duty on polyester yarn from China and Thailand until November 30.
  • Zensar Tech: To divest 100% stake in PSI Holding Group to Service Express for $10 million and an additional deferred amount of $5 million based on performance. On the disposal of PSI Holding Group, the company has estimated a loss between $11-13 million. The transaction is likely to be completed by December 18. This will mark the completion of the company’s non-core business, which formed 4% of the overall revenue in Q1FY21.
  • MRPL: Board approves acquisition of 125 crore shares of ONGC Mangalore Petrochemicals from ONGC at Rs 9.76 per share, for a total consideration of Rs 1,217 crore. The company's stake in OMPL will now rise to 100% from 51%.
  • Adani Transmission: Average System Availability at 99.9% from 99.78%. Transmission network length of 14,837 ckt kilometers. Target of 20,000 ckt kilometers by 2022. Low network addition due to Covid-19 disruption. Transformation capacity unchanged at 27,280 MW. Distribution losses for Adani Electricity Mumbai at 2.94% from 8.18%, due to billing basis of actual meter reading.
  • ONGC: Has issued NCDs worth Rs 1,140 crore on a private placement basis.
  • Ramco Systems: Has secured additional orders for its flagship digital solutions (ERP platform) from Jamna Auto.
  • BSE: Has tied up with the Government of Telangana and Global Linker to help MSME’s raise equity funds.
  • Hexaware Technologies: Trading in securities shall be suspended from November 2 due to voluntary delisting, as per SEBI guidelines. Shares will be delsited on November 9.
  • Nifty Earnings Today: Hindustan Unilever
  • Non-Nifty Earnings Today: L&T Infotech, Granules India, Indian Energy Exchange, Hindustan Zinc, Kajaria Ceramics, CCL Products, Mahindra CIE, Oriental Aromatics, CRISIL.

Earnings Reported After Market Hours

L&T Technology Services Q2FY21

  • U.S. Dollar revenue down 9.9% to $178 million
  • Revenue down 6.3% to Rs 1,313.8 crore
  • Net profit down 19.6% to Rs 165.5 crore
  • Ebitda down 17.8% to Rs 232.8 crore
  • Ebitda margin at 17.7% from 20.2%
  • Higher other income contributes to net profit
  • Industrial products, transportation and plant engineering businesses showed strong recovery on a sequential basis
  • Guides for revenue decline of 7-8% in FY21 in U.S. Dollar terms
  • All numbers are consolidated and compared on a year-on-year basis

ACC Q3CY20

  • Revenue flat at Rs 3,537.3 crore
  • Net profit up 21% to Rs 363.1 crore
  • Ebitda up 20.5% to Rs 670.7 crore
  • Ebitda margin at 19% from 15.8%
  • Cement segment revenue up 4% to Rs 3,373 crore
  • Ready Mix concrete revenue down 41% to Rs 196.6 crore
  • Power and Fuel cost down 20% to Rs 630 crore
  • Freight and Forwarding expenses down 10% to Rs 860 crore
  • Cement sales volume up 1% at 6.49 MT
  • Ready Mix concrete volume down 43% to 0.46 MT
  • RMX volumes continue to be under pressure due to slowdown in construction activities in metros
  • Operating cost per ton of cement continues to reduce
  • Share of blended cement up to 91% from 88%
  • All numbers are standalone and compared on a year-on-year basis

Tata Metaliks Q2FY21

  • Revenue up 1.6% to Rs 519.6 crore
  • Net profit up 3.5 times to Rs 82.2 crore
  • Ebitda up 2.7 times to Rs 109.4 crore
  • Ebitda margin at 21.1% from 8%
  • Ebitda margin improves due to lower raw material costs and employee expenses
  • Deferred tax reversal of Rs 13.3 crore contributes to net profit
  • All numbers are standalone and compared on a year-on-year basis

Brokerage Radar

Citi On ACC

  • Buy rating maintained
  • Price target raised to Rs 2,075 from Rs 1,571
  • Expect price hikes post the festive season in November 2020
  • Focus continues to remain on cost and cash flows
  • Gradual pick-up in demand from commercial, industrial segment
  • Incorporate 3% realisations growth for CY20
  • Remains top pick along with UltraTech

CLSA On ACC

  • Buy rating maintained
  • Price target raised to Rs 1,920 from Rs 1,730
  • Cement volumes largely in-line, RMC recovery gradual
  • Better-than-expected realisations drive beat
  • Profitability better owing to lower costs
  • Cost efficiencies showing results
  • Trading at a 25% discount to peers
  • See risk-reward as attractive

CLSA On HDFC Life Insurance

  • Outperform rating maintained
  • Price target of Rs 675
  • Balanced business mix aids recovery in Q2
  • Growth and margins are normalising
  • Strong individual protection growth
  • Factor in 3% APE growth in FY21CL as compared to an earlier decline and a 16-17% CAGR over FY21-23CL
  • Well-balanced, improving product mix and ability to innovate should drive best-in-class VNB margins and RoEV growth in the medium-term
  • Recent valuation decline has improved risk-reward

Macquarie On HDFC Life Insurance

  • Outperform rating maintained
  • Price target raised to Rs 849 from Rs 680
  • Balanced product mix drives growth in Q2FY21
  • Has taken required price hikes in the protection segment
  • Key catalysts: Balanced product mix, VNB growth, margins
  • Is the top pick in the sector

JPMorgan On Britannia

  • Overweight rating maintained
  • Price target of Rs 4,300
  • Revenue growth moderates Vs expectations
  • Margin performance robust
  • Increase in debt, high dividend payout led to lower cash levels
  • Focus on earnings call will be on demand trends and growth outlook, competitive landscape and market share trends, input cost environment and promotional intensity and gross margin outlook

UBS On Britannia

  • Buy rating maintained
  • Price target of Rs 4,500
  • Margin outlook positive for H2FY21
  • Cost cutting should benefit the company going forward
  • Product mix, ad-spends normalise in Q2FY21
  • All inputs in place; focus on diversification
  • Strong sales momentum not exclusive to biscuits but across the entire packaged foods space

BofA Securities On L&T Technology Services

  • Underperform rating maintained
  • Price target raised to Rs 1,650 from Rs 1,570
  • Pipeline increases but decision making on the slower side
  • Pace of recovery appears soft when compared to peers
  • A relatively soft quarter for telecom vertical
  • Margin recovery likely to be gradual as well
  • Expect slow improvement in profitability, in-sync with revenue recovery.
  • Current risk-reward appears unfavourable

Pledged Share Details

  • Adani Green Energy: Promoter SB Adani Family Trust created pledge of 10.23 lakh shares on October 16
  • Zee Learn: Promoters invoked pledge of 58 lakh shares between October 13-16.
  • Ajanta Pharma: Promoter Ravi Aggarwal released pledge of 1.25 lakh shares on October 16.
  • Atul: Promoter Arvind Farms released pledge of 5 lakh shares on October 19.
  • Emami: Promoters released pledge of 8 lakh shares on October 15.
  • GNA Axles: Promoter Jasvinder Singh released pledge of 7 lakh shares on October 13.
  • JSW Steel: Promoters revoked pledge on 57 lakh shares between October 13-14.

(As Reported On October 19)

Trading Tweaks

  • Price Band Revised From 10% To 5%: Subex.
  • Price Band Revised From 20% To 10%: Tata Steel Long Products.
  • Price Band Revised From 5% To 20%: Anant Raj.
  • Move Into Short Term ASM Framework: Tata Steel Long Products.
  • Move Out Of Short Term ASM Framework: Ujaas Energy, Aarti Drugs.

Money Market Update

  • The rupee ended little changed on Monday at 73.37 against the U.S. Dollar as compared to Friday's close of 73.35.
  • The currency was the third worst performer in Asia on Monday.
All You Need To Know Going Into Trade On October 20

F&O Cues

  • Nifty October futures closed at 11,897; premium of 24 points from 7 points
  • Nifty October futures shed 0.4% and 47,000 shares in Open Interest
  • Nifty Bank October futures closed at 24,321; premium of 54 points from 27 points
  • Nifty Bank October futures add 1% and 16,000 shares in Open Interest
  • Nifty Put-Call Ratio at 1.37
  • Enter F&O Ban: Mindtree, Nalco
  • Out Of F&O Ban: Adani Enterprises
  • Stocks In F&O Ban: BHEL, Canara Bank, Escorts, Indiabulls Housing Finance, JSPL, Mindtree, Nalco, Punjab National Bank, PVR, SAIL, Tata Motors, Vodafone Idea

Nifty Monthly Expiry: October 22

  • Maximum Open Interest on Call side at 12,500 strike (32.8 lakh shares)
  • Maximum Open Interest on Put side at 11,800 strike (23.7 lakh shares)
  • Active Options: 11,800 Put (15.2 lakh shares) and 12,200 Call (7.2lakh shares)

Nifty Monthly Expiry: October 29

  • Maximum Open Interest on Call side at 12,500 strike (24.3 lakh shares)
  • Maximum Open Interest on Put side at 10,500 strike (33.4 lakh shares)
All You Need To Know Going Into Trade On October 20
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