All You Need To Know Going Into Trade On October 21
A food delivery courier for Just Eat Takeaway.com NV travels along Brick Lane in London, U.K. (Photographer: Hollie Adams/Bloomberg)

All You Need To Know Going Into Trade On October 21

Asian markets have extended gains in mid-week trading amid optimism over progress on the stimulus talks in the U.S.

Benchmark indices were rising in Japan, Australia and South Korea after house speaker Nancy Pelosi said that she remains hopeful of a deal before the elections.

Treasury yields continued to retreat while oil prices were declining.

The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, rose 0.16% to 11,927 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 trading higher by 100 points currently. The index ended 0.4% higher on Tuesday.
  • Technology shares mostly shook off the U.S. Justice Department's decision to sue Google for allegedly abusig its power.
  • "The odds of a deal being low, tells us much about the battle between hope and the reality of an economy still under severe shock but recovering," Sebastien Galy, a senior macro strategist at Nordea Investment Funds told Bloomberg.
  • ECB President Christine Lagarde said that the pick-up in Covid-19 infections in Europe is a 'clear risk' to the economic outlook of the region. New daily cases hit a record in Germany and the Netherlands.
  • Yield on the 10-year treasuries stood at 0.8%.
  • West Texas Intermediate crude fell 0.9% to $41.32 per barrel while Gold traded 0.2% higher at $1,910.4/Oz.

Get your daily fix of the global markets here.

All You Need To Know Going Into Trade On October 21

Stocks To Watch

  • Hindustan Zinc: Announces interim dividend of Rs 21.3 per share, amounting to Rs 9,000 crore. This implies a dividend yield of 9.48% to Tuesday's closing price. The record date for the same has been set as October 28. Vedanta holds 64.92% stake in the company, basis of which, it will receive Rs 5,842.8 crore as dividend. The company said that it is on track to meet its FY21 guidance. Due to ongoing Covid-19 restrictions, the commissioning of the Fumer plant in Chanderiya is delayed and efforts are ongoing for an early commissioning, according to the company.
  • Cipla: Launches Nitib drug, used in the treatment of a rare lung diseases. It is priced at Rs 69 (100mg) and Rs 85 (150mg), per capsule.
  • Motherson Sumi: To acquire Bombardier’s electrical wiring interconnection business in Mexico. The transaction includes the transfer of assets, employees and inventories, on a debt-free and cash-free basis and is valued at around US $10 million.
  • Indian Oil Corporation: Started 4 hydrogen-CNG plants in Delhi having a capacity of 4 tonnes/day. The company will experiment with this fuel in Delhi’s buses for a period of six months. It has also raised Rs 2,000 crore via NCDs.
  • Shiva Cement: Board approved proposal for setting up of 4,000 TPD clinker unit along with 1 MTPA grinding unit for Rs 1,530 crore. The cost will be funded through mix of long-term debt and equity.
  • Kirloskar Oil Engines: There has been an improvement in the company's overall performance during the quarter, as compared to the previous one. Power generation business recovering, but the pace of recovery is slower, as compared to other business divisions. Other business divisions, including exports, have shown good recovery during the quarter. The company is seeing demand uptick in its various businesses. Liquidity position of the company is robust.
  • Larsen & Toubro Infotech: Board approved merger of wholly-owned arms, Syncordis Software Services and Ruletronics Systems with the company.
  • NHPC: Board approved proposal to initiate the process of merger of company’s wholly-owned arm Lanco Teesta Hydro Power with itself, subject to approval of the government.
  • Mastek: The company's wholly-owned U.K. arm, has sold its entire stake in Majesco's U.S. arm for a total consideration of $32.3 million, in cash. The company stated that the funds will help the U.K. arm drive its growth strategy and reduce borrowings.
  • Prabhat Dairy: The Securities and Exchange Board of India on Tuesday has directed the company to cooperate with the forensic auditor and deposit over Rs 1,292 crore in a nationalised bank within seven days, till the conclusion of the audit.
  • Equitas Small Finance Bank IPO: Overall subscription at 0.39 times. QIB subscription at zero, non-institutional subscription at 0.03 times and retail subscription at 0.68 times.
  • Nifty Earnings Today: UltraTech, Bajaj Finance, Bajaj Finserv
  • Non-Nifty Earnings Today: Syngene, Colgate Palmolive, GMM Pfaudler

Earnings Reported After Market Hours

L&T Infotech Q2FY21

  • U.S. Dollar revenue up 3.6% to Rs $404.5 million
  • Revenue up 1.7% at Rs 2,998.4 crore
  • Net profit up 9.7% at Rs 456.8 crore
  • Ebit up 15.9% at Rs 595.7 crore
  • Ebit margin at 19.9% from 17.4%
  • All numbers largely in-line with Bloomberg consensus estimates
  • Constant currency growth of 2.3%
  • Declares dividend of Rs 15 per share
  • Lower operating expenses, employee costs aid margin expansion
  • Announces large deal with net new TCV in excess of $40 million the analytics space
  • Large deal pipeline remains strong
  • See increased traction in digital, cloud and analytics business
  • All numbers are consolidated and compared on a quarter-on-quarter basis

Hindustan Zinc Q2FY21

  • Revenue up 25% to Rs 5,660 crore
  • Net profit down 7% to Rs 1,940 crore
  • Ebitda up 39% to Rs 2,952 crore
  • Ebitda margin at 52.2% from 46.9%
  • Power and Fuel costs up 5% to Rs 435 crore
  • Mining Royalty up 25% to Rs 673 crore
  • Zinc revenue up 9% to Rs 3,323 crore
  • Lead revenue up 28% to Rs 861 crore
  • Silver Metal revenue up 116% to Rs 1,242 crore
  • Continued to deliver record volumes despite challenges posed by the pandemic
  • All numbers are standalone and compared on a year-on-year basis

Indian Energy Exchange Q2FY21

  • Revenue up 4.9% to Rs 70.8 crore
  • Net profit down 4.3% to Rs 46.7 crore
  • Ebitda up 8.3% to Rs 57.6 crore
  • Ebitda margin at 81.4% from 78.8%
  • Higher taxes impact growth in net profit
  • All numbers are standalone and compared on a year-on-year basis

Brokerage Radar

CLSA On Hindustan Unilever

  • Buy rating maintained
  • Price target raised to Rs 2,600 from Rs 2,525
  • Prioritising volume over margin in the near-term is an apt strategy to expand penetration across categories
  • Should be able to uptrade customers and recoup any margin losses in the medium to long-term
  • Cut FY21-23 earnings estimates by 4-5% to capture near-term headwinds like slowdown in laundry, negative sales mix and increased advertising & promotion expenses
  • Long-term prospects remain bright
  • View HUL as a structural play in India's FMCG industry

UBS On Hindustan Unilever

  • Buy rating maintained
  • Price target of Rs 2,700
  • Q2 trends reflect improvement in core business
  • Best of the GSK portfolio is yet to come
  • Channel dominance should enable it to recover faster than peers
  • Among the most future-ready companies given digital investments made in back-end and front-end and the scale of the business
  • Deserves to trade at a premium valuation

JPMorgan On Hindustan Zinc

  • Overweight rating maintained
  • Price target of Rs 256
  • Remain overweight due to large dividend, earnings beat and strong zinc environment
  • Among the lowest cost zinc producers globally and can deliver strong free cash flows even in a weak Zinc price environment
  • LE Zinc's price environment remains strong and hence there is an upside risk to our estimates based on spot prices
  • Continue to see elevated dividend payouts
  • Trading at a discount to its historical average

BofA Securities On Hindustan Zinc

  • Buy rating maintained
  • Price target cut to Rs 226 from Rs 242
  • Growth visibility is improving
  • Well placed to comfortably achieve MIC of 951 kt in FY21
  • Factor in MIC volume growth of 13% and 7% in FY22 and FY23 respectively
  • Raise FY21-23E Ebitda estimates by 2-13% on higher production volumes
  • Lower target to factor in higher dividend payout resulting in low net cash

Citi On Mindspace Business Parks REIT

  • Initiate coverage with buy rating
  • Price target of Rs 343
  • Portfolio appears well positioned to achieve organic growth through a combination of lease-up of vacant space, contractual rent escalations, re-leasing at market rents and new construction
  • Expect portfolio's NOI/Ebitda grow at 16-17% CAGR over FY20-23E
  • Significant opportunity to grow through acquisitions
  • Current valuations are attractive
  • Scope of decline in cost of capital may open potential for further valuation upside

Pledged Share Details

  • Atul: Promoter Arvind Farms released pledge of 5 lakh shares on October 19.
  • Ajanta Pharma: Promoter Ravi Agrawal Trust released pledge of 3 lakh shares on October 20.

(As Reported On October 20)

Trading Tweaks

  • Ex-Date Rights Issue: Mold-Tek Packaging (Rights issue at 1:50)
  • Price Band Revised From 20% To 10%: Just Dial
  • Move Into Short Term ASM Framework: AGC Networks.
  • Move Out Of Short Term ASM Framework: Mohota Industries, Dynacons Systems & Solutions, Repco Home Finance.

Money Market Update

  • The rupee ended weak on Tuesday, closing at 73.47 against the U.S. Dollar, as compared to Monday's close of 73.37.
  • The currency ended as the third worst performer in Asia on Tuesday.
All You Need To Know Going Into Trade On October 21

F&O Cues

  • Nifty October futures closed at 11,895; discount of 2 points from premium of 24 points
  • Nifty October futures add 3% and 3.5 lakh shares in Open Interest
  • Nifty Bank October futures closed at 24,348; premium of 36 points from 54 points
  • Nifty Bank October futures shed 1% and 15,000 shares in Open Interest
  • Nifty Put-Call Ratio at 1.41

Nifty Weekly Expiry: October 22

  • Maximum Open Interest on Call side at 12,500 strike (33 lakh shares)
  • Maximum Open Interest on Put side at 11,700 strike (26.6 lakh shares)
  • Active Options: 11,900 Put (8.7 lakh shares), 12,800 Call (-8 lakh shares)

Nifty Monthly Expiry: October 29

  • Maximum Open Interest on Call side at 12,500 strike (25 lakh shares)
  • Maximum Open Interest on Put side at 10,500 strike (33.5 lakh shares)
All You Need To Know Going Into Trade On October 21
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