All You Need To Know Going Into Trade On October 28
Asian markets remain lower in mid-week trade as concerns linger about the impact of the worsening Covid-19 cases in some parts of the world.
Benchmark indices fell in Japan, Australia and South Korea, even as the U.S. Dollar rebounded against major peers.
The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, fell 0.4% to 11,839 as of 7:05 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 lower. The index declined 0.8% on Tuesday.
- China's Yuan is in focus after the country's banks abandoned inclusion of a key factor used to calculate the currency's daily reference rate.
- Sentiment was also muted due to a U.S. consumer confidence report that came in worse than forecast.
- Covid-19 hospitalisation in the U.S. rose at least 10% in the past week, in 32 states, including the country's capital, data showed.
- Yield on the 10-year treasuries stood at 0.76%
- West Texas Intermediate crude fell 1.8% to $38.85 per barrel. Oil had risen on Tuesday after U.S. producers shut production ahead of tropical storm Zeta.
- Bitcoin rose past $13,500, approaching levels not seen since just after the collapse of prices almost three years ago.
Get your daily fix of the global markets here.
Earnings FIneprint: Bharti Airtel Q2FY21
- Revenue up 7.7% to Rs 25,785 crore
- Net loss narrows to Rs 763 crore from Rs 15,933 crore
- Sixth straight quarterly loss
- Ebitda up 11.3% to Rs 11,848 crore
- Ebitda margin at 46% from 44.4%
- ARPU improves to Rs 162 from Rs 157
- India business revenue up 7.4% to Rs 13,832 crore
- Africa business revenue up 11% to Rs 7,166 crore
- Digital TV Services revenue flat at Rs 755 crore
- Tower services revenue up 7.5% to Rs 1,766 crore
- All numbers are consolidated and compared on a quarter-on-quarter basis
Earnings Fineprint: Tata Motors Q2FY21
- Revenue down 18% to Rs 53,530 crore
- Net loss widens to Rs 314 crore from Rs 217 crore
- Ebitda down 21% to Rs 5,691 crore
- Ebitda margin at 10.6% from 10.9%
- JLR retail sales down 11.9% to 1,13,569 units; up 53.3% quarter-on-quarter
- JLR positive free cash flow of 463 million pounds
- JLR business received Ebit margin of 0.3%
- Continue to expect positive free cash flow over the second half
- PV business achieved Ebitda breakeven
- CV margins though improved sequentially but continue to be impacted by lower volumes and adverse mix year-on-year
- Look forward to gradual pick-up in demand and supply situation
- Worst may be over for the Commercial Vehicles Business
- Do not see any green shoots for the buses business until schools reopen
Stocks To Watch
- Hero MotoCorp: Announces agreements with Harley-Davidson for the Indian market. The company will sell and service Harley motorcycles and sell parts & accessories through network of Harley dealers and its existing dealership network. It will also develop and sell a range of premium motorcycles under the Harley-Davidson brand name.
- ICICI Bank: The United States Securities and Exchange Commission (SEC) has concluded its investigation into the bank’s loan impairment provisions under US GAAP and that the SEC does not intend to take any enforcement action against the lender.
- JSW Steel: Has completed the acquisition of Asian Colour Coated Ispat through its wholly-owned subsidiary JSW Steel Coated Products. JSWCPL has infused Rs 1,550 crore into its wholly-owned subsidiary Hasaud Steel through a mix of debt and equity as per the resolution plan. Hasaud Steel has paid Rs 1,477 crore to certain financial creditors of Asian Colour Coated Ispat and has infused Rs 73 crore into Asian Colour Coated Ispat for onward payments to operational creditors and employees.
- Tata Motors: Jaguar Land Rover sets aside 90 million pounds for potential European Union fines related to its fleet exceeding carbon dioxide limits. Also, Ralf Speth has resigned as the non-executive director of the company. The new JLR CEO Thierry Bollore and Kosaraju Veerayya Chowdary have been appointed as non-executive directors.
- Asian Paints: Compliance Officer has approved promoter Sattva Holding and Trading's plan to adhere to RBI guidelines. The promoter will sell 5.64 crore shares or 5.88% stake in the company between May 1, 2021 and April 30, 2022 worth Rs 500 crore. The sale will be made in tranches. The proceeds from the sale will be used for reducing debt and quantum of pledged shares.
- Bharti Airtel: To exit the Ghana market. The government of Ghana will acquire 100% stake in Airtel Ghana. To take an impairment hit of Rs 184 crore.
- Adani Gas: To consider raising up to $400 million through foreign currency bonds on November 3.
- NACL Industries: The company's arm has acquired Gujarat Industrial Development Corporation's industrial land, which will be used to set up a green-field project to manufacture agro chemicals, active ingredients and formulations.
- Delta Corporation: Sikkim casino operations to resume from November 1.
- Cochin Shipyard: Signs MoU with Italy's Fincantieri for co-operation in areas of design, ship building, ship repair, marine equipment manufacturing along with training and skill development.
- Nifty Earnings Today: Axis Bank, Dr Reddy's Laboratories, Hero MotoCorp, Larsen & Toubro, Titan
- Non-Nifty Earnings Today: APL Apollo Tubes, Aavas Financiers, Blue Star, Carborundum Universal, AU Small Finance Bank, Cummins India, GSK Pharma, Firstsource Solutions, ICICI Securities, Marico, MCX, Navin Fluorine, PI Industries, PNB Housing, Radico Khaitan, RBL Bank, Route Mobile, Tata Coffee, UTI AMC, V-Guard Industries, Welspun Enterprises
Earnings Reported After Market Hours
Nippon Life India AMC Q2FY21
- Revenue down 13.8% to Rs 258.7 crore
- Net profit up 6.2% to Rs 145.3 crore
- Lower other expenses and employee costs aid profit growth
- All numbers are consolidated and compared on a year-on-year basis
ICICI Prudential Life Insurance Q2FY21
- Gross Premium up 6.6% to Rs 8,733.5 crore
- Net profit flat at Rs 303.2 crore
- 13th month persistency at 83.7% from 80.7%
- APE down 32.1% to Rs 2,288 crore for H1FY21
- VNB margins at 26.3% from 21% for H1FY21
- Margins improve on account of better protection mix and growth in non-linked savings
Castrol India Q3CY20
- Revenue up 4% to Rs 883.1 crore
- Net profit up 9% to Rs 204.6 crore
- Ebitda up 18% to Rs 288.2 crore
- Ebitda margin at 32.6% from 28.8%
- Declares interim dividend of Rs 2.5 per share
- Record date for interim dividend set as November 6
- All numbers are standalone and compared on a year-on-year basis
JPMorgan On Metropolis Healthcare
- Initiate coverage with overweight rating
- Price target of Rs 2,450
- Has the footprint to capture market share to grow ahead of industry
- Diversified revenue base, retail focus growth and a profitable B2B strategy should facilitate investment in the long-term growth opportunity
- See the stock as a steady growth story despite run-up from April lows
- See 19% revenue CAGR over FY21-23E
- Project 20% EPS CAGR over FY21-23E
- Better positioned to capture growing opportunity in diagnostic space
- Discount versus peers is unwarranted
Citi On Wipro
- Neutral rating maintained
- Price target of Rs 375
- Opening a 90-day positive catalyst watch
- Expect stock price to move closer to buyback price once record date is announced
- Small shareholder acceptance ratio drives short-term upside
- Stock has re-rated sharply from lows and hence upside is limited given valuations
- Key Upside Risk: Better than expected acceleration in growth, continued margin improvement
- Key Downside Risk: Growth gap persisting versus peers, margin pressure and sector issues
CLSA On Bharti Airtel
- Buy rating maintained
- Price target of Rs 715
- Continued ARPU growth and jump in 4G additions
- Gained 13.9 million mobile subscribers in a seasonally weak quarter
- Commendable ramp-up in non-mobile business
- Comfortable gearing and compelling valuations
BofA Securities On Tata Motors
- Underperform rating maintained
- Price target of Rs 120
- Elevated debt levels continue to remain worrisome
- Strong quarter for JLR but near-term visibility remains low
- Adverse mix in India to weigh on margins
- Remain cautious as CVs continue to remain weak in India, JLR's R&D expenses may rise in H2FY21, impacting free cash flow and uncertainty over sustaining working capital improvement
- Guidance of positive free cash flow by FY22 appears tough
Macquarie On Tata Motors
- Neutral rating maintained
- Price target of Rs 130
- Margin improvement continues
- Concerns remain on JLR's market share, growth and free cash flow
- Positive free cash flow for JLR entirely due to working capital reversal
- Remain neutral due to multiple challenges for JLR
- Key Catalysts: Stronger-than-expected recovery for Indian MHCVs, better-than-expected recovery for global autos and strategic partnerships
Pledged Share Details
- Zuari Agrochemicals: Promoters released pledge of 66.75 lakh shares on October 23.
(As Reported On October 27)
- Sandhar Tech: HSBC sold 12.09 lakh shares (2.01%) at Rs 236 per share.
- Jump Networks: Esaar India acquired 6.05 lakh shares (0.61%) at Rs 45.55 per share.
Who’s Meeting Whom
- Bajaj Consumer Care: To meet Ashmore Investment Advisors and DSP Investments between October 28-29.
- AGM: Accelya Solutions
- Ex-Date Share Buyback: KIOCL
- Price Band Revised From 10% To 5%: Orient Green Power, Jump Networks, NDR Auto Components.
- Move Into ASM Framework: Shiva Cement.
- Move Into Short Term ASM Framework: Nahar Poly Films, Music Broadcast, Anant Raj.
- Move Out Of Short Term ASM Framework: Tata Steel Long Products.
- HFCL: Promoter MN Ventures acquired 10 lakh shares on October 27
(As Reported On October 27)
Money Market Update
- The currency ended with gains on Tuesday, snapping a two-day losing streak. The rupee ended at 73.72 against the U.S. Dollar as compared to Monday's close of 73.85.
- The rupee was the second best performer in Asia on Tuesday.
- Nifty October futures closed at 11,875; discount of 14 points from premium of 12 points
- Nifty October futures shed 13% and 12 lakh shares in Open Interest
- Nifty Bank October futures closed at 24,757; discount of 13 points from premium of 51 points
- Nifty Bank October futures shed 27% and 3.6 lakh shares in Open Interest
- Nifty Put-Call Ratio at 1.16
Nifty Monthly Expiry: October 29
- Maximum Open Interest on Call side at 12,000 strike (44 lakh shares)
- Maximum Open Interest on Put side at 11,500 strike (39 lakh shares)
- Active Options: 11,800 Put (10 lakh shares) and 12,500 Call (-12.3 lakh shares)