All You Need To Know Going Into Trade On October 29
Pedestrians wearing protective masks walk past a store in San Francisco, U.S. (Photographer: David Paul Morris/Bloomberg)

All You Need To Know Going Into Trade On October 29

Asian markets continue to tumble, in-line with its global peers as tougher lockdowns added to worries about the economic hit from the pandemic.

Benchmark indices in Japan and South Korea fell, though the losses were modest compared to their peers on Wall Street.

The U.S. Dollar held an overnight advance while treasuries were little changed. What also declined, were oil prices.

The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, fell 0.6% to 11,660 as of 7:00 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 230 points higher currently. The gauge fell 3.4% on Wednesday. The S&P 500 fell 3.5% - its biggest single-day drpo since June.
  • The yen is steady ahead of a Bank of Japan meeting that is expected to leave key interest rates and asset purchases unchanged.
  • Italy, Spain and U.K. reported record Covid-19 cases on Wednesday while Germany and France are imposing stricter lockdowns.
  • The ECB policy decision is also due later today, with the chances of preemptive monetary stimulus rising after a surge in virus cases.
  • The first reading of the U.S. third-quarter GDP is also to be reported later today and its anticipated to be the strongest on record.
  • Yield on the 10-year treasuries stood at 0.78%.
  • West Texas Intermediate crude was 0.5% higher at $37.6 per barrel after an overnight drop of over 5%.

Get your daily fix of the global markets here.

All You Need To Know Going Into Trade On October 29

Earnings Fineprint: Larsen & Toubro Q2FY21

  • Revenue down 12.2% to Rs 31,034 crore
  • Net profit before exceptional item down 41.8% to Rs 1,462.8 crore
  • Including the exceptional item, the net loss stands at Rs 2,322.1 crore
  • Exceptional cost of Rs 3,732.3 crore this quarter, due to impairment of funded exposure in heavy forgings facility JV and impairment of assets in the power development business
  • Ebitda down 12% to Rs 5,318.7 crore
  • Ebitda margin flat at 17.1%
  • Orders in Q2 down 42% to Rs 28,039 crore
  • Order book down 1.4% to Rs 2,98,856 crore
  • Declares special dividend of Rs 18 per share
  • All numbers are consolidated and compared on a year-on-year basis

Earnings Fineprint: Axis Bank Q2FY21

  • Net Interest Income up 20% to Rs 7,326 crore
  • Net profit of Rs 1,683 crore as compared to a net loss of Rs 112 crore
  • Gross NPA at 4.18% from 4.72% last quarter
  • Net NPA at 0.98% from 1.23% last quarter
  • On classification of certain accounts as NPAs, the Gross and Net NPA would have been 4.28% and 1.03%
  • Cumulative provisions at Rs 4,580 crore, up 3.7% from last quarter
  • Total provisioning buffer at Rs 10,839 crore for any possible slippage
  • Provisions to accounts which may be potentially restructured in the future at Rs 1,886 crore
  • No restructuring requests received so far as on September 30
  • Capital Adequacy Ratio at 18.92%
  • Advances down 1.3% to Rs 5.76 lakh crore
  • Deposits up 8.7% to Rs 6.35 lakh crore
  • Net profit and NII compared on a year-on-year basis

Also read: Axis Bank Q2 Results: Lender Returns To Profitability Aided By Growth In Core Income

Earnings Fineprint: Hero MotoCorp Q2FY21

  • Revenue up 24% to Rs 9,367 crore
  • Net profit up 9% to Rs 953.4 crore
  • Ebitda up 17% to Rs 1,286 crore
  • Ebitda margin at 13.7% from 14.5%
  • Recovery in demand to pre-Covid levels, credible resumption of supply chain and logistics, cost and cash management and judicious price hikes helped profitability
  • Volumes up 7% to 18,14,683 units
  • All numbers compared on a year-on-year basis

Also read: Hero MotoCorp Q2 Results: Profit Rises 9%, Revenue Up 24% On Sales Rebound

Stocks To Watch

  • Cipla: Announced commercialisation of the antibody detection kits for Covid-19 in India, in partnership with KARWA Ltd. Cipla will market and distribute the testing kit that will be manufactured by KARWA Ltd.
  • Ajanta Pharma: To consider share buyback on November 3.
  • HUDCO: Achieved loan sanctions worth Rs 2,628.2 crore and loan releases worth Rs 3,411.8 crore as on September 30, 2020.
  • Pidilite: Board approves definitive agreement with Huntsman Corporation to acquire 100% stake in one of their subsidiaries Huntsman Advanced Materials Solutions for a cash consideration of Rs 2,100 crore. The transaction does not require government approval and is expected to be completed in a few days.
  • NTPC: Enters into foreign currency loan agreement worth Rs 3,582 crore with various financial institutions in Japan. 60% of the amount will be provided by the Japan Bank for International Co-operation, while the balance will be given by a consortium of commercial banks, under the guarantee by JBIC. The loan proceeds will be used to fund capex for fuel gas desulphurisation and renewable energy projects. The agreement has ben signed under the GREEN initiative.
  • GSK Pharma: Post the global voluntary recall of Zinetac, the company has decided to proceed with the sale of its manufacturing site at Vemgal and has classified the assets as 'held for sale.'
  • PNB Housing: To get capital infusion worth Rs 600 crore from Punjab National Bank. Also approves fund raising worth Rs 1,800 crore through preferential issue, rights issue.
  • Max India: Board approved giving corporate guarantee worth Rs 170 crore to Antara Senior Living.
  • HSIL: Board approves setting up a specialty glass facility to meet the packaging requirements of segments like pharma, including vials, perfumery and other cosmetics along with high-end liquor. The facility will have a capacity of 150 tonnes per day and will be set up at a cost of Rs 220 crore. It will also expand the capacity of its pipes business to 48,000 tonnes per annum from the current 30,000 tonnes per annum at a total cost of Rs 100 crore.
  • Godrej Industries: Allotted NCDs worth Rs 750 crore.
  • VA Tech Wabag: Files writ petition in the Delhi High COurt agains the Delhi Jal Board. The DJB has issued a debarment letter, stating that the company cannot participate in Delhi Jal Board tenders for a period of three years. This is with regard to certain non-payment of dues of more than five years and other issues over a contract for operations and maintenance of a sewage treatment plant in Delhi.
  • ICICI Lombard General Insurance: Future and Options contracts will be available for trading from October 30.
  • DCB Bank: Reserve Bank of India imposes a penalty of Rs 22 lakh in relation to para-banking activity.
  • Nifty Earnings Today: Maruti Suzuki, BPCL
  • Non-Nifty Earnings Today: Aavas Financiers, Aegis Logistics, Apollo Pipes, Bank of Baroda, Canara Bank, Blue Dard, Havells India, InterGlobe Aviation, Laurus Labs, JK Paper, MRPL, Orient Cement, Strides Pharma, Tata Chemicals, TVS Motor, Vodafone Idea, Zensar Technologies

Earnings Reported After Market Hours

ICICI Securities Q2FY21

  • Revenue up 63.2% to Rs 680.7 crore
  • Net profit up 2.1 times to Rs 278.2 crore
  • Broking income up 82% to Rs 392 crore
  • Equities and allied revenue up 88% to Rs 450 crore - the highest ever
  • Active clients up 17% to 1.56 million - the highest ever
  • Private Wealth Management revenue up 86% to Rs 101 crore
  • Declares interim dividend of Rs 8 per share
  • All numbers are consolidated and compared on a year-on-year basis

PI Industries Q2FY21

  • Revenue up 27.6% to Rs 1,157.7 crore
  • Net profit up 76.6% to Rs 217.6 crore
  • Ebitda up 45.5% to Rs 280.1 crore
  • Ebitda margin at 24.2% from 21.2%
  • All numbers are consolidated and compared on a year-on-year basis

Brokerage Radar

JPMorgan On Axis Bank

  • Upgrade to overweight from neutral
  • Price target raised to Rs 600 from Rs 500
  • Restructuring outlook is positive
  • Provisioning remains conservative
  • Capital levels are high post equity raise and balance sheet looks well protected
  • Asset quality picture better than feared; standard assets cover provides a large buffer
  • Growth indicators are improving
  • Raise operating profit estimates by 8% and 8.5% for FY22/23E
  • Key Risk: Elevated slippages from BB and Below book and restructuring book

CLSA On Axis Bank

  • Buy rating maintained
  • Price target raised to Rs 700 from Rs 600
  • PPoP beat and strong asset quality commentary
  • Non-NPA provisions at 1.8% of loans should cover majority of expected stress
  • Cut FY21 and FY22CL credit cost expectations to 450 basis points from 513 basis points
  • Increase core PPoP estimates by 6% for FY21-23CL
  • Expect RoE of 15% by FY23CL
  • Should lead to a re-rating going forward

Macquarie On Axis Bank

  • Outperform rating maintained
  • Price target raised to Rs 624 from Rs 504
  • Continues to make provisions; balance sheet strengthens further
  • Disclosed stressed book is reasonably covered
  • Potential earnings upside would be 40% if credit costs were to come down by 80 basis points to normalise around 150 basis points for FY22E
  • Key question is whether collection trends are sustainable

BofA Securities On Dr Reddy's Laboratories

  • Buy rating maintained
  • Price target raised to Rs 5,620 from Rs 5,537
  • Beat on higher sales and lower costs despite GM miss
  • On strong growth footing for H2FY21
  • Key risks: More settlements in gRevlimid lowering NPV per share

CLSA On Dr Reddy's Laboratories

  • Upgrade to outperform from buy
  • Price target raised to Rs 6,050 from Rs 5,600
  • Strong earnings momentum
  • Growth outlook is encouraging on improved U.S. / EU launch profile
  • Volume-led growth in India and EM should drive margin gains and earnings momentum
  • Raise FY21-23 EPS estimates by 3-12%
  • Risk-reward favourable

Goldman Sachs On Dr Reddy's Laboratories

  • Neutral rating maintained
  • Price target of Rs 4,800
  • Results were broadly in-line
  • gVascepa could take slightly longer to launch
  • U.S. market witnessing moderate price erosion
  • Marginally cut estimates to reflect unfavourable currency moves and lower export incentives going forward
  • Remain neutral on limited return potential

Pledged Share Details

  • Hatsun Agro Products: Promoter C Sathyan released pledge of 5.14 lakh shares on October 27.
  • Aurobindo Pharma: Promoter Prasad Kambam released pledge of 1.7 lakh shares on October 26.

(As Reported On October 28)

Who’s Meeting Whom

  • Indian Energy Exchange: To meet Trident Capital on October 29.

Trading Tweaks

  • AGM: Mastek, JBM Auto.
  • Price Band Revised From 20% To 10%: GE Power India.
  • Price Band Revised From 5% To 20%: Likhitha Infrastructure.
  • Move Into ASM Framework: Kopran, IFB Industries, Reliance Communications.
  • Move Into Short Term ASM Framework: Angel Broking, Ndr Auto Components, Suzlon Energy, Sanghi Industries.
  • Move Out Of Short Term ASM Framework: AGC Networks.

Insider Trades

  • Ultratech Cement: Promoter Kumar Mangalam Birla acquired 1.1 lakh shares on October 26

(As Reported On October 28)

Money Market Update

  • The currency ended weaker in Wednesday's session, closing at 73.87 against the U.S. Dollar as compared to Tuesday's close of 73.72.
  • It was the second worst performer in Asia on Wednesday.
All You Need To Know Going Into Trade On October 29

F&O Cues

  • Nifty October futures closed at 11,720; discount of 10 points from 14 points
  • Nifty October futures shed 21.5% and 17 lakh shares in Open Interest
  • Nifty Bank October futures closed at 24,250; premium of 17 points from discount of 13 points
  • Nifty Bank October futures shed 23% and 2.2 lakh shares in Open Interest
  • Nifty Put-Call Ratio at 0.9
  • Stocks In F&O Ban: Coforge, Vodafone Idea

Nifty Monthly Expiry: October 29

  • Maximum Open Interest on Call side at 12,000 strike (65.6 lakh shares)
  • Maximum Open Interest on Put side at 11,500 strike (39.4 lakh shares)
  • Active Options: 11,800 Put (-8.6 lakh shares) and 12,000 Call (21.6 lakh shares)
All You Need To Know Going Into Trade On October 29
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