All You Need To Know Going Into Trade On October 8

Asian markets are following their U.S. peers higher this morning, as investors mulled encouraging signs for Joe Biden in the presidential election race and its impact on any potential stimulus.

Treasury yields are steady after gaining while the U.S. Dollar is weakening.

The Singapore-traded SGX Nifty, an early indicator of the Nifty 50 Index’s performance in India, was little changed at 11,800 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:

• Benchmark indices in Australia and South Korea are advancing while those in Japan are little changed.
• Futures on the Dow Jones are currently flat. The index ended 1.9% higher on Wednesday.
• House speaker Nancy Pelosi signalled openness to an airline-relief bill in talks with treasury secretary Steven Mnuchin after President Donald Trump scuttled broader negotiations.
• Fresh round of state polls show that Joe Biden is widening his lead in a slew of crucial background states.
• Minutes of the FMOC meeting showed that some central bankers sought further debate on the future of the Fed's asset purchase program, signalling that they will be open to altering or increasing bond buying going forward.
• Yield on the 10-year treasuries stood at 0.78%.
• West Texas Intermediate crude rose 0.3% to $40 per barrel. Oil prices fell overnight after U.S. government data showed a first crude stockpile rise in four weeks.

Get your daily fix of the global markets here.

Earnings Fineprint: TCS Q2FY21

• U.S. Dollar revenue up 7.1% to $5,420 million
• U.S. Dollar revenue growth highest in 24 quarters
• Revenue in rupee terms up 4.7% to Rs 40,135 crore
• Ebit up 16.2% to Rs 10,515 crore
• Ebit margin at 26.2% from 23.6%
• Net profit up 6.7% to Rs 7,475 crore
• Net profit impacted owing to exceptional item of Rs 1,218 crore in the EPIC Systems Corporation matter
• All numbers are compared on a quarter-on-quarter basis

Key Factors For TCS:

• Growth led by BFSI and Retail segments
• Total Contract Value at $8.6 billion
• Attrition at all-time low of 8.9%
• Better absorption of fixed costs, higher utilisation and lower travel costs aid margins
• Management says demand recovery taking place earlier than expected
• Impact of salary hike to be felt in Q3 and Q4 results

Brokerages On TCS

CLSA

• Outperform rating maintained
• Price target raised to Rs 2,750 from Rs 2,610
• Strong performance in Q2 and an optimistic outlook
• Order-book optically strong and qualitative commentary was characteristically positive
• Long-term extrapolation of Q2FY21 will be incorrect
• Valuations at nearly 60% premium to its five-year median appear rich
• Size and premium of buyback provides little incentive to institutional and retail shareholders and may limit incremental upside in the near-term

Macquarie

• Outperform rating maintained
• Price target raised to Rs 3,030 from Rs 2,487
• On the cusp of a strong growth cycle
• Commentary on demand underscores thesis of strong digital transformation
• Margin improvement will continue driven by growth, changing hiring model in medium-term and savings in SG&A.
• Deal conversions strong, though led more by small and mid-sized deals
• Expect EBit margin of 26% in FY22-23E
• Raise FY21-23 EPS estimates by 3.5% and 8.4% respectively

JPMorgan

• Overweight rating maintained
• Price target raised to Rs 2,900 from Rs 2,650
• Results displayed that Indian tech companies enjoying a V-shaped recovery from Covid-19
• Continued strong deal wins and faster revenue conversion from virtual onboarding drives expectations of a secular demand recovery
• Margins expand from operating leverage
• Raise FY21/22/23E revenue estimates by 1%, 2% and 2% respectively
• Buybacks and dividends will keep payouts over 100% for FY21

Antique Stock Broking

• Hold rating maintained
• Price target raised to Rs 2,500 from Rs 2,350
• Medium to long-term outlook remains positive
• Deal wins continue to remain strong
• Raise EPS estimates by 6%
• Expensive valuations caps upside

Stocks To Watch

• TCS: Board approves buyback worth Rs 16,000 crore rupees. The company will buyback 5.33 crore shares or 1.42% of the total equity. Buyback price of Rs 3,000 per share is a 9% premium to Wednesday's closing price. The company has also declared a dividend of Rs 12 per share.
• Wipro: To consider proposal for buyback of equity shares at its board meeting on October 13.
• Bandhan Bank: Says that collection efficiency in September stood at 92% across all loan categories. The lender reported 20% growth in advances over the July-September period while deposits rose 34% year-on-year to Rs 66,153 crore.
• RBL Bank: Advances down 3% in the second quarter while deposits rise 3% year-on-year. CASA deposits up 21% to Rs 20,060 crore. Liquidity Coverage Ratio at 170.7%.
• ICICI Prudential: New Business Premium for the April-September period (H1FY21) down 13.5% to Rs 4,456 crore while Annualised premium equivalent down 32.1% to Rs 2,288 crore.
• Infosys: Announces automated data science platform to support public health agencies.
• Asian Granito: To consider stock split from shares of face value of Rs 10 into shares of face value of Rs 2 each along with a proposal to raise funds though an equity issue on October 23.
• S Chand: Appoints LoEstro Advisors LLP - a Hyderabad-based firm specialising in transaction advisory as it looks to raise funds for its EdTech platforms, which includes both school and student solutions.
• Lakshmi Vilas Bank: Brickwork Ratings downgrades the rating on its unsecured tier-II bond worth Rs 50.5 crore to BWR B+ from BWR BB+. The outlook too has been revised to 'credit watch with negative implications' from 'credit watch with developing implications.' The downgrade factors in weak capital position, high Gross NPA and rejection of directors by shareholders.
• Shriram City Union Finance: CARE Ratings downgrades ratings of NCDs and fixed deposits to CARE AA from CARE AA+. The outlook has been revised to negative from stable. The revision factors in high NPA levels with stage III assets even after considering moratorium benefits given to borrowers.
• Hero MotoCorp: Launches Maestro Edge 125 Stealth, which will be available at a price of Rs 72,950 per unit in the upcoming festive season.
• Future Consumer: Care Ratings has reaffirmed NCDs worth Rs 20 crore as CARE D (Default).
• Wonderla Holidays: Named Arun Chittilappily as Managing Director with immediate effect. Kochouseph Chittilappilly appointed as Chairman Emeritus.
• Indian Bank: Cuts MCLR by 5 basis points across various tenors from October 10. One-month MCLR at 7.35% and one-year MCLR at 7.50%.
• Adani Power: Appellate Tribunal of Electricity has upheld the order of the Maharashtra Electricity Regulatory Commission regarding the allowability of compensation under the change in law. It has also allowed the Adani Power Maharashtra's appeals related to calculation methodology, extent of shortfall and carrying cost.
• Lemon Tree Hotels: Announces the opening of a fifth hotel in Goa.
• Non-Nifty Earnings Today: Prabhat Dairy, GM Breweries, 5Paisa Capital
• Srikalahasthi Pipes: Belgrave Investment Fund acquired 3.5 lakh shares or 0.75% stake at Rs 126.08 per share.
• Grasim: Promoter Kumar Mangalam Birla acquired 5 lakh shares on September 30.

Brokerage Radar

Antique Stock Broking On Prestige Estate Projects

• Initiate coverage with buy rating
• Price target of Rs 315
• Sizeable rental portfolio and set to grow further
• Focus on asset monetisation is key to de-risking and growth
• Collections expected to improve going forward
• Dominant position in South Indian cities and diversifying into other major cities

HSBC On Apollo Hospitals

• Buy rating maintained
• Price target raised to Rs 2,400 from Rs 1,875
• Seeing gradual recovery in hospital occupancy
• Expect low single-digit Ebitda margin for the hospital segment in Q2FY21
• Outlook remains intact on strong brand equity and potential from digital initiatives
• Raise FY22/23E EPS estimates by 1.8% and 5.9% respectively

Pledged Share Details

• Apollo Pipes: Promoter Sameer Gupta created pledge of 4.95 lakh shares on September 25.
• Uflex: Promoter Anshika Consultants revoked pledge of 3.5 lakh shares on October 1.
• Future Enterprises: Promoters Central Departmental Stores invoked pledge of 2.82 crore shares on October 1.
• Sun Pharma: Promoter Shanghvi Finance created pledge of 11.38 lakh shares on October 3.

(As Reported On October 7)

Trading Tweaks

• Buyback Announcement: Majesco
• Price Band Revised From 10% To 20%: Adani Transmission, Allsec Technologies, Alphageo, AGC Networks, Avadh Sugar & Energy, Caplin Point Laboratories, Cholamandalam Financial Holdings, DB Realty, Dwarikesh Sugar Industries, eClerx Services, Elgi Equipments, Goa Carbon, Graphite India, Indiabulls Real Estate, IDBI Bank, IFB Agro Industries, Indiamart Intermesh, INEOS Styrolution India, Indian Overseas Bank, Jay Bharat Maruti, The Jammu & Kashmir Bank, Jubilant Industries, Laurus Labs, Madras Fertilizers, Magma Fincorp, Mahindra CIE Automotive, MT Educare, Nahar Poly Films, Olectra Greentech, Orissa Minerals Development, Quess Corp, Redington, Religare Enterprises, Saregama, Shriram City Union Finance, Speciality Restaurants, Suven Life Sciences, Tube Investments, Titagarh Wagons, Unichem Laboratories, Valiant Organics, Varroc Engineering, Vipul, VA Tech Wabag, Zuari Global.
• Price Band Revised From 5% To 10%: Aarti Drugs, Andhra Cements, Aries Agro, Ashiana Housing, Birla Tyres, Oswal Chemicals & Fertilizers, Borosil Renewables, Datamatics Global Services, Dishman Carbogen Amcis, Den Networks, DFM Foods, DHFL, Dish TV India, Ducon Infratechnologies, Entertainment Network, Future Lifestyle Fashions, Future Retail, Future Supply Chain Solutions, GE T&D India, Globus Spirits, HCL Infosystems, Hindusthan National Glass & Industries, Hind Rectifiers, Infibeam Avenues, Jain Irrigation Systems, Kaya, Khadim, KIOCL, Lemon Tree Hotels, MEP Infrastructure Developers, Nagarjuna Fertilizers and Chemicals, Neogen Chemicals, Reliance Capital, Som Distilleries & Breweries, Shakti Pumps, Shree Pushkar Chemicals & Fertilisers, Sical Logistics, SMS Lifesciences, Suzlon Energy, Tejas Networks, Tilaknagar Industries, Weizmann, Welspun Corp, Zuari Agro Chemicals.
• Price Band Revised From 5% To 20%: Ester Industries, Expleo Solutions, Morepen Laboratories, Munjal Showa, Network18 Media & Investments, Repco Home Finance, Sadbhav Engineering, Skipper, Wockhardt.
• Move Into ASM Framework: SP Apparels, InfoBeans Technologies.
• Move Into Short Term ASM Framework: Srikalahasthi Pipes, GSS Infotech, Banswara Syntex.
• Move Out Of Short Term ASM Framework: GMM Pfaudler, Shree Rama Multi-Tech, Pearl Polymers.

Money Market Update

• The rupee snapped a two-day losing streak on Wednesday, ending with gains at 73.33 against the U.S. Dollar as compared to Tuesday's close of 73.46.
• The currency was the third best performer in Asia on Wednesday.

F&O Cues

• Nifty October futures closed at 11,756; premium of 17 points from 10 points
• Nifty October futures add 4% and 3.6 lakh shares in Open Interest up 4%
• Nifty Bank October futures closed at 23,011; premium of 46 points from 56 points
• Nifty Bank October futures add 1% and shed 21,000 shares in Open Interest
• Nifty Put-Call Ratio at 1.51

Nifty Weekly Expiry: October 8

• Maximum Open Interest on Call side at 11,800 strike (36.7 lakh shares)
• Maximum Open Interest on Put side at 11,500 strike (34.6 lakh shares)
• Active Options: 11,700 Put (21.3 lakh shares) and 11,600 Call (-10 lakh shares)

Nifty Monthly Expiry: October 29

• Maximum Open Interest on Call side at 12,000 strike (19.3 lakh shares)
• Maximum Open Interest on Put side at 10,500 strike (35.4 lakh shares)