All You Need To Know Going Into Trade On Sept. 12

U.S. equity futures rose along with Asian stocks and the yuan after President Donald Trump said he will delay the next tariff increase on China by about two weeks.

Shares rose in Tokyo and Sydney on the boost to sentiment as investors awaited a potentially pivotal European Central Bank policy meeting. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.41 percent to 11,082 as of 7:15 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.

Here’s a quick look at all that could influence equities today.

• U.S. stocks rallied, with the Nasdaq Composite Index rising to the highest level since July, as the rotation from momentum to value shares that began at the start of the week slowed.
• Dow Jones Industrial Average gained for a sixth day and the S&P 500 closed above 3,000 for the first time in six weeks.
• Oil pared overnight losses stemming from signs there could be a thaw in U.S-Iran relations following John Bolton’s departure.
• European Central Bank’s policy meeting will be in focus, where it is widely expected to lower interest rates and potentially offer more stimulus.

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Indian ADRs

Stocks To Watch

• SBI Life Insurance: SBI’s board has approved an offer-for-sale of at least 3.5 percent stake—or 3.5 crore shares—in SBI Life Insurance Company Ltd., with an option of oversubscription of 1 percent. The floor price for the sale has been set at Rs 770 per share—a discount of 4 percent to today’s closing price of Rs 799.65—the life insurer said in a separate filing. The sale for institutional investors will take place on Sept. 12 and retail investors on Sept. 13.
• Alkem Laboratories received four Form 483 observations from the U.S. Food and Drug Administration for its manufacturing facility in St.Louis, U.S. The company said that the inspection has been closed by U.S. FDA now.
• Apollo Hospitals founder Sunitha Reddy to sell 50 lakh shares up to Rs 725 crore. Floor price is set at Rs 1,450 per share, which is at discount of 3.2 percent as per current market prices, according to Bloomberg report.
• MSTC: Adani Group has appointed the company as selling agent to sell all surplus inventory and equipment for the entire Group.
• Globus Spirits: Promoters have deferred company’s convertible warrants allotment plan. The promoters plan to consider subscription of the warrants at a later stage and the company will seek for fresh special resolution from shareholders.
• HDFC has proposed to raise up to Rs 5,000 crore via issue of bonds.
• Reliance Capital to exercise the over-subscription option 3.15 percent stake sale, in addition to the base sale of 3.15 percent of equity shares, aggregating to 6.3 percent of Reliance Nippon Life Asset Management.
• Texmaco Rail & Engineering: Board to consider various matters regarding the rights issue on Sept. 13.
• SREI Infra Finance: Brickworks Ratings downgraded instruments worth Rs 5,327 crore. Non-convertible debentures downgraded to ‘BWR A+’ from ‘BWR AA’, with outlook remaining negative. Perpetual Debt downgraded to ‘BWR BBB+’ from ‘BWRA+’, with outlook remaining negative. Commercial Paper downgraded to ‘BWR A1’ from ‘BWR A1+’.
• Walchand Nagar Industries has entered into an agreement with Indian Space Research Organisation to supply equipment for GSLV Launch Vehicle for a contract value of Rs 77.2 crore.
• Central Bank of India: Tribunal has set aside Securities and Exchange Board of India’s monetary penalty order of Rs 3 lakh for violations of Debenture Trustee regulations.
• Kridhan Infra’s arm secured infra orders worth Rs 112 crore for Bengaluru International Airport.
• OnMobile Global said that it has dissolved its Romanian unit with effect from Sept. 4.
• Allahabad Bank to consider amalgamation of the Bank with Indian Bank on Sept.16.
• Andhra Bank to consider merger proposal with Union Bank and Corporation Bank on Sept. 13.
• Reliance Nippon AMC: Shares offered by Reliance Capital received a demand of 1.32 times from the non-retail category on day one. The offer for sale will open today for retail category

Datawatch

• 5:30 p.m.: India Aug. Consumer Price Inflation YoY; Bloomberg estimate 3.35 percent (prior 3.15 percent)
• 5:30 p.m.: India July Industrial Production YoY; Bloomberg estimate 2.5 percent (prior 2.0 percent)

Brokerage Radar

Antique on Alkem Labs

• Initiated ‘Buy’ with a price target of Rs 2,160.
• Solid domestic franchise - expect 230 basis points expansion in margin driven by chronic therapies
• Expect revenue, Ebtida and net profit to grow at a CAGR of 12 percent, 18 percent and 21 percent respectively over FY19-22
• Rising input cost and investments in OTC business that led to margin compression earlier now reversed.
• U.S. achieving meaningful scale; Valuation reasonable as earnings risk limited.

BofAML on L&T

• Maintained ‘Neutral’; cut price target to Rs 1,535 from Rs 1,624.
• September quarter order inflows steady; could match high base of the first quarter of the previous financial year.
• Working capital likely to get stretched; Valuations look fair for mid-cycle capex.
• Earnings estimate unchanged; TP cut on lower valuation multiple.

Axis Capital on Sudarshan Chemical

• Initiated ‘Buy’ with a price target of Rs 410.
• Focus on specialty segment and step up in capex plans to aid growth.
• Expect positive surprise on volumes/margin given emerging international opportunities.
• Favorable product mix and raw material stability to aid Ebitda growth.

Edelweiss on IndiaMART InterMESH

• Initiated ‘Buy’ with a price target of Rs 1,900.
• Large and growing number of buyers and suppliers on platform are driving up business enquiries.
• This could lift realisations and lure more paying customers.
• Expect revenue, Ebitda and net profit to grow at a CAGR of 24 percent, 51 percent and 50 percent respectively over FY19-21.
• See value owing to high entry barriers, network effect-driven pricing power and negative working capital.

Citi on Oil Marketing Companies

• Refining: Signs of IMO starting to play out.
• Marketing margins stable, inventory loss concerns recede.
• Disinvestment: Could swing either way, but stay prudent.
• Strong fundamentals, positive earnings momentum and attractive valuations.

Morgan Stanley on Apollo Hospitals

• Maintained ‘Overweight’ with a price target of Rs 1,667.
• Stake sale to lower pledge.
• Expect promoter's pledge to reduce from 78 percent to 20 percent by end 2019
• Expect positive Ebitda momentum, deleveraging and no promoter pledge overhang.

On India Insurance

Nomura

• August growth moderates for private insurers.
• Still too early to extrapolate the slower APE growth in August.
• Will need to keep a close watch as most insurers seem to be pricing in sustainable growth.

Morgan Stanley

• August 2019 – Premium growth moderation led by private sector.
• Overall industry premium growth in August 2019 was 14 percent on a yearly basis compared to 17 percent YoY last month.
• Expect private sector premium growth to be in mid-teens over next two years.

Trading Tweaks

• Rajratan Global Wires record date for bonus issue at 4:3.
• Balkrishna Paper Mills, GTN Industries, Indiamart Intermesh to move into short term ASM Framework.
• Goa Carbon, Somany Ceramics price band revised to 10 percent.
• Williamson Magor, Patel Engineering price band revised to 5 percent.

Who’s Meeting Whom

• Hind Rectifiers to meet AM Investments and I-Wealth Management on Sept. 12
• CG Consumer Electricals to meet Genesis Investment Management on Sept. 20.
• Sudarshan Chemical to meet Motilal Oswal Securities on Sept. 16.

Insider Trading

• Arvind promoter Aura Business acquired 4.2 lakh shares on Sept. 6.
• Panama Petrochem promoter group Ittefaq Ice & Cold Storage acquired 47,000 shares on Sept. 9.
• KEC International promoter RPG Venture acquired 69,000 shares on Sept. 9.

Money Market Update

The Indian rupee is likely to strengthen today, inline with emerging Asian peers after the U.S. President Trump said he will delay the next U.S. tariff increase on China by about two weeks.

The implied opening from forwards suggest rupee may start trading at 71.44 to the dollar.

In the bond market, sovereign bond traders are awaiting the release of data on consumer price inflation and industrial production, which may have a bearing the central bank’s rate decision next month.

CPI probably rose 3.32 percent year on year in August, according to the median estimate in a Bloomberg survey. That’s against July’s pace of 3.15 percent. Industrial output production likely expanded 2.3 percent year on year in July, faster than 2 percent seen in June.

F&O Cues

September Futures

• Nifty Sep futures closed at 11,060.8, premium of 25 points versus 22 points.
• Nifty futures open interest up 0.1 percent, adds 9,000 shares in open interest.
• Bank Nifty Sep futures closed at 27,830, premium of 54 points versus 47 points.
• Bank Nifty futures open interest up 3 percent, adds 50,000 shares in open interest.

Options

• Nifty PCR at 1.32 versus 1.41 (across all series).

Nifty Weekly Expiry: Sept. 12

• Max open interest on call side at 11,200 (20 lakh shares).
• Max open interest on put side at 10,900 (28.8 lakh shares).
• Open interest addition seen at 11,000P (+10.5 lakh shares), 11,050C (+6.4 lakh shares).
• Open interest shedding seen at 10700P (-4 lakh shares), 11,000C (-3 lakh shares).

Nifty Monthly Expiry: Sept. 26

• Max open interest on call side at 11,500 (20.8 lakh shares).
• Max open interest on put side at 10,800 (28.6 lakh shares).