All You Need To Know Going Into Trade On Sept. 27

Asian stocks edged lower at the open Thursday as investors assessed commentary from the Federal Reserve that reaffirmed the U.S. economy is strong enough to warrant another interest-rate increase by the end of this year.

Equity benchmarks dipped in Japan and were little changed in Australia and South Korea, while futures signalled gains for stocks in Hong Kong. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.2 percent higher at 11,074 as of 7:30 a.m.

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U.S. Market Check

  • U.S. stocks fell and Treasuries rose after the Federal Reserve signaled it’ll keep raising interest rates even as inflation remains tepid.
  • The yield on 10-year Treasuries was steady at 3.05 percent after falling four basis points.

Also read: Fed Raises Rates and Says More Coming, Brushing Off Trump Jabs

Europe Market Check

  • European stocks continued a steady recovery before the Federal Reserve’s U.S. monetary policy decision.
All You Need To Know Going Into Trade On Sept. 27

Also read: Europe Finally Has an Excuse to Challenge the Dollar

Asian Cues

  • Japan’s Topix index fell 0.5 percent.
  • Australia’s S&P/ASX 200 Index was flat.
  • South Korea’s Kospi index was little changed as trading resumed after a two-day holiday.
  • Futures on Hong Kong’s Hang Seng Index rose 0.3 percent.
  • FTSE China A50 Index futures added 0.6 percent.
  • S&P 500 futures were little changed.

Also read: Emerging-Market Funds Avoid Asia Even as Bargains Appear

Commodity Cues

  • West Texas Intermediate crude gained 1.3 percent to $72.51 a barrel.
  • Brent crude traded 1.1 percent higher at $82.20 per barrel.
  • Gold rose 0.2 percent to $1,196.89 an ounce.

Shanghai Exchange

  • Steel snapped four-day losing streak; up 0.4 percent.
  • Aluminium traded lower for the third day; down 0.5 percent.
  • Zinc traded higher for the third day; up 0.2 percent.
  • Copper snapped a three-day winning-streak; down 0.2 percent.
  • Rubber traded lower; down 0.9 percent.

Indian ADRs

All You Need To Know Going Into Trade On Sept. 27

Also read: ‘Tsunami of Negatives’ to Sink $2.8 Billion India-Bond Support

Stocks To Watch

  • HCL Technologies signs five year infrastructure deal diversified mining business Anglo American. The IT major will provide IT Infrastructure services, desk support and end-user services.
  • BSE: Gets SEBI approval for futures contract in gold, silver.
  • IIFL: IIFL Wealth Finance approves raising Rs 500 crore via debentures.
  • Torrent Power wins order for 115MW wind power project from Solar Energy Corporation of India. The bid tariff for the new capacity addition was Rs 2.76/KWH.
  • Hero MotoCorp will make upward revision in the ex-showroom prices of its motorcycles and scooters with effect from Oct. 3. The price hike will translate to increase up to Rs 900 across various models. The company says that the revision has occurred due to increasing commodity costs and currency depreciation.
  • TD Power Systems board approves buyback of 11.7 lakh shares representing 3.53 percent of the equity capital for Rs 30 crore. The buyback price is set at Rs 256 per share.
  • State Bank of India committee approves divestment of its 86.2 lakh shares constituting 4 percent stake in SBI General lnsurance for Rs. 481.73 crore to Axis New Opportunities AIF-l and Pl Opportunities Fund (owned by Azim Premji). An SBI General Insurance official said that this is a pre-IPO stake sale and decision of SBI’s insurance arm going public will be taken in due course of time by the board. According to the press release the valuation of SBI General Insurance stands at Rs 12,000 crore. Post stake sale SBI will hold 70 percent stake and IAG International Pvt will continue to hold 26 percent stake.
  • IL&FS Transportation faces an interim injunction order after Aditya Birla Finance appeal in connection with Rs 155 crore of outstanding debt and accrued interest thereon.
  • 5Paisa Capital raises FPI limit and NRI limit by 100 percent and 24 percent, respectively.
  • Reliance Communications in talks to sell controlling stake after asset sale to Jio: Bloomberg News
  • Reliance Infrastructure clarifies that the company is compliant of MERC order, with response to news that the company was pulled for buying costly coal and driving up electricity rates.
  • NBCC receives principle approval from Air India to monetize or redevelop its land parcel in Delhi. The properties are spread across a total of 33.54 acres in Vasant Vihar and Connaught Place.
  • Reliance Capital: Reliance Commercial Finance’s CEO Devang Mody to leave company by Dec. 31.

Offerings

  • The date for Garden Reach Shipbuilders and Engineers’ initial public offering has been extended until Oct. 1 after the issue received 0.67 times subscription during the three-day bid period. The price band of the failed issue, first for a state-run companies, has been revised lower to Rs 118-114 per share.

Also read: State-Run Shipbuilder Garden Reach’s IPO Fails To Attract Investors

  • Aavas Financiers IPO day 3. Issue subscribed 0.29 times on day 2.

Also read: Aavas Financiers’ IPO: Here’s All You Need To Know

Bulk Deals

  • Dewan Housing Finance Corporation: BNP Paribas acquired 51.5 lakh shares (1.64 percent) at Rs 297.87 each.
  • Astra Microwave Products: HDFC MF sold 34.9 lakh shares or 4.03 percent equity at Rs 85 each.
  • Apollo Hospitals Enterprise
    Oppehheimer sold 14 lakh shares or 1.01 percent equity at Rs 1,044.23 each.
    Wellington acquired 9.5 lakh shares or 0.68 percent equity at Rs 1,044.23 each.

Who’s Meeting Whom

  • Great Eastern Shipping to meet SBI Capital Securities and Centrum Capital Securities on Sept. 27
  • Deepak Fertilisers & Petrochemicals to meet L & T Mutual Fund, ASK Investment Managers and other investors on Sept. 27.

Insider Trades

  • Chambal Fertilisers & Chemicals promoter acquired 77,500 shares from Sept. 24-25.
  • UPL promoter acquired 88,700 shares on Sept. 24.
  • Mannapuram Finance promoter and director VP Nandakumar acquired 15 lakh shares from Sept. 11-21.
  • KEC International promoter acquired 40,000 shares from Sept. 24-25.
  • Infibeam Avenues promoter group acquired 13.4 lakh shares on Sept. 21.

(As reported on Sept. 26)

Money Market Update

  • Rupee closed at 72.62/$ on Wednesday versus 72.69/$ on Tuesday.

F&O Cues

  • Nifty September futures closed trading at 11,062 at premium of 8 points versus 20 points.
  • September series-Nifty open interest down 16 percent; Bank Nifty open interest down 20.5 percent.
  • Nifty Rollovers at 43 percent; Nifty Bank Rollovers at 36 percent.
  • India VIX ended at 17.1, up 2.4 percent.
  • Max open interest for September series at 11,200 strike value call option (open interest at 36.2 lakh, open interest up 45 percent)
  • Max open interest for September series at 11,000 strike value put option (open interest at 38.7 lakh, open interest up 4 percent)

Put-Call Ratio

  • Nifty PCR at 1.09 versus 1.13.
  • Nifty Bank PCR at 0.74 versus 0.7 .

Stocks In F&O Ban

  • In Ban: Adani Power, Jet Airways, PNB
  • Out of Ban: DHFL
All You Need To Know Going Into Trade On Sept. 27

Brokerage Radar

Brokerages On Custom Duty Hike

CLSA

  • Government hiked custom duty rates on AC, refrigerators, washing machines.
  • Havells currently imports 70 percent Lloyds requirement but has option to shift to domestic manufacturing.
  • Voltas’s JV with Arcelik would be hurt as appliances are 100 percent imported.
  • Voltas Beko’s domestic factory will likely take a year to start.

Goldman Sachs

  • Hike in custom duty rates are negative for Voltas and Havells India.
  • Crompton Consumer best placed as none of its product categories have been impacted.
  • Expect industry to collectively pass this custom duty hike.
  • Price hike could be with a lag and impact margins in the near to medium term.

Brokerages On Titan

Morgan Stanley

  • Maintained ‘Overweight’ with a price target of Rs 1,250, implying a potential upside of 54 percent from the last regular trade.
  • No change in import duty on Gold to lift overhang on Titan.
  • Hike in rate or jewellery pieces is marginally positive as it reduces competitiveness.
  • Expect Titan to react positively.

BofAML

  • Maintained ‘Buy’ with a price target of Rs 1,080, implying a potential upside of 33 percent from the last regular trade.
  • Stock corrected on market concerns about the current financial year’s growth guidance and gold import regulation.
  • Believe concerns are overdone and expect Titan to post robust jewelry growth in 2018-19.
  • Stock is currently pricing in 10-year EBIT CAGR of just 19 percent despite strong growth prospects.

More Brokerage Calls

Credit Suisse on Consumer Staples

  • Margin performance depends on revenue growth as it will provide operating leverage
  • Margin Negative: increasing commodity inflation and GST tailwinds getting anniversarise from the third quarter.
  • Marico best placed in entire consumer pack as Copra prices trending down.
  • Britannia seems most susceptible to rising input costs.

Morgan Stanley on Havells India

  • Maintained ‘Equalweight’ with a price target of Rs 712, implying a potential upside of 10 percent from the last regular trade.
  • Increase in duty on consumer durables will hurt earnings in the second half.
  • Likely commissioning of AC plant by Mar-19 will moderate the impact in the next financial year.
  • Medium-term outlook for consumer durables is intact.

Goldman Sachs on Asian Paints

  • Upgraded to ‘Buy’ from ‘Neutral’; raised price target to Rs 1,550 from Rs 1,407, implying a potential upside of 21 percent from the last regular trade.
  • Capacity expansion to offer significant competitive advantages and better returns.
  • Dominant position to help navigate a more turbulent input cost environment.
  • Government initiatives starting to bear fruits in home building.
  • Optionality from other home improvement categories.

HSBC on SpiceJet

  • Maintained ‘Hold’; cut price target to Rs 70 from Rs 100, implying a potential upside of 1 percent from the last regular trade.
  • Indian aviation is set for a poor second quarter – generally the weakest.
  • Freight business broadly neutral for profitability since the scale has been small.
  • Expect positive momentum after December as high fuel prices will start to be built into the base.