All You Need To Know Going Into Trade On Sept. 3

Asian stocks were mixed in thin trading as Chinese and American officials struggled to schedule a planned meeting this month to continue trade talks.

Shares were little changed in Tokyo, Sydney and Seoul. U.S. futures dropped as Bloomberg reported the difficulties the two countries were having in arranging the talks, following Washington’s rejection of Beijing’s request to delay tariffs that took effect over the weekend.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.17 percent to 10,922.50 as of 6:55 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.

• Cash markets for both U.S. stocks and bonds were closed for the Labor Day holiday.
• Oil extended losses as the U.S. and China struggled to make progress in setting a date for fresh trade talks and Hurricane Dorian added to demand worries.
• The pound held losses with the U.K. facing a showdown in Parliament over delaying Brexit again.

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DataWatch

The Indian economy continued to slow down in the April-June quarter, as private consumption in the economy weakened further. Gross domestic product rose by 5 percent in the first quarter of 2019-20 compared to 5.8 percent in the previous quarter.

The growth of eight core sectors improved marginally to 4.7 percent in March 2019 against 4.5 percent in the same month last year.

The IHS Markit India Manufacturing Purchasing Managers' Index, fell to 51.4 in August, its lowest mark since May 2018, from 52.5 in July.

Earnings Reaction To Watch

CG Power Q4 FY19 (YoY)

• Revenue down 13 percent to Rs 1,989 crore.
• Net loss at Rs 189 crore versus net loss of Rs 57 crore.
• Ebitda profit at Rs 142 crore versus Ebitda loss of Rs 36.5 crore.
• Margin at 7.1 percent versus -1.6 percent.
• Exceptional loss of Rs 153 crore in current quarter versus a gain of Rs 160 crore.

(Base quarter numbers have been restated)

Auditor SRBC & Co issued disclaimer of opinion following discovery of many unauthorised transactions.

Brokerage Radar

CLSA on India Strategy

• RBI’s extra dividend to only partially offset tax shortfall.
• Expectations of a large fiscal stimulus are unrealistic.
• Spending picks up in July, but states may be revenue constrained.
• Government has not abandoned fiscal prudence yet.

Morgan Stanley on Hathway

• Maintained ‘Overweight’ with a price target of Rs 40.
• See synergistic relationship with Reliance.
• Implementation of TRAI tariff order positive for MSOs, including Hathway.

Morgan Stanley on Indiabulls Housing Finance

• Maintained ‘Underweight’ with a price target of Rs 600.
• ICRA downgrades credit rating from AAA to AA+.
• Rating downgrade could lead to higher capital consumption for certain lenders like banks.
• Indiabulls has been facing funding constraints and secondary market bond yields are higher than peers.

Nomura on Indian Autos

• Sharp decline across segments despite festive season arriving 10 days earlier.
• Inventory levels might have come down marginally in commercial vehicles and passenger vehicles, still they remain elevated.
• Two-wheelers segment: believe there may not have been any reduction in inventory.
• Unless there is GST cut, volumes will likely remain weak even in the second half of the current financial year.

On PSU Bank Merger

IDFC Securities

• Mergers will be negative for earnings and dilutive.
• Executing mergers is tough task due to branch overlaps, migrating clients to single data base, non-alignment of provisioning policies and difference in cultures.
• New mergers will be negative due to higher loan provisions and slower loan growth.
• More negative for Indian Bank as asset quality of Allahabad is weaker than Indian.

Citi

• PSU banks consolidation should strengthen the system.
• Consolidation to make capital and talent management easier.
• Common technology and geography driving current mergers.
• Capital distribution and people management to be better.

Morgan Stanley

• Bank of Baroda: Maintained ‘Equal-weight’; cut price target to Rs 100 from Rs 135
• Bank of India: Maintained ‘Underweight’; cut price target to Rs 62 from Rs 80
• PNB: Maintained ‘Underweight’; cut price target to Rs 51 from Rs 75
• Canara Bank: Maintained ‘Underweight’; cut price target to Rs 170 from Rs 220
• Banks consolidation is a good long-term move, but could weigh on near-term growth and potentially worsen credit crunch.
• For PNB and Canara, the loan book size would increase by 50 percent and 40 percent post-merger.
• For PNB and Canara don’t see any significant change on asset quality and profitability.

Stocks To Watch

• DHFL approved the conversion of debt into equity shares. The conversion may happen wholly, or part of debt into shares or securities and increasing the authorised share capital. The company said that it will also seek additional credit facilities and will dispose wholly or a part of undertakings or assets of the company.
• GSK Pharma sold its Thane land parcel of 60 acres to Oberoi Realty for Rs 889.5 crore. The company said that it paid a sum of Rs 337.46 crore towards obtaining all required statutory and regulatory approvals.
• Coffee Day Enterprises: Board has chosen Ashok Kumar Malhotra from Central Bureau of Investigation to investigate the circumstances leading to statements made in the purported letter of the former Chairman late VG Siddhartha and to scrutinise the books of accounts of the Company and its subsidiaries. E&Y was chosen earlier for the afore-mentioned investigation, but they backed out due to a conflict of interest. Lenders like Kotak Mahindra Bank, Aditya Birla Money and IDBI invoked 2.45 percent pledge stake in the company, as pledge by promoter group Coffee Day Consolidations.
• Yes Bank: Board approved increasing authorised share capital from Rs 800 crore to Rs 1100 crore, fund raising via equity shares including preferential allotment and authorised the Managing Director and CEO to negotiate term sheets with prospective private investors. In terms of numbers the authorised capital has increased from 300 crore shares to 450 crore shares. These changes will be made effective consequent to the amendments to existing capital clause and subject to approval from shareholders and RBI.
• Aurobindo Pharma’s Netherlands arm has entered into an agreement with Shanghai LongJin Investment Company (China) and Sveva Capitals (Hong Kong) to establish a joint venture in China for development, manufacturing, marketing and sale of pharmaceutical products for China excluding Taiwan, Hong Kong and Macau.
• IL&FS Group has received a total of 14 binding orders from multiple bidders for 10 road assets. These road assets account for Rs 17,700 crore of total debt. (Bloomberg News)
• BSE to introduce weekly F&O contracts for 149 stocks in Equity Derivatives Segment with effect from Sept. 19.
• Alkem Laboratories received two Form 483 observations by U.S. Food and Drug Administration for its manufacturing facility in Daman.
• Sun Pharma’s NDA for Oral Rimet ER gets U.S. FDA approval. (Bloomberg News)
• Divi’s Laboratories received zero critical observations from HPRA (Ireland) and JAZMP (Slovenia) for Unit 2, Vishakhapatnam facility’s inspection.
• Power Grid Corporation declared successful bidder for two Transmission Projects.
• HDFC sold 6.74 crore shares of Gruh Finance at Rs 247.15 each aggregating to Rs 1,665.8 crore. Post this sale HDFC will not be required to sell any further shares of Gruh Finance as per RBI Directives.
• State Bank of India said it has raised up to Rs 3,105 crore by issuing bonds under the Basel-III regulations.
• IFB Industries to acquire Stamping Business and Motor Business from its arm IFB Automotive for Rs 45 crore.
• Brigade Enterprises: Board approved allotment of 6.8 crore shares in ratio of 1:2. The paid up capital has increased from Rs 136.2 crore to Rs 204.3 crore due to the aforesaid allotment.
• Neuland Laboratories received Establishment Inspection Report for its Hyderabad manufacturing facility by U.S. FDA.
• Jamna Auto Industries: ICRA downgraded long term ratings to ‘AA-’ from ‘AA’, with outlook remaining stable.
• Patel Engineering: Board to consider rights issue on Sept. 5
• Tanla Solutions has entered into a share purchase agreement to acquire 100 percent stake in automation platform company Gamooga Softtech for Rs 48.45 crore. The board plans to consider raising capital via preferential issue of shares on Sept. 5.
• L&T Infotech has completed the 100 percent acquisition of Lymbyc Solutions.
• BPCL to spend Rs 22,500 crore for expansion of Numaligarh refinery. The company sees petchem to contribute 10 percent volumes by 2024 versus 1 percent now. (Bloomberg News)
• IndiGo Chief Financial Officer Rohit Phillip quits, Aditya Pandey will take over the role.
• Oberoi Realty buys 60 acre land in Thane for Rs 889.5 crore.
• CG Power removed Chief Financial Officer VR Venkatesh after irregularities fraud. (ANI)
• Biocon said U.S. FDA issued Complete Response Letter for the New Drug Application for Insulin Glargine filed by partner Mylan. The commercialisation plans remain unchanged. U.S. FDA also completed surveillance (routine) Current Good Manufacturing Practice inspection of one of the company’s biologics drug product facilities in Bengaluru. The inspection concluded with four observations. The company said it is confident of addressing these observations in a timely manner.
• Asian Granito to appoint M/s RRS & Associates appointed as the statutory auditors of the co after M/s Manubhai & Shah LLP filed for resignation.
• Amber Enterprises extended the timeline for acquisition of remaining 51 percent in EVER Electronics by Oct. 31.
• L&T Construction awarded contract for Navi Mumbai International Airport project by GVK subsidiary.
• PTC India to raise up to Rs 500 crore.
• JSW Steel said that ICRA revises outlook on long term debt of the company to ‘Negative’ from ‘Stable’. The revision in the rating outlook takes into account the expected moderation in JSW Steel's profits and coverage indicators in 2019-20 following weakness in domestic as well as international steel prices, and a moderation in domestic demand.
• Shree Pushkar Chemicals to raise Rs 2.33 crore via preferential issue of shares to the promoter group. Issue prices for the same has been fixed at Rs 208.5 apiece (CMP: Rs 90.5 on NSE)
• BHEL approved proposal of strategic disinvestment in Neelanchal Ispat Nigam Ltd.

Auto Sales August 2019

Eicher Motors Motorcycles Sales

• Total fell 24 percent to 52,904 units.
• Exports rose 205 percent to 4,152 units.

Maruti Suzuki

• Total sales fell 33 percent to 1,06,413 units.
• Domestic sales slumped 34 percent to 97061 units.
• Export sales were down 10.8 percent to 9,352 units.

Mahindra & Mahindra

• Total sales down 25 percent to 36,085 units.
• Domestic sales fell 26 percent to 33,564 units.
• Export sales slipped 15 percent to 2,521 units.

Hero MotoCorp

• Sales down nearly 21 percent to 5,43,406 units.

Tata Motors

• Commercial vehicle sales slumped 45 percent at 21,824 units.
• Passenger vehicle sales plummeted 58 percent to 7,316 units.

ATF Price Cuts

• IOCL cut ATF prices for the fourth consecutive month.
• Pan-India prices cut by 9.1 percent compared to last year to Rs 64,430 per kilo litre for September 2019.

Pledge Share Details

• NCC promoter AGK Raju released pledge of 40 lakh shares on Aug. 28.
• JSW Steel promoters created pledge of 1.25 crore shares on Aug. 27.
• Adani Ports & ZEZ promoter Gautam Adani revoked pledge of 17,800 shares on Aug. 29.
• JSW Energy promoters created pledge of 1.5 crore shares from Aug. 27-28.
• Adani Transmission promoter group Gautam Adani created pledge of 6.23 lakh shares on Aug. 29.

Trading Tweaks

• Essel Propack to move out of short term ASM Framework.
• Mishtann Foods, Birla Precision Technologies, Him Teknoforge to move out of ASM Framework.
• Zenlabs Ethica, Dixon Technologies, Shilpa Medicare to move into short term ASM Framework.
• HSIL price band revised to 20 percent.
• Titagarh Wagons launches the second coastal research vessel ahead of schedule Vessel for is National Institute of Ocean Technology.
• Essel Propack, R P P Infra Projects price band revised to 5 percent.
• Coal India August Production and Offtake: Production down 10.3 percent to 37.8 MT. Offtake down 10.4 percent to 40.5 MT.

Who’s Meeting Whom

• Mahindra & Mahindra to meet Quantum Asset Management on Sept. 3.
• TCS to meet Stewart Investors on Sept. 20.
• KEC International to meet Elara Securities on Sept. 4.
• Dr Lal Pathlabs to meet Manulife Financial Corporation and ESI MedTek Solutions from Sept. 3-5.
• Voltas to meet Edelweiss Securities, Goldman Sachs and other investors from Sept. 4-18.
• Symphony to meet ENAM AMC and Matthews International Capital Mgmt on Sept. 3 and Sept. 9 respectively.
• KEI Industries to meet Elara Securities on Sept 4.

Insider Trading

• IG Petrochemicals promoter group Gembel Trade sold 51,000 shares from Aug. 29-30.
• JSW Steel promoter groups acquired 7 lakh shares from Aug. 26-27.
• Tourism Finance Corporation promoter group India Opportunities Fund acquired 55,000 shares on Aug. 28.
• Cadila Healthcare promoter Zydus Family Trust acquired 2.01 lakh shares in Aug. 29.
• HG Infra Engineering promoter Girish Pal Singh acquired 52,000 shares on Aug. 26.

Money Market Update

• The rupee snapped a two-day losing streak to close at 71.41/$ versus 71.79/$ On Thursday.

FII

• FII inflow snapped a seven-day losing streak to stand at Rs 1,163 crore—highest Since Aug. 14.

F&O Cues

September Futures

• Nifty Sep futures closed at 11,058.9, premium of 35.7 points versus 54 points.
• Nifty futures open interest down 0.5 percent, sheds 81,000 shares in open interest.
• Bank Nifty September futures closed at 27,520.9, premium of 93 points versus 130 points.
• Bank Nifty futures open interest down 4 percent, sheds 59,700 shares in open interest.

Options

• Nifty PCR at 1.37 versus 1.31 (across all series).

Nifty Weekly Expiry: Sept. 5

• Max open interest on call side at 11,100 (18.9 lakh shares).
• Max open interest on put side at 11,000 (22.1 lakh shares).
• open interest addition seen at 11,000P (+9.5 lakh shares), 10,900P (+8.9 lakh shares).

Nifty Monthly Expiry: Sept. 26

• Max open interest on call side at 11,700 (21 lakh shares).
• Max open interest on put side at 10,800 (25.8 lakh shares).