Stocks To Watch: Ashok Leyland, Bharti Airtel, Indiabulls Housing Finance, IndusInd Bank, Lakshmi Vilas Bank, TCS, Torrent Pharma

Asian stocks and U.S. futures fell, China’s yuan dropped and the yen edged higher as optimism about crucial Sino-American trade talks subsided.

Japanese and Korean shares slid, Treasuries rose and oil dropped. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.47 percent to 11,285 as of 7:10 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 are the stocks to watch in today’s trade.

• Lakshmi Vilas Bank, Indiabulls Housing Finance: The proposed merger of private sector lender with home financier failed to receive approval from the Reserve Bank of India, the bank said on Wednesday in a statement to stock exchanges.
• Reliance Industries: Forced by regulatory uncertainty over review of sunset clause for call termination charges, Mukesh Ambani's Reliance Jio Infocomm Ltd. on Wednesday announced it will charge customers 6 paise per minute for voice calls made to rival phone networks, but will compensate them by giving free data of equal value. Since voice calls on Jio network are free, the company had to bear the Rs 13,500 crore payment made to rivals Bharti Airtel Ltd. and Vodafone Idea Ltd. To recover losses created by the TRAI move, the company has decided to charge customers 6 paise per minute for every call they make to a rival's network.
• Bharti Airtel has raised $750 million (about Rs 5,330 crore) from investors based in Asia, Europe and the U.S. through a hybrid financial instrument. The proceeds shall be used for refinancing, investments in subsidiaries and general corporate purpose.
• Torrent Pharma: received a warning letter from the U.S. drug regulator for its Indrad, Gujarat facility, barring fresh approvals from its largest unit that contributes bulk of its sales in the American market. The warning letter follows the August “official action indicated” by the U.S. Food and Drug Administration, according to the drugmaker’s exchange filing. The status pointed to potential regulatory and administrative action.
• Indiabulls Housing Finance to consider share buyback plan on Oct. 14.
• Bank of Maharashtra: The RBI has denied the Bank’s request for setting off accumulated losses aggregating to Rs 7,360.29 crore against the balance lying in share premium account and the revenue reserve account of the Bank.
• Reliance Infrastructure has appointed Anmol Ambani and Anshul Ambani as non-executive directors with effect from Oct. 9. Besides, Lt. Gen. Syed Ata Hasnain (Retd) inducted onto the Board as Independent Director.
• Union Bank of India: Board approved preferential issue of equity shares aggregating up to Rs 11,768 crore to the Government of India. Board to approve the new issue price on Oct. 14.
• Ashok Leyland to observe non-working days between 2-15 days in all plants in October.
• Sintex Industries defaulted in payment of interest on non-convertible debentures worth Rs 5.92 crore which were due on Oct. 8.
• DCB Bank revised its Marginal Cost of Funds based Lending Rate across various tenors with effect from Oct. 10. One-month MCLR is at 8.87 percent and one-year MCLR is at 10.47 percent.
• Hester Biosciences said that its Nepal unit’s PRR vaccine has been started to be marketed through Nepal’s distributors and private market channels. The unit has received manufacturing license for the Classical Swine Fever vaccine, for which registration is ongoing in a few South East Asian countries.
• Future Retail to consider raising funds on Oct. 12.
• Indian Overseas Bank fixed Bank’s Repo Linked Rate at Repo Rate plus markup aggregating to 8 percent with effect from Nov 1.
• Coffee Day Enterprises said that promoters hold 25.35 percent stake in the company, out of which 79.94 percent of the promoter’s stake is pledged, which is roughly about 4.28 crore shares.
• Transformers & Rectifiers received orders worth Rs 126 crore from Power Grid Corporation. Order book as on date stands at Rs 1,001 crore.
• Indian Oil Corporation’s Canadian unit has sought requests for proposals from lenders for facility to refinance a loan of Canadian $580 million from 2014, according to Bloomberg report.

Earnings To Watch

• TCS
• IndusInd Bank

Who’s Meeting Whom

• Magma Fincorp to meet IDFC MF on Oct. 10.
• Emmbi Industries to meet Augmen Catalyst and Phoenix Capital on Oct. 10.

Pledge Share Details

• Zee Entertainment promoters Cyquator Media Services and Essel Corporate LLP on a net basis created pledge of 7.8 crore shares from July 29-Sept. 30, predominantly led by pledge in favour of VTB Capital Plc.
• Sun Pharma promoter Shanghvi Finance created pledge of 27.32 lakh shares on Oct. 3 in favour of Axis Trustee Services as a trustee for scheme managed by the lender Copthall Mauritius Investment in respect of NCDs issued by third party.
• Essel Propack promoter Epsilon Bidco has not encumbered any shares in the company. On Aug. 16 the promoter Epsilon Bidco has created pledge of its entire shareholding of 74.99 percent in favour of DB International Trust (Singapore) in relation to an offshore facility availed by the Epsilon Bidco.
• Emami promoters released pledge of 10.6 lakh shares from Oct. 4-5, shares were encumbered in favour of DCB Bank, Bajaj Finance and RBL Bank.
• Adani Ports & SEZ promoter SB Adani Family Trust released pledge of 12.38 lakh shares on Oct. 3 in favour of Catalyst Trusteeship as a trustee for the lender Tata Capital Financial Services.
• Adani Enteprises promoter SB Adani Family Trust released pledge of 9.48 lakh shares on Oct. 3 in favour of Catalyst Trusteeship as a trustee for the lender Tata Capital Financial Services.
• Adani Transmission promoter SB Adani Family Trust released pledge of 33.3 lakh shares on Oct. 1 in favour of Vistra ITCL as a trustee for the lender Yes Bank.
• Sadbhav Engineering promoter Vikram Patel released pledge of 6.71 lakh shares for repayment of loan on Sept. 30, shares were encumbered in favour of Axis Finance.
• Dish TV promoters created pledge of 50 lakh shares from Aug. 7-Oct. 3.
• Future Consumer promoter Future Capital Investment created pledge of 89.35 lakh shares on Oct. 4.

Trading Tweaks

• OCL Iron and Steel to move into ASM Framework.
• Ramky Infrastructure, SMS Lifesciences to move into short term ASM Framework.
• Snowman Logistics, Dai-Ichi Karkaria to move out of short term ASM Framework.
• Shriram EPC, SREI Infrastructure Finance price band revised to 10 percent.

Money Market Update

• The rupee weakened for the third straight session to close at 71.07/$ verus 71.02/$ on Monday.

F&O Cues

Futures

• Nifty October futures closed at 11347.7, premium of 34.4 versus 35.6 points.
• Nifty October futures down 6 percent, sheds 9.7 lakh shares in open interest.
• Nifty Bank futures closed at 28,874, premium of 88 points versus 104 points.
• Nifty Bank October futures open interest down 6 percent, sheds 89,000 shares in open interest.

Options

Nifty PCR at 1.19 versus 0.95 (across all series).

Nifty Monthly Expiry: Oct. 10

Max open interest on call side at 11,500 (18.5 lakh shares).

Max open interest on put side at 11,000 (18.6 lakh shares).

Open interest addition seen at 11,250P (+10.2 lakh shares), 11,200P (8.7 lakh shares), 11,300P (+8.4 lakh shares).

Open interest shedding seen at 11200C (-11 lakh shares).

Nifty Monthly Expiry: Oct. 31

Max open interest on call side at 11,500 (23.9 lakh shares).

Max open interest on put side at 11,000 (27 lakh shares).

Brokerage Radar

On Indiabulls Housing

Morgan Stanley

• Maintained ‘Underweight’ with a price target of Rs 410.
• RBI approval would not be easy and even if it were to happen conversion into a bank could significantly hurt return ratios.
• Fundamentals for real estate lenders are challenging given the risk of higher bad loans and shrinking funding.

Macquarie

• Rating Under Review.
• RBI rejects merger proposal; future is very uncertain.
• Rejection by RBI changes the future outlook for the company significantly.
• Rejection implies that RBI is not comfortable with the group and the promoter.

On Reliance Industries

CLSA

• Maintained ‘Outperform’ with a price target of Rs 1,530.
• Jio passes IUC to users; temporary measure which may reverse.
• Tariff discounts to incumbents will shrink and may drive huge bump in Jio’s profit.
• Gross IUC charges could have boosted Jio’s EBITDA by 41 percent in June quarter.

JPMorgan

• Maintained ‘Neutral’ with a price target of Rs 1,400.
• IUC top up is a large indirect tariff hike, margin accretive and reduce negative cash flow.
• Believe markets would react positively as it would allow investors to gauge willingness of Jio subscribers to pay higher charges.

More Calls

UBS on Dr Lal Pathlabs

• Maintained ‘Buy’; hiked price target to Rs 1,660 from Rs 1,375.
• In strong position to drive consolidation.
• Robust cash position and stock currency is ammunition for inorganic growth.
• Believe potential inorganic opportunities and tax benefit not priced in completely.

Macquarie on Siemens India

• Maintained ‘Outperform’; hiked price target to Rs 1,730 from Rs 1,298.
• First in line to benefit from economic recovery.
• Corporate tax rate cut and potential revival of brownfield capex cycle to benefit.
• Smart infra and digital industries businesses to see margin expansion over long term.

Citi on Zee Entertainment

• Rating Under Review from Neutral.
• Stock is not trading based on underlying business prospects.
• Promoter group concerns weigh on valuation multiples.
• Additional stake sale in Zee or group’s assets have become key consideration.

BofAML on Telecom

• Consider IUC tariffs as one-off change by Jio which could reverse.
• Sentimentally positive for Airtel/Vodafone Idea, but fundamentally do not see any material change.
• Remains to be seen if Airtel/Vodafone Idea take a tariff hike.