All You Need To Know Going Into Trade On August 16
Stocks in the news, key earnings updates, who’s buying and who’s selling, brokerage radar and much more!
Asian stocks extended declines and the yen climbed after technology shares slumped on earnings concerns and copper sank into a bear market, weighing on commodities.
Equities from Sydney to Seoul fell, tracking overnight moves in U.S. benchmarks that were led by the Nasdaq 100 Index. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, declined 0.3 percent to 11,399 as of 7:10 a.m.
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BQ Live
Here’s a quick look at all that could influence equities today.
U.S. Market Check
- U.S. stocks had their worst day in seven weeks Wednesday amid a broad decline in global equities as technology shares were roiled by disappointing results from Chinese internet giant Tencent Holdings Ltd. and copper sank into a bear market, weighing on commodities.
- The yield on 10-year Treasuries held at 2.86 percent.
#BQMarketWrap | U.S. stocks tumble as tech, commodities trigger fears.
— BloombergQuint (@BloombergQuint) August 16, 2018
Read: https://t.co/C0Sm5R5LId pic.twitter.com/u9WPeyNHSn
Europe Market Check
- European equities plunged the most since June as miners extended declines amid a meltdown in metal prices.
Asian Cues
- Japan’s Topix index fell 1.7 percent.
- Futures on Hong Kong’s Hang Seng Index slid 1.3 percent.
- Australia’s S&P/ASX 200 Index lost 0.6 percent.
- South Korea’s Kospi index fell 1.3 percent.
- Futures on the S&P 500 Index dipped 0.1 percent. The S&P 500 dropped 0.8 percent and the Nasdaq 100 fell 1.2 percent.
- The MSCI Emerging Market Index fell 1.8 percent, taking its slide since its January high to almost 20 percent.
Key Events To Watch This Week
- Australia jobs data is coming Thursday.
- Earnings are still to come from companies including Maersk and Carlsberg.
- Brexit talks between the EU and the U.K. resume in Brussels Thursday.
Commodity Cues
- The Bloomberg Commodity Index fell 1.9 percent Wednesday to the lowest since July 2017.
- West Texas Intermediate crude slid 0.3 percent to $64.84 a barrel.
- LME copper was up 0.3 percent after sinking 4 percent.
- Gold fell 0.1 percent to $1,173.55 an ounce, having slid more than 3 percent this week.
Indian ADRs
Stocks To Watch
- RBI rejected Kotak Mahindra Bank’s plan for dilution of promoter stake.
- Reliance Industries said that one of its units at its Jamnagar refinery has been shut down temporarily.
- Shilpa Medicare to set up arm for North American operations.
- Siyaram Silk Mills commenced production of indigo at Amravati unit.
- Svendgaard Labs approved expansion manufacturing facilities at Kheri.
- Jindal Worldwide board approved stock split of 5:1.
- NCLT approved demerger of Cox & Kings forex division.
- Monsanto India clarified that news of a lawsuit by cancer patient pertains to its U.S. arm.
- Fortis Healthcare holders clear IHH proposal to buy company.
- GMR Infra executed settlement agreement with PE investors for its airport arm.
- Allcargo Logistics in talks to buy controlling stake in Gati (Economic Times).
- Jet Airways seeks to raise Rs 5000 crore to pay debt (Mint).
IPO Watch
- Cipla’s Ugandan unit sets IPO price at UGX 256.5 per share.
- Mrs Bectors Food Specialities files with SEBI for IPO.
Earnings To Watch
SP Apparels (Q1, YoY)
- Revenue up 26.7 percent at Rs 190.8 crore.
- Net profit up 13.5 percent at Rs 12.6 crore.
- Ebitda up 51.6 percent at Rs 28.5 crore.
- Margin at 14.9 percent versus 12.5 percent.
Aster DM Healthcare (Q1, YoY)
- Revenue up 14 percent at Rs 1,774.7 crore.
- Net profit at Rs 12.4 crore versus net loss at Rs 76.9 crore.
- Ebitda at Rs 124 crore versus Rs 39.8 crore.
- Margin at 7 percent versus 2.6 percent.
Suven Lifesciences (Q1, YoY)
- Revenue up 36 percent at Rs 191.7 crore.
- Net profit up 31.1 percent at Rs 38.8 crore.
- Ebitda up 28.7 percent at Rs 58.3 crore.
- Margin at 30.4 percent versus 32.1 percent.
Dilip Buildcon (Q1, YoY)
- Revenue up 46.4 percent at Rs 2,436.3 crore.
- Net profit up 107.9 percent at Rs 254.9 crore.
- Ebitda up 44.1 percent at Rs 432.6 crore.
- Margin at 17.8 percent versus 18 percent.
Khadim India (Q1, YoY)
- Revenue up 8.7 percent at Rs 189.6 crore.
- Net profit unchanged at Rs 7.4 crore.
- Ebitda flat at Rs 16.6 crore.
- Margin at 8.8 percent versus 9.6 percent.
Cox & Kings (Q1, YoY)
- Revenue up 14.5 percent at Rs 2183.9 crore.
- Net profit down 56.1 percent at Rs 66.6 crore.
- Ebitda down 20.2 percent at Rs 297.9 crore.
- Margin at 13.6 percent versus 19.6 percent.
Indiabulls Real Estate (Q1, YoY)
- Revenue up 38.5 percent at Rs 810.9 crore.
- Net profit down 5.3 percent at Rs 117.5 crore.
- Ebitda down 23.4 percent at Rs 246.2 crore.
- Margin at 30.4 percent versus 54.9 percent.
Fortis Healthcare (Q1, YoY)
- Revenue down 9.9 percent at Rs 1,042 crore.
- Net loss at Rs 70.7 crore versus net profit at Rs 5.3 crore.
- Ebitda at Rs 8 crore versus Rs 86.1 crore.
- Margin at 0.8 percent versus 7.4 percent.
Bulk Deals
Parsvnath Developers
- Globe Capital Markets acquired 82 lakh shares or 1.88 percent equity at Rs 12.2 each.
- ITF Mauritus sold 82 lakh shares or 1.88 percent equity at Rs 12.2 each.
Who’s Meeting Whom
- Shriram Transport Finance to meet Edelweiss Securities on Aug. 16.
- Eris Lifesciences to meet Equirius Securities on Aug. 16.
- TVS Motor company to meet Prince Street Capital Management on Aug. 16.
- Westlife Development to meet investors on Aug. 16-17.
- Himatsingka Seide to meet investors from Aug. 16-17.
- Texmaco Rail & Engineering to meet HDFC Mutual Fund, SBI Mutual Fund and other investors from Aug. 16-17.
Insider Trades
- Bajaj Finance promoter acquired 1 lakh shares from Aug. 10-13.
- Raymond promoter group acquired 20k shares on Aug. 10.
- Jagran Prakashan promoter acquired 3 lakh shares on Aug. 13.
Rupee
- Rupee closed at 69.89/$ on Tuesday from 69.93/$ on Monday.
F&O Cues
- Nifty August futures closed trading at 11,463, premium of 28.3 points versus 25.4 points.
- August Series: Nifty open interest up 1.4 percent; Bank Nifty open interest down 0.6 percent.
- India VIX ended at 13.2, down 0.8 percent.
- Max open interest for August series at 11,500 Call (open interest at 42.1 lakh, down 7 percent).
- Max open interest for August series at 11,000 Put (open interest at 51.3 lakh, up 2 percent).
F&O Ban
In ban: Adani Enterprises, Adani Power, Jet Airways, Punjab National Bank.
Put-Call Ratio
- Nifty PCR at 1.70 versus 1.66
- Nifty Bank PCR at 1.14 versus 0.95
Fund Flows
Brokerage Radar
JPMorgan on Mindtree
- Initiated ‘Neutral’ with a price target of Rs 1,050.
- Mindtree has carved a strong positioning for itself in digital services.
- RUN business nicely complementing digital and offering revenue stability.
- Robust mid teen revenue growth and Rupee depreciation to lead to strong earnings growth.
- Assign lower multiple on account of margin volatility and skewed top-client contribution.
IDFC Securities on India Strategy
- June quarter review: Consumption, IT and commodities did well; financials disappointed.
- Overall operationally strong quarter; broad-based in line performance.
- Higher slippages, ageing provisions cause weakness in financials.
- Cut Nifty EPS estimates for the current and the next financial year reduced to Rs 516 and Rs 645 respectively from Rs 549 and Rs 682 respectively.
- Top Nifty Picks: Coal India, NTPC, IndusInd Bank, GAIL, Hero MotoCorp.
Morgan Stanley On MakeMyTrip
- June quarter’s operating performance was better than expected.
- Traffic metrics and customer metrics are strong.
- Unit economics in budget hotels are improving.
- Growth in key segments and market share dynamics remain healthy.
JPMorgan On Coal India
- Maintained ‘Buy’ with a price target of Rs 330.
- Strong fundamental outlook for near term.
- Well placed in improving domestic coal market.
- Expect dividend payout to remain elevated.
- Technical overhang of a potential stake sale by Government.
- Stock struggle to break out of Rs 260-330 range on concerns of earnings growth beyond 2018-19.
Deutsche Bank On UPL
- Maintained ‘Buy’ with a price target of Rs 765.
- Emerging Markets currency volatility is a worry, but risk-reward remains favorable.
- Revenue growth for the current financial year is to recover to 12 percent from 6.5 percent in 2017-18.
- Margins to also expand driven by backward integration.
- Dollar appreciation of 1 percent can reduce post-acquisition EPS by 4 percent.
On Kotak Mahindra Bank
Goldman Sachs
- Maintained ‘Buy’ with a price target of Rs 1,506.
- RBI rejection to impact stocks’ performance in near-to-medium term.
- Investor focus to shift from fundamental performance to regulatory aspect.
- Continue to remain positive on Kotak’s fundamental performance.
- Expect continued growth recovery and improving profitability.
Morgan Stanley
- Maintained ‘Overweight’ with a price target of Rs 1,435.
- Slight negative as the overhang of significant equity supply would increase.
- Another potential solution could be sizeable inorganic growth opportunities.
- Probability of equity capital raising appears low to given its good capital position.
Citi
- Maintained ‘Buy’ with a price target of Rs 1,565.
- If capital raised then it will further increase an already high Tier 1 and depress RoE for a long period.
- Selling stake in secondary market - not preferred in the past.
- Consider a meaningful acquisition either in the banking space or via one of its subsidiaries.
On Grasim Industries
Morgan Stanley
- Maintained ‘Overweight’ with a price target of Rs 1,329.
- June quarter’s Ebitda surpassed estimates, driven by strong VSF margins.
- Outlook for VSF business remains constructive.
- Capacity growth in VSF and chemicals should further support earnings.
- While capex will rise, standalone balance sheet remains healthy.
Deutsche Bank
- Maintained ‘Buy’ with a price target of Rs 1,380.
- June quarter’s standalone result beats estimates on better margins.
- Volume growth to be robust in both VSF and chemicals businesses.
- Strong growth outlook in its core businesses.
- Prefer Grasim over UltraTech given better valuation.
On Sun Pharma
CLSA
- Maintained ‘Buy’; raise price target to Rs 750 from Rs 600.
- June quarter was a strong quarter after the U.S. and India spring a positive surprise.
- Specialty launches in the U.S. on track.
- Regulatory challenges behind and pipeline monetisation underway.
- Believe Sun is well-placed to double its adjusted EPS over the next two years.
Citi
- Maintained ‘Neutral’ with a price target of Rs 600.
- June quarter earnings was ahead of estimates largely on strong traction in U.S.
- Low R&D spend drive earnings beat.
- US traction is encouraging, margins could taper a bit.
Macquarie
- Maintained ‘Neutral’ with a price target of Rs 522
- June quarter’s performance was in line adjusted for lower R&D spend and tax rate.
- Sun is guiding for higher cost largely due to upcoming specialty launches.
- U.S. pricing remains challenging, as competitive intensity is not abating.