All You Need To Know Going Into Trade On August 7

Asian stocks opened mixed Tuesday as risk appetite remained subdued despite a positive U.S. session on earnings.

Equity benchmarks ticked higher in Japan and were little changed in Australia and South Korea, while Hong Kong futures pointed to gains. The Singapore traded SGX Nifty, an early indicator of NSE Nifty 50 Index's performance in India traded a little changed as at 11,436 as of 7:22 a.m.

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BQ Live

U.S. Market Check

• U.S. stocks rose for a third day as strong results from Berkshire Hathaway Inc. lifted financial shares and higher oil prices boosted energy producers.
• The yield on 10-year Treasuries held at 2.94 percent.

#BQMarketWrap | U.S. stocks advance with dollar, Treasuries.

Read: https://t.co/KzxPYy8aYl pic.twitter.com/0rdmoAe8zb

August 7, 2018

Europe Market Check

European shares ended lower Monday, as concerns about trade again took the limelight, with mining stocks nearly reversing Friday's' gains.

Asian Cues

• Topix index rose 0.1 percent.
• Australia's S&P/ASX 200 Index fell less than 0.1 percent.
• South Korea's Kospi index was little changed.
• Hong Kong's Hang Seng Index futures added 0.4 percent.
• Futures on the S&P 500 were flat.

Commodity Cues

• West Texas Intermediate crude fell 0.2 percent to $68.86 a barrel.
• Gold rose 0.1 percent to $1,208.80 an ounce.

Shanghai Exchange

• Steel traded higher for third day; up 1.7 percent.
• Aluminium traded higher for third day; up 0.5 percent.
• Zinc snapped two-day winning streak; down 0.4 percent.
• Copper traded lower; down 0.1 percent.
• Rubber traded higher for second day; up 0.7 percent.

Fuel prices hiked in major cities across India. ⛽️ pic.twitter.com/hm4iHF5pju

August 7, 2018

Stories That You Might've Missed

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• India is growing ‘too fast' for its own good, Macquarie's Viktor Shvets says.
• Supreme Court Judges meet Chief Justice over KM Joseph's seniority issue.
• Mapping unpaid women's work is India's next step in jobs puzzle.
• The National Health Stack: An expensive, temporary placebo.
• Bring back LoUs, says Parliamentary Panel.
• Indra Nooyi is stepping down as PepsiCo CEO after 12-year stint.
• Here's Apple's plan to fix its problems in India.
• Blade Runners: Prosthetics Startup Xiborg is ready for business.
• Dell projects revenue boost in pitch for tracking-stock buyout.
• While music streaming sales surge, singers still get paid a song.
• Obamacare helped make this doctor a billionaire.

Here are some key events to watch out for this week:

• Earnings season includes results from: Japan Post Bank, Disney, 21st Century Fox, Deutsche Telekom, China Mobile, Glencore and Adidas.
• Tuesday brings the latest Reserve Bank of Australia meeting that is forecast to produce no change in either the record-low cash rate or the long-term guidance.
• The Bank of Japan releases a summary of opinions Wednesday from its July 30-31 meeting, at which it tweaked elements of its stimulus policy to make it more sustainable.
• Samsung Electronics unveils its next Galaxy Note smartphone.
• U.S. consumer prices probably rose in July, consistent with a pickup in inflation that's projected to keep the Federal Reserve on a path of gradual interest-rate increases, economists forecast before Friday's release.

Nifty Earnings To Watch

• Mahindra & Mahindra

Other Earnings To Watch

• Adani Enterprises
• Adani Transmission
• AU Small Finance Bank
• Bombay Dyeing
• Edelweiss Financial Services
• Future Lifestyle Fashions
• Future Supply Chain Solutions
• Glaxosmithkline Consumer Healthcare
• Inox Wind
• Mcdowell Holdings
• Motherson Sumi Systems
• Mphasis
• Punjab National Bank
• Sobha
• Somany Ceramics
• SRF
• Thomas Cook
• TVS Motor
• Wonderla Holidays

Earnings Reactions To Watch

Nava Bharat Ventures (Q1, YoY)

• Revenue up 106.2 percent at Rs 740.8 crore.
• Net profit up 5.6 times at Rs 85.4 crore.
• Ebitda up 6.2 times at Rs 275.6 crore.
• Margins at 37.2 percent versus 12.4 percent.

Ujjivan Financial Services (Q1, YoY)

• NII up 61 percent at Rs 222.4 crore.
• Net Profit of Rs 45 crore versus loss of Rs 74.9 crore.
• Provisions at Rs 15.1 crore versus Rs 34.7 crore (QoQ).
• GNPA at 2.7 percent versus 3.6 percent (QoQ).
• NNPA at 0.3 percent versus 0.7 perent (QoQ).

Adani Power (Q1, YoY)

• Revenue down 30.9 percent at Rs 3,829.7 crore.
• Net loss at Rs 825.2 crore versus net loss of Rs 452.8 crore.
• Ebitda down 25.8 percent at Rs 1,158.8 crore.
• Margin at 30.3 percent versus 28.2 percent.

Max Financial Services (Q1, YoY)

• Revenue up 37 percent at Rs 129 crore.
• Net profit up 12 percent at Rs 75 crore.

Praj Industries (Q1, YoY)

• Revenue up 3.1 percent at Rs 191.6 crore.
• Net profit up at Rs 3.5 crore.
• Ebitda up 4.7 times at Rs 4.2 crore.
• Margin at 2.2 percent versus 0.5 percent.

Dalmia Bharat Sugar (Q1, YoY)

• Revenue up 2.6 percent at Rs 653.3 crore.
• Net profit up 12.5 percent at Rs 62 crore.
• Ebitda down 13.9 percent at Rs 83.9 crore.
• Margin at 12.8 percent versus 15.3 percent.

Dixon Technologies (Q1, YoY)

• Revenue down 13.4 percent at Rs 592.7 crore.
• Net profit up 18.5 percent at Rs 12.8 crore.
• Ebitda up 23.7 percent at Rs 26.1 crore.
• Margin at 4.4 percent versus 3.1 percent.

Avanti Feeds (Q1, YoY)

• Revenue up 4.2 percent at Rs 1,040.2 crore.
• Net profit down 41.6 percent at Rs 85.7 crore.
• Ebitda down 41.3 percent at Rs 132 crore.
• Margin at 12.7 percent versus 22.5 percent.

Syndicate Bank (Q1, YoY)

• Net Interest Income down 5.9 percent at Rs 1,505.9 crore.
• Net loss at Rs 1,281.8 crore versus net loss of Rs 263.2 crore.
• Provisions at Rs 1,774.1crore versus Rs 3,544.7 crore (QoQ).
• GNPA at 12.59 percent versus 11.53 percent (QoQ).
• NNPA at 6.64 percent versus 6.28 percent (QoQ).

Adani Ports and Special Economic Zone (Q1, YoY)

• Revenue down 12.2 percent at Rs 2,411 crore.
• Net profit down 9.2 percent at Rs 690.7 crore.
• Ebitda up 1.4 percent at Rs 1,588.32 crore.
• Margin at 65.9 percent versus 57.1 percent.

Dhanlaxmi Bank (Q1, YoY)

• Net Interest Income down 5 percent at Rs 81.1 crore.
• Net loss at Rs 45 crore versus net profit at Rs 8 crore.
• Provisions at Rs 65 crore versus Rs 80.1 crore (QoQ).
• GNPA at 8.94 percent versus 7.35 percent (QoQ).
• NNPA at 3.79 percent versus 3.19 percent (QoQ).

Parag Milk Foods (Q1, YoY)

• Revenue up 33 percent at Rs 549 crore.
• Ebitda up 109 percent at Rs 60 crore.
• Margin at 10.9 percent versus 6.9 percent.
• Net profit up 169 percent at Rs 28.3 crore.
• Operating leverage and higher capacity utilisations aided numbers.

Stocks To Watch

• Sun Pharma launched Kapspargo Sprinkle in the U.S.
• ONGC board approved its entire stake sale of 49 percent in Pawan Hans (PTI).
• Unichem Labs received four observations for its API manufacturing facility in Maharashtra.
• Three Indian ports may acquire majority stake in Dredging Corporation of India.
• Kridhan Infra received civil works order worth Rs 132.6 crore in Uttar Pradesh.
• IZMO bagged multi-crore contract from leading European Automotive OEM.
• Sagar Cements: Cement sales for July up 13.4 percent at 219,748 metric tonne.
• Kwality said that its results will be delayed due to technical problems.
• Rolta India said due to unforeseen circumstances the Group will be unable to perform its obligations under restructuring pact.

Indian ADRs

Bulk Deals

Mahindra Lifespace

• First State Indian Subcontinent Fund bought 4.64 lakh shares or 0.9 percent equity at Rs 500 each.
• Smaller Cap World Fund Inc sold 26.17 lakh shares or 5.1 percent equity at Rs 501.75 each.

TCI Express

• Manulife Global Fund - India Equity Fund sold 2.26 lakh shares or 0.6 percent equity at Rs 697.03 each.

Nath Bio-gene

• Satpal Khattar bought two lakh shares or 1.1 percent equity at Rs 493.11 each.

Who's Meeting Whom

• Balaji Telefilms to meet UBS on Aug. 7.
• Vedanta to meet investors from Aug. 7-8.

Insider Trades

• Srikalahasthi Pipes promoters acquired 35,000 shares from Aug 2-3.

(As Reported on Aug. 06)

Trading Tweaks

• Vakrangee circuit filter revised to 20 percent from 5 percent.
• Den Networks, Hathway Cable, KRBL, Vimta Labs circuit filter revised to 20 percent from 10 percent.
• 5Paisa Capital, Link Pharma circuit filter revised to 10 percent from 5 percent.
• Morepen Labs, VIP Industries circuit filter revised to 5 percent from 20 percent.
• Adani Green, Morepen Labs, VIP Industries, Gujarat Ambuja Exports placed under ASM framework.
• DB Corp buy back period from Aug 8 – 23.
• Gallant Ispat stock split to Re 1 from Rs 10 per share.

Money Market Update

• Rupee ended at 68.89/$ on Monday versus 68.62/$ on Friday.

F&O Cues

• Nifty August Futures closed trading at 11,414.2 premium of 27 points versus 34.9 points.
• August series-Nifty OI up 0.5 percent and Bank Nifty OI up 12 percent.
• India VIX ended at 12.5, up 4 percent.
• Max OI for Aug series at 11,500 Call, OI at 34.5 lakh, OI up 10 percent.
• Max OI for Aug series at 11,000 Put OI at 50 lakh, OI up 3 percent.

F&O Ban

• In ban: Adani Power, Jet Airways
• New in ban: None
• Out of ban: None

Put-Call Ratio

• Nifty PCR at 1.69 versus 1.72.
• Nifty Bank PCR at 1.50 versus 1.34.

Active Stock Futures

Fund Flows

Brokerage Radar

Elara Capital on V-Mart Retail

• Initiated ‘Buy' with a price target of Rs 3,316.
• Pioneer in value retailing in the organized space.
• One of the best plays in India's organized apparel retail sector.
• Huge untapped opportunity up for grabs; Retail market to touch $1.3 trillion by March 2020.
• Expect revenue, Ebitda and net profit to grow at a compounded annual growth rate of 25 percent, 32 percent and 31 percent over FY18-20.
• Strong RoCE and free cashflow generation to continue.

HSBC on SAIL

• Maintained ‘Buy'; cut price target to Rs 100 from Rs 110.
• Ebitda missed estimates, largely driven by higher than expected costs.
• Ebitda/tonne benefited from ramping up of expanded and upgraded plants.
• Guidance for rising employee costs a concern.
• Volume guidance of 17 metric tonnes looks realistic now.

Macquarie on Graphite India

• Maintained ‘Outperform'; raised price target to Rs 1,410 from Rs 1,260.
• June quarter's operating income came above estimates led by higher realization.
• Higher prices and utilisation should absorb cost increase in 2018-19.
• Cost to gradually increase but little risk to margins.
• Price strength to sustain; Volumes to grow with higher utilisation.

Investec on Dixon Technologies

• Maintained ‘Buy' with a price target of Rs 3,460.
• June quarter was impacted by one-off debtor write-off, forex and commodity cost increase.
• Lighting business delivered stellar margins.
• Dixon added new large customers which significantly improves revenue visibility.
• See several drivers that should contribute to strong earnings growth.

Brokerages On Britannia

UBS

• Maintained ‘Buy' with a price target of Rs 7,700.
• Margin improvement led improving gross margin and optimising other expenses.
• Efforts to restructure international units with sub-par profitability to continue.
• Key beneficiary of rural upswing, diversification on track.
• Maintain buy on good revenue and earnings growth visibility compared to peers.

Goldman Sachs

• Maintained ‘Buy' with a price target of Rs 7,235.
• Ebitda came below estimates as better gross margin was offset by higher other expenses.
• International markets remained flat.
• Believe Britannia has re-invested gross margin benefit in ad-spend to support volume growth.
• Bullish stance on ability to drive premiumisation by launching affordable packs of premium products.

Brokerages On Arvind

UBS

• Maintained ‘Buy' with a price target of Rs 515.
• June quarter's revenue growth below expectation due to subdued textile performance.
• Robust quarter for brand and engineering.
• Management maintained strong growth guidance for 2018-19.
• See marginal increase in competitive intensity for Arvind.

CLSA

• Maintained ‘Buy' with a price target of Rs 550.
• Juen quarter was a mixed quarter.
• B&R business scaling up well; Textiles margins correct.
• Lower DEPB rates, currency hedges impact textiles margins.
• In final stages of demerger approvals; Expect approvals to come in by early Q2.

Brokerages on Ujjivan

Macquarie

• Maintained ‘Outperform' with a price target of Rs 490.
• June quarter was a bit of a mixed bag.
• Aggressive branch opening; but slower growth.
• Expect credit costs to drop quite significantly in 2018-19.
• Ujjivan is top pick in microfinance.

Spark Capital

• Maintained ‘Buy' with a price target of Rs 399.
• Lower MFI growth, higher opex leads to net profit miss.
• Calculated net interest margins seems to have declined QoQ to 9.79 percent.
• Gross NPAs came in at 2.7 percent versus 3.7 percent (QoQ).

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