All You Need To Know Going Into Trade On Dec. 8

Asian stocks opened higher following a broad-based rally in U.S. equities.

Equities across the Asia-Pacific began rallying on Thursday after an eight-day losing streak saw investors booking profits following 2017 gains. This year remains on track to be the best since 2009 when stocks surged in the immediate aftermath of the financial crisis.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index's performance in India, rose 0.2 percent at 10,216.50 as of 6:50 a.m.

Short on time? Well, then listen to this podcast for a quick summary of the article!

Day Break

Global Cues

• U.S. stocks rose as investors evaluated the outlook for a final tax bill while the dollar advanced for a fourth day and oil rebounded from its worst selloff in two months.
• Brazil's real and stocks tumbled amid growing skepticism a pension overhaul will be passed this year.

#BQMarketsNow | U.S. stocks rose as investors evaluated the outlook for a final tax bill.https://t.co/eAeD2UZNnf pic.twitter.com/ilcgcrg3uP

December 8, 2017

Europe Check

• The pound jumped on speculation that Ireland and Britain were close to a Brexit deal.
• The Stoxx Europe 600 Index ended little changed.
• The U.K.'s FTSE 100 Index fell 0.4 percent.

Asian Cues

• The Topix index climbed 0.5 percent and the Nikkei 225 Stock Average rose 0.9 percent.
• Australia's S&P/ASX 200 Index added 0.2 percent and the Kospi index in Seoul was also up 0.2 percent.
• Futures on Hong Kong's Hang Seng Index rose 0.4 percent.
• The MSCI Asia Pacific Index gained 0.1 percent and is up 24 percent so far this year.

Here are some key events scheduled for the remainder of the week:

• China reports on trade on Friday.
• U.S. employers probably hired at a robust pace in November as the unemployment rate held at an almost 17-year low. The Labor Department's jobs report Friday may also show a bump up in average hourly earnings.

Commodity Cues

• West Texas Intermediate crude was little changed at $56.60 a barrel.
• Gold was steady at $1,247.38 an ounce.
• Brent crude trades lower at $62.1 per barrel, down 0.2 percent.
• Sugar ended lower for third-day at 14.31 cents per pound; down 0.97 percent.

Shanghai Exchange

• Steel trades lower for third day; down 1.4 percent.
• Aluminium trades lower for fourth day; down 0.2 percent.
• Zinc trades lower for fourth day; down 0.2 percent.
• Copper trades lower for fourth day; down 0.02 percent.
• Rubber trades lower for fourth day; down 1.8 percent.

Indian ADRs

Earnings To Watch

• Aegis Logistics
• Ajmera Realty
• Federal Mogul
• Global Vectra Helicorp
• HDFC Standard Life Insurance
• Jayshree Tea
• KDDL
• Omax Autos

Earnings Reaction To Watch

Jet Airways (Q2, YoY)

• Revenue up 3 percent at Rs 5,627 crore.
• Net Profit down 91 percent to Rs 50 crore.
• Ebitdar down 31 percent at Rs 837 crore.
• Ebitdar margin at 14.9 percent versus 22.1 percent.

Indian Hume Pipe (Q2, YoY)

• Revenue down 52 percent at Rs 214 crore.
• Net profit down 63 percent at Rs 8 crore.
• EBITDA down 49 percent at Rs 25 crore.
• Margin at 11.7 percent versus 11.3 percent.

Fortune Financial (Q2, YoY)

• Revenue up 36 percent at Rs 60 crore.
• Net profit down 33 percent at Rs 8 crore.
• EBITDA up 33 percent at Rs 20 crore.
• Margin at 33.3 percent versus 34.1 percent

BPL (Q2, YoY).

• Revenue up 23 percent at Rs 43 crore.
• Net profit at Rs 16 crore.
• EBITDA up 260 percent at Rs 3.6 crore.
• Margin at 8.4 percent versus 2.9 percent.

Stocks To Watch

• GAIL awards contracts for laying 520 km pipelines from Dobhi to Durgapur.
• NCL Industries' QIP opens at floor price of Rs 249.63 per share.
• Union Bank QIP opens at a floor price of Rs 162.79 per share.
• TVS Motor bought 14.8 percent stake in electric two-wheeler company Ultraviolette.
• Federal Bank gives in principal approval for investment to be done by a strategic investor in its wholly owned subsidiary FedBank Financial Services.
• Emami to acquire 30 percent stake in Helios Lifestyle Pvt. Ltd. for an undisclosed consideration.
• Tube Investments to acquire controlling stake in Creative Cycles & Great Cycles, Sri Lanka.
• JSPL submits plans for debt resolution, eyeing equity issue (Financial Express).

Bulk Deals

Himatsingka Seide

• Merrill Lynch India Equities Fund bought 13.76 lakh shares or 1.4 percent equity at Rs 332 each.
• Promoter Leela Devi Himatsingka sold 11.55 lakh shares or 1.2 percent equity at Rs 332 each.

Blue Star

• SAIF India IV FII Holdings sold 7.57 lakh shares or 0.8 percent equity at Rs 800 each.

Kohinoor Foods

• Equity Intelligence India sold 2 lakh shares or 0.6 percent equity at Rs 77.04 each.

Religare Enterprises

• Resilient India Growth Fund bought 1.76 crore shares or 9.9 percent equity at Rs 56.7 each.
• IDBI Trusteeship sold 1.78 Crore shares or 10 percent equity at Rs 56.7 each.

Axiscades Engineering

• Master Portfolio Services - Valum India Discovery Scheme bought 1.95 lakh shares or 0.5 percent equity at Rs 153.22 each.

LT Foods

• India Agri Business Fund sold 20 lakh shares or 0.7 percent equity at Rs 84.19 each.

Ruchi Soya

• Cresta Fund sold 42.50 lakh shares or 1.3 percent equity at Rs 20.48 each.

Asian oil fields

• Religare Finvest sold 1.79 lakh shares or 0.6 percent equity at Rs 217.75 each.

Who's Meeting Whom?

• Cipla to meet Polar Capital on Dec. 8.
• SP Apparels to meet DSP Blackrock, Pru ICICI MF, JM Financial on Dec. 8.
• Shriram City Union to meet LGM Capital and Tata AMC on Dec. 8.
• Pfizer to meet SBI MF on Dec. 8.
• Graphite India to meet investors in HK from Dec. 11 - 12.
• GE Shipping to meet investors like ICICI Pru, Birla MF, Alchemy and others on Dec. 11.

Insider Trades

• Vaibhav Global promoter bought 20,000 shares on Dec. 5.
• Man Infra promoter bought 1.5 lakh shares on Dec. 6.

Rupee

• Rupee closed at 64.57/$ on Thursday from 64.52/$ on Wednesday.

IPO

• Shalby Limited IPO subscribed 2.8 times on final day.
• Future Supply Chain Solutions IPO continues on day 3.

Index Trends

Top Gainers And Losers

F&O Cues

• Nifty December Futures trading at 10,202.9, premium of 37 points versus 24.6 points.
• Dec. Futures: Nifty open interest down 1 percent; Bank Nifty open interest up 2 percent.
• India VIX closed at 14.2, down 5.4 percent.
• Max open interest for Dec. series at 10,500 Call (open interest at 61.9 lakh, down 7 percent).
• Max open interest for Dec. series at 10,000 Put (open interest at 85.9 lakh, up 7 percent).

F&O Ban

• In ban: HDIL, IRB Infra, Jet Airways and Jain Irrigation.
• New in ban: HDIL, IRB Infra, Jet Airways.

Only intraday positions can be taken in stocks which are in F&O ban. In case of a rollover of these intraday positions, there is a penalty.

Put-Call Ratio

• Nifty PCR at 0.91 versus 1.11.
• Nifty Bank PCR at 1.17 versus 0.71.

Stocks Seeing High Open Interest Change

Fund Flows

Brokerage Radar

HSBC on Escorts

• Initiated ‘Buy' rating with price target of Rs 835, implying a potential upside of 26 percent from yesterday's close.
• Brand and profit growth back on track.
• New products to boost market share, margins, and profits.
• Expect Tractor volumes, revenue, EBIT and net profit to grow at a compounded rate of 10 percent, 13 percent, 33 percent and 45 percent respectively by March 2020.
• Cost cutting, improved product mix and increased capacity utilization to drive profits.
• Construction equipment to break even in the current financial year.
• Return on capital employed to improve to 23 percent by March 2020, compared to 11 percent, clocked in previous financial year.
• Positives: improved demand, favourable monsoons, increasing farm mechanisation and improving farming income.

Credit Suisse on HDFC Bank

• Maintained ‘Outperform'; raised price target to Rs 2,075 from Rs 1,955.
• Bank's CET1 at 12.2 percent, similar to the levels seen in the financial year-ended March 2015.
• Expects bank to undertake next capital raise in in the next financial year.
• If $3 billion raised, then expect 4 percent dilution and increase in capital base by 20 percent.
• $3 billion enough to support growth for next 3-4 years, if loan growth at 23-25 percent.
• Stock does well around capital raise as P/B premium moderates.
• An equity raise can equalise P/B multiples of HDFC Bank and Kotak.

Citi on JSW Energy

• Maintained ‘Buy'; raised price target to Rs 93 from Rs 75.
• Signing of new power purchase agreements increases comfort.
• Strong cash flows despite untied capacity.
• Low visibility on PPA for Vijaynagar, but several other potential positives in making.
• Raised price target on the back of new PPA, improvement in cash flow and decline in net debt.

Morgan Stanley on Cyient

• Maintained ‘Overweight' with price target of Rs 620.
• Potential hiccups in communication vertical, but company reiterates outlook for the current financial year.
• Any delays in fibre rollout in Australia to have an impact on Cyient's business.
• Worst case impact to be 5-6 percent on the next financial year's earnings estimates.
• Still believes Cyient is cheap relative to many mid-cap peers.

Morgan Stanley on Indian Telecom

• Smaller operators' merger or exit mean top incumbents/Jio could gain 10 percent market share in next 12 months.
• Tower companies to see near-term headwinds on consolidation, but rising data usage augers well.
• Remain constructive on tower companies over the medium term.
• TRAI's recommendation to raise limit for overall spectrum holdings could be favorable for the top incumbent operators/Jio to augment their holdings if the spectrum is sold or auctioned.

Jefferies on Bharat Petroleum

• Maintained ‘Underperform' with price target of Rs 425.
• Fuel margins should rebound but refining headwinds loom.
• Less confident of margin momentum into the busy election calendar in the next financial year.
• Current quarter tracking to be a weak quarter with core earning per share down 25 percent on a sequential basis.
• Expect refining margins to rise to $8.5/bbl once Kochi stabilises by the second half of next financial year.

Morgan Stanley on Future Consumer

• Initiated ‘Overweight' rating with price target of Rs 95; implying a potential upside of 61 percent form yesterday's close.
• Expect Future Consumer to be India's fifth-largest FMCG company by March 2021.
• Future Group's retail ecosystem yields a unique competitive advantage.
• FCL can launch innovative products with a disruptive go-to-market strategy.
• Expect Future Retail to contribute over 90 percent of financial year-ending March 2020's revenues, compared to 74 percent in the next financial year.
• Expect revenues to jump 3.2 times by March 2020; margins to expand by 470 basis points by March 2020.
• Scale-driven efficiencies, better fixed-cost absorption and product mix improvement to drive margin expansion.
• Bull Case price target Rs 194: Faster ramp-up of small format stores by FRL, and higher contribution of FCL brands.

IIFL on Vardhman Textiles

• Maintained ‘Buy'; raised price target to Rs 1,480 from Rs 1,400.
• Expect yarn spreads to remain healthy.
• Expect global cotton prices to remain healthy.
• Erratic weather increased share of low quality U.S. cotton.
• Expect margins to benefit in second half of the current financial year as yarn spreads expand.
• Margins in the first half of next financial year to benefit from low-cost cotton inventory.
• Raised earnings per share estimates by 4 percent till March 2020.

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