All You Need To Know Going Into Trade On December 7

Asian equities opened higher on Thursday, stemming a losing streak as the recent rout in global stocks abated.

Global markets have succumbed to a bout of profit taking this week with eight days of losses for Asian equities culminating Wednesday in the biggest slide since last December for the region's stocks index.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index's performance in India, fell 0.5 percent at 10,071.50 as of 7 a.m.

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DayBreak

Here's a quick look at all that could influence equities on Thursday.

Global Cues

• U.S. stocks put the brakes on a global equity selloff while European stocks almost erased losses following Nikkie's worst rout in nine months.
• Technology stocks, this year's biggest winners, have posted the largest declines along with emerging-market shares, also standout winners in 2017.

#BQMarketsNow | U.S. stocks put the brakes on a global equity selloff as technology shares advanced. https://t.co/J4eyqeoxFf pic.twitter.com/btVI4wuB0j

December 7, 2017

Europe Check

• The Stoxx Europe 600 Index fell 0.1 percent.
• The U.K.'s FTSE 100 Index gained 0.3 percent.

Asian Cues

• The Topix index climbed 0.9 percent as of 9:20 a.m. in Tokyo and the Nikkei 225 Stock Average also rose 0.9 percent. The Nikkei dropped 2 percent on Thursday.
• Australia's S&P/ASX 200 Index gained 0.3 percent.
• South Korea's Kospi index was 0.1 percent lower.
• Futures on Hong Kong's Hang Seng Index were up 0.3 percent.
• Futures on the S&P 500 rose 0.1 percent. The underlying measure closed little changed.
• The MSCI Emerging Markets Index was little changed after dropping 1.5 percent.
• The MSCI Asia Pacific Index advanced 0.3 percent.

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

• The U.S. faces a partial government shutdown after money runs out on Dec. 8 if Congress can't agree on a spending bill by then.
• 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 $56.11 a barrel after falling 2.9 percent.
• Gold was at $1,263.60 an ounce.
• Sugar ended near one-month low at 14.45 cents a pound; down 3.02 percent.

Shanghai Exchange

• Steel trades lower for second day; down 1 percent.
• Aluminium trades lower for third day; down 1.4 percent.
• Zinc trades lower for third day; down 0.5 percent.
• Copper trades lower for third day; down 0.27 percent.
• Rubber trades higher; up 0.11 percent.

Indian ADRs

Earnings To Watch

• BPL
• Fortune Financial
• Haldyn Glass
• Hotel Leela
• Indian Hume Pipe
• Jet Airways
• Multibase
• Venus Remedies

Earnings Reaction To Watch

Pokarna (Q2, YoY)

• Revenues down 9 percent to Rs 85 crore.
• Net profit down 37 percent to Rs 12 crore.
• EBITDA down 27 percent to Rs 27 crore.
• Margins at 31.8 percent from 39.6 percent.

Centum Electronics (Q2, YoY)

• Revenues down 14 percent to Rs 91 crore.
• Net loss of Rs 9 crore from Net profit of Rs 10 crore.
• EBITDA at Rs (6.7 crore) versus Rs 16.6 crore.
• Margins at (7.4 percent) from 15.7 percent.

Arshiya Ltd (Q2, YoY)

• Revenues up 11 percent to Rs 24 crore.
• Net loss of Rs 22.5 crore versus Net loss of Rs 22.6 crore.
• EBITDA up 14 percent to Rs 16.3 crore.
• Margins at 67.9 percent from 66.2 percent.

Ador Welding (Q2, YoY)

• Revenues up 20 percent to Rs 122 crore.
• Net profit up 4 percent to Rs 5.5 crore.
• EBITDA up 8 percent to Rs 10.8 crore.
• Margins at 8.9 percent versus 9.8 percent.

Stocks To Watch

• IRB Infra says CBI filed charge sheet in Pimpoli land case.
• Quess Corp received NCLT Bengaluru's approval to acquire facility management and catering business of Manipal Integrated services.
• Bank of Maharashtra sets one-year MCLR at 8.65 percent from Dec. 7.
• Hatsun Agro approves raising Rs 900 crore via rights issue.
• IDBI Bank to sell 27.99 lakh shares (7 percent) in NSDL.
• Tata Motors rolls out first lot of Tigor EVs from Sanand plant.
• DLF reopens sales, sells Rs 300 crore flats in Gurgaon in Nov.
• Infosys says it has submitted settlement plea with SEBI.
• Claris Life Science's board finds delisting option best for shareholders.

Bulk Deals

• C&C Constructions: Ketan Karani sold 1.94 lakh shares or 0.8 percent stake at Rs 77.67 each.

Weizmann Forex

• Girik wealth advisors bought 70,000 shares or 0.6 percent stake at Rs 1399.52 each
• Parmatma Power Projects Pvt Ltd sold 79,711 shares or 0.6 percent stake at Rs 1399.52 each

Corporate Actions

• Circuit filter revised to 10 percent: Ansal Properties, Rain Inds, Centrum Cap, LKP Fin, Graphite India, Deccan Gold, OK Play, Liberty Shoes, Goldstone Infra, Pincon Spirits and Adani Transmission.
• Circuit filter revised to 20 percent: Bombay Dyeing, HFCL, 63 Moons, Soril Infra, GNFC, GM Breweries, Shalimar Paints, 8K Miles, MMTC, Hind Copper, Kitex, Castex Technologies, TV Today and Puravankara.

Who's Meeting Whom?

• UFO Moviez to meet Nalanda Capital on Dec. 7 and AKSA Capital on Dec. 8.
• Dixon Tech to meet AMSEX on Dec. 7, Sundaram MF on Dec. 11 and Matthews International on Dec. 18.
• Som Distilleries and Breweries to meet investors on Dec. 7 and 8.
• HPCL to meet Morgan Stanley and other investors from Dec. 7-13.
• Crompton Greaves to meet Fidelity, HSBC, GIC, Wellington and other investors on Dec. 7 -8.

Insider Trades

• Lupin promoters bought 50,000 shares on Dec. 5.
• Apollo Tyre promoter PTL Enterprises bought 20,000 shares on Dec. 5.
• GP Petroleum promoter bought 24,700 shares on Dec. 4 - 5.
• Info Edge promoter sold 2.8 lakh shares on Dec. 5.
• Man Infra promoter bought 1.25 lakh shares on Dec. 5.

Rupee

• Rupee closed at 64.52/$ on Wednesday from 64.39/$ on Tuesday.

IPO

• Shalby Limited IPO continues on day 3. The issue has been subscribed 0.46 times.
• Future Supply Chain Solutions IPO continues on day 2. The issue has been subscribed 0.32 times.

Top Gainers And Losers

Index Trends

F&O Cues

• Nifty December Futures trading at 10,068, premium of 24.6 points versus 28.7 points.
• December Futures: Nifty open interest up 5 percent; Bank Nifty open interest up 16 percent.
• India VIX closed 0.5 percent higher at 15.
• Max open interest for Dec. series at 10,500 Call (open interest at 66.8 lakh, up 7 percent).
• Max open interest for Dec. series at 10,000 Put (open interest at 80.5 lakh).

F&O Ban

• In ban: Jain Irrigation.

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 1.11 from 1.16.
• Nifty Bank PCR at 0.71 from 1.

Stocks Seeing High Open Interest Change

Fund Flows

Brokerage Radar

Credit Suisse on Indian Market

• Structural reforms have weakened near-term visibility.
• Weak agricultural income growth to lower broad-based consumption.
• Unclear outlook with low utilisations to keep investment demand weak.
• 2018 less uncertain but growth could still be weak.
• State elections have limited economic impact.
• Changes in market sentiment to drive volatility as 2019 elections approach.
• Market is not relatively expensive, but cuts should resume.
• Expect double-digit earnings per share growth in the next financial year.
• Overweight: Energy and metals, PSU banks and IT.
• Underweights on high price-to-earnings sectors with possible earnings per share cuts: NBFCs, Cement, Discretionary and Staples.
• Outperforms: SBI, ONGC, Tata Steel.
• Underperforms: Bajaj Finance, UltraTech Cement, Dr. Reddy's.

Ventura Securities on Solar Industries

• Initiated ‘Buy' rating with a price target of Rs 1,537, implying a potential upside of 37 percent over 27 months.
• Solar Industries is dominant player in the explosives industry and five times of its nearest peer.
• Infrastructure growth and mining boom to boost demand for explosives.
• Opening up of Indian defense and tapping international markets is positive.
• Expect healthy operating cash flows going ahead.
• Net debt to equity to be maintained at 0.4 times in future
• Expect revenue, operating income and net profit to grow at a compound annual growth rate of 25.3 percent, 27.2 percent and 28.6 percent by March 2020.
• Expect return on equity to expand by 157 basis points to 21.7 percent by March 2020.
• Expect return on capital employed to expand by 357 basis points to 28.7 percent by March 2020.
• Incisive business strategy, enviable financial performance, regulatory compliant and well managed capex compelling case for premium valuation.

Citi on UFO Moviez

• Maintained ‘Buy'; raised price target to Rs 610 from Rs 530.
• Consolidation to enhance in-cinema ad opportunity.
• Merger with Qube to increase geographical strength and client base.
• GST and demonetization impacts are temporary issues and provide buying opportunity.
• Worst is behind and expect better numbers in the second half of the current financial year.

Credit Suisse on Idea Cellular

• Maintained ‘Underperform' with price target of Rs 70.
• Operating income decline eats up most of targeted synergies.
• Vodafone-Idea would still have high leverage at 3.8 times.
• Timelines on merger approvals critical to prevent further market share/EBITDA erosion.
• Idea has not been a participant of massive growth in Indian mobile data market.

Credit Suisse on PI Industries

• Initiated ‘Outperform' rating and price target of Rs 1,150.
• PI strongly positioned in custom synthesis and manufacturing; Orderbook provides visibility.
• PI to have a less than 5 percent market share of global industry in custom synthesis and manufacturing, offering ample opportunity to grow.
• Focus on speciality products in domestic business a key differentiator.
• Expect revenue of custom synthesis and manufacturing business and Domestic business to grow at a compound annual growth rate of 20 percent and 14 percent by March 2020.
• Expect earnings per share to grow at a compound annual growth rate of by March 2020, with better growth for custom synthesis and manufacturing in the second half of the current financial year itself.
• Operating margins should sustain in narrow range.

HSBC on IRB Infra

• Downgraded to ‘Hold' from ‘Buy'; cut price target to Rs 200 from Rs 331.
• CBI filed a charge sheet against IRB, its promoter, its subsidiary, and few other employees in a government land grab case.
• Historically, the stock has reacted very negatively on such news flow.
• Very difficult to predict how the case will progress.
• Expect stock to be under pressure and will not be driven by business fundamentals.
• Downgrade to Hold despite attractive valuations.

Nomura on BSE

• Initiated ‘Neutral' rating with a price target of Rs 1,000; implying a potential upside of 9 percent.
• Monetising/diversifying its franchise but losing the core battle.
• Large part of BSE's business value driven by non-core segment.
• High EBIT growth led by transaction revenues from highly volatile illiquid segment.
• Refrain from giving higher multiple to unsustainable/volatile portion.
• Dependence on investment income reducing; Operational costs stable.
• Expect revenue, EBIT and profit before tax to grow at a compound annual growth rate of 4 percent, 11 percent and 14 percent respectively by March 2020.
• EBIT margin improve to 30 percent by March 2020.

Brokerages On RBI Policy

Motilal Oswal

• Expect inflation to rise towards 5 percent by March 2018, primarily on account of low base.
• On the other hand, expect real GVA to rise slower than the RBI's expectations.
• No rate action expected in remaining part of this financial year.

CLSA

• India's credit growth remains massively below what would support a cyclical upswing and inflation is still below the centre of the inflation target.
• Discussion of a cut has more merit given the weakness of growth.
• CPI inflation will rise a little further which implies no change in monetary policy in 2018 either.

Macquarie

• We read the policy statement as neutral.
• Expect the RBI to be on an extended pause with inflation risks contained and growth in a gradual recovery mode.
• With ongoing liquidity tightness to persist into the fiscal year-end, expect market rates to remain under pressure which could potentially hurt financial stocks, particularly NBFCs.
• A rate hike in the next financial year will be premature on expectations of a gradual growth recovery and inflation risks remaining contained.

Nomura

• Believe both growth and inflation are headed higher.
• Expect rates to be on hold through 2018 as the RBI has a sufficient real rate cushion to absorb higher inflation.
• FX strategy: remain constructive on Indian Rupee.
• Rates Strategy: do not expect any further open market operation sales.
• Rates Strategy : Expect bond markets to consolidate around current levels.

Kotak

• The tone of the communique was broadly neutral even as it adequately highlighted the upside risks to inflation.
• Maintain call that the RBI MPC will likely remain on a pause for the rest of FY2018 as inflation continues to inch higher.
• Believe that the focus will start shifting to MPC's possible moves in FY2019 with the rate-cut cycle broadly over, for now.

Key takeaways from the #RBIPolicyhttps://t.co/QVch4OAMn6 pic.twitter.com/jdWVFx7amS

December 6, 2017

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