All You Need To Know Going Into Trade On Jan. 25

Asian shares traded lower Thursday after Trump administration officials' rhetoric on trade and the dollar roiled financial markets, sending the U.S. currency to its lowest level in three years and whipsawing stocks that had been buoyed by strong earnings.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index's performance in India, rose 0.3 percent to 11,108 as of 7:25 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 fluctuated through the session and finished mostly lower yesterday as technology companies slumped.
• Commerce Secretary Wilbur Ross's suggestion that the U.S. could enact more levies touched off concerns of a trade war that could hamper the synchronized global growth that's sent equities around the world to all-time highs.
• Meanwhile, Treasury Secretary Steven Mnuchin's endorsement of a weak dollar added to pressure on a greenback that's been in decline for a year, although White House Press Secretary Sarah Sanders appeared to soften his comments later.

#BQMarketsNow | U.S. markets end mixed; WTI above $65 per barrel mark.https://t.co/kpsNiO4UlB pic.twitter.com/EBhmYDP8t2

Europe Check

• European stocks fell the most in a month as the euro strengthened and technology companies posted their biggest declines since November.
• The euro rose to the highest since 2014 as eyes turn to the European Central Bank's policy meeting on Thursday, where traders will be looking for for further clues on its appetite for rolling back stimulus, and its officials' thoughts on a strengthening currency.

Asian Cues

• The MSCI Asia Pacific Index sank 0.3 percent.
• Japan's Topix index sank 0.8 percent.
• Kospi index rose 0.3 percent.
• Australia's S&P/ASX 200 Index fell 0.2 percent.
• Futures on the S&P 500 Index fell 0.1 percent.

Here are some of the other key events scheduled for this week:

• Earnings season is in full swing: Intel, LVMH Moet Hennessy Louis Vuitton, Starbucks and Hyundai Motor all come this week.
• Barring any last minute changes in Washington, Trump will join world leaders and senior executives in Davos for the annual World Economic Forum.
• The U.K. House of Lords is considering Prime Minister Theresa May's Brexit bill this week.

Lots of risks to the global economy, one of them is visiting #Davos this week, says @Harvard's Kenneth Rogoff (@krogoff). #BQatWEF https://t.co/5nUPcW1Cs8 pic.twitter.com/JcY1vm8rbi

Commodity Cues

• Brent crude settled at $70.53 a barrel, up 0.8 percent
• West Texas Intermediate crude rose 0.4 percent to $65.85 a barrel.
• Gold fell 0.2 percent to $1,356.29 an ounce.
• Sugar ended lower at 13.16 cents per pound; down 0.2 percent.

Shanghai Exchange

• Steel trades higher for second day; up 0.3 percent.
• Aluminium snaps three-day losing streak; up 0.7 percent.
• Zinc trades higher; up 0.7 percent.
• Copper trades higher; up 2 percent.
• Rubber trades lower for fifth day; down 0.3 percent.

Indian ADRs

Nifty Earnings To Watch

• Dr Reddy's Lab
• Maruti Suzuki
• UPL

Other Earnings To Watch

• Ajanta Pharma
• Avenue Supermarts
• Future Supply Chain Solutions
• Jindal Steel & Power
• L&T Finance Holdings
• LIC Housing Finance
• Nilkamal
• Shriram City Union Finance
• Tata Coffee

Earnings Reaction To Watch

Biocon Q3 (YoY)

• Revenue up 2 percent at Rs 1,058 crore.
• Net profit down 46 percent at Rs 92 crore.
• EBITDA down 20 percent at Rs 222 crore.
• Margin at 21 percent from 26.6 percent.

Canara Bank Q3 (YoY)

• Net Interest Income up 52 percent at Rs 3679.5 crore.
• Net profit down 61 percent at Rs 125.75 crore.
• Provisions up 24 percent at Rs 2674 crore (QoQ).
• Provisions for NPA down 3 percent at Rs 1,900 crore (QoQ).
• GNPA at 10.38 percent from 10.51 percent (QoQ).
• Net NPA at 6.78 percent from 7.02 percent (QoQ).

L&T Infotech Q3 (QoQ)

• Revenue up 8 percent at Rs 1,884 crore.
• Net profit up 4 percent at Rs 283 crore.
• EBIT up 11 percent at Rs 281.5 crore.
• Margin at 14.9 percent from 14.5 percent.

KPIT Technologies Q3 (QoQ)

• Revenue down 0.3 percent at Rs 913 crore.
• Net profit up 3.4 percent at Rs 61.7 crore.
• EBIT up 11.2 percent at Rs 78.4 crore.
• Margin at 8.6 percent from 7.7 percent.

Music Broadcast Q3 (YoY)

• Revenue up 4 percent at Rs 76 crore.
• Net profit up 20 percent at Rs 12 crore.
• EBITDA down 13 percent at Rs 23.5 crore.
• Margin at 30.9 percent from 37 percent.

Quess Corp Q3 (YoY)

• Revenue up 48.5 percent at Rs 1,584 crore.
• Net profit up 106 percent at Rs 70 crore.
• EBITDA up 54 percent at Rs 91 crore.
• Margin at 5.7 percent from 5.5 percent.

Container Corporation of India Q3 (YoY)

• Revenue up 25 percent at Rs 1,640 crore.
• Net profit up 55 percent at Rs 289 crore.
• EBITDA up 71.5 percent at Rs 446 crore.
• Margin at 27.2 percent from 19.8 percent.

Pidilite Q3 (YoY)

• Revenue up 16 percent at Rs 1,543 crore.
• Net profit up 19 percent at Rs 240 crore.
• EBITDA up 29 percent at Rs 370 crore.
• Margin at 24 percent from 21.5 percent.

Raymond Q3 (YoY)

• Revenues up 14 percent at Rs 1484 crore.
• Net profit at Rs 29 crore.
• EBITDA up 74 percent at Rs 101.6 crore.
• Margins at 6.8 eprcent versus 4.4 percent.

KEI Industries Q3 (YoY)

• Revenues up 25 percent at Rs 889 crore
• Net profit up 50 percent at Rs 39 crore.
• EBITDA up 9.5 percent at Rs 84 crore.
• Margin at 9.5 percent versus 10.75 percent.

Sagar Cements Q3 (YoY)

• Revenue up 30 percent at Rs 249 crore.
• Net profit of Rs 3 crore from a loss Rs 0.5 crore.
• EBITDA up 7 percent at Rs 31 crore.
• Margin at 12.4 percent from 15.2 percent.

Mphasis Q3 (QoQ)

• Revenue up 3.5 percent at Rs 1,661 crore.
• Net profit up 9 percent at Rs 215 crore.
• EBIT up 11 percent at Rs 257 crore.
• Margin at 15.5 percent from 14.5 percent.

TT Ltd Q3 (YoY)

• Revenue down 28 percent at Rs 140 crore.
• Net profit up 33 percent at Rs 0.8 crore.
• EBITDA up 5 percent at Rs 11 crore.
• Margin at 7.9 percent from 5.4 percent.

Genus Power Infrastructures Q3 (YoY)

• Revenue up 9 percent at Rs 200 crore.
• Net profit up 8 percent at Rs 13 crore.
• EBITDA down 17 percent at Rs 19 crore.
• Margin at 9.5 percent from 12.6 percent.

Liberty Shoes Q3 (YoY)

• Revenue up 28 percent at Rs 163 crore.
• Net profit up 145.5 percent at Rs 2.7 crore.
• EBITDA up 10 percent at Rs 11 crore.
• Margin at 6.7 percent from 7.9 percent.

Bharat Bijlee Q3 (YoY)

• Revenue up 34.5 percent at Rs 228 crore.
• Net profit at Rs 9.65 crore.
• EBITDA at Rs 14 crore.
• Margin at 6.1 percent from 4.4 percent.

Geojit Financial Services Q3 (YoY)

• Revenue up 36 percent at Rs 91 crore.
• Net profit up 40 percent at Rs 21 crore.

Siti Networks Q3 (YoY)

• Revenue up 20 percent at Rs 357.5 crore.
• Net loss of Rs 37 crore from a loss of Rs 26 crore.
• EBITDA up 28 percent at Rs 70.5 crore.
• Margin at 19.7 percent from 18.4 percent.

Everest Industries Q3 (YoY)

• Revenue up 16.4 percent at Rs 291 crore.
• Net profit of Rs 9.4 crore from a loss of Rs 14 crore.
• EBITDA at Rs 18 crore.
• Margin at 6.2 percent from -4 percent.

Orient Green Power Q3 (YoY)

• Revenue up 2 percent at Rs 56 crore.
• Net loss of Rs 51 crore from a loss of Rs 69.5 crore.
• EBITDA down 1.5 percent at Rs 33 crore.
• Margin at 58.9 percent from 60.9 percent.

#Q3WithBQ | Biocon's profit declines for fourth straight quarter on higher costs.https://t.co/HKV2kLr6dF pic.twitter.com/gn8Jd0wqbj

Stocks To Watch

• Bharat Electronics to consider buyback proposal on Jan. 30.
• No proposal to relax FDI in Indian banking industry, says DEA Secretary Subhash Chandra Garg.
• Wipro buys minority stake in Harte Hanks for $9.9 million.
• NCC QIP opens at a floor price of Rs 129.47 per share.
• CRISIL completes acquisition of Pragmatix Services.
• Indigo awarded 20 routes, Spicejet awarded 17 routes and Jet Airways awarded 4 under India's regional connectivity scheme UDAN.
• ICICI Lombard partners with Practo to launch health insurance app IL TakeCare
• Phillips Carbon to consider raising funds on Jan. 31.
• Majesco unit wins contract from Reliance Nippon Life Insurance.
• Dr. Reddy's says German regulator carried out re-inspection of its Bachupally plant. It can now start dispatching products to Europe.
• Garnet International approves 2:1 bonus issue and will increase NRI investment from 10 percent to 24 percent, and foreign investment from 24 percent to 49 percent.
• ONGC signs loan pact worth Rs 16,940 crore with EXIM (Rs 1,600 crore), ICICI (Rs 4,000 crore), SBI (Rs 7,340 crore) and HDFC Bank (Rs 4,000 crore).

Why Gujarat's cotton spinning mills are struggling this peak season. @ChitnisPurva reports. https://t.co/f8kzwoGi4n pic.twitter.com/HxT2f60Dk3

Bulk Deals

• Apollo Pipes: Canara HSBC OBC Life Insurance bought 83,489 shares or 0.8 percent equity at Rs 640 each.
• Indoco Remedies: India Whizdom Fund sold 5 lakh shares or 0.5 percent equity at Rs 280.01 each.
• Foods & Inns: Promoter Shital P Dalal bought 10,000 shares or 0.6 percent equity at Rs 1250 each.
• HDIL: Acadian Asset Management's Emerging Markets Small Cap Equity Fund LLC sold 24.86 lakh shares or 0.6 percent equity at Rs 59.97 each.
• Hi-Tech Pipes: Girik Wealth Advisors Pvt Ltd PMS bought 2.81 lakh shares at Rs 350.05 each.

Cyient

• Goldman Sachs India bought 16.50 lakh shares or 1.5 percent equity at Rs 630 each.
• Deutsche Securities Mauritius sold 54.55 lakh shares or 4.8 percent equity at Rs 630.35 each.

#BQatWEF | SBI will use the entire Rs 8,800 crore recap to fund growth, Chairman Rajnish Kumar tells @menakadoshi at #Davos.https://t.co/fZUIJ9U7U7 pic.twitter.com/mGMg8S0LHz

Corporate Action

• Orient Paper & Industries shifted to B group and circuit filter revised to 20 percent.
• IKF Technologies status reverted to normal by SEBI, will trade under X group and 20 percent circuit filter.
• Samtel Color, Orchid Pharma and Value Industries shifted to Z group.

Insider Trades

• JSW Steel promoter Urmila Bhuwalka acquired 10,000 shares on Oct. 3, 2017.
• Jaipan Industries promoter Neha Agarwal sold 3,513 shares on Jan. 18.
• Baid Leasing & Finance promoter Aditya Baid acquired 4,000 shares on Jan. 23.
• Omax Autos promoters sold 11,800 shares on Jan. 23.
• Sterlite Tech promoter Pratik Agarwal sold 1.30 lakh shares from Jan. 22–23.
• Globus Spirits promoters sold 24,735 shares on Jan. 22.
• Shyam Century Ferrous promoter Yash Bhajanka sold 3.30 lakh shares from Jan. 19–23.

ONGC to borrow Rs 24,000 crore from five banks to fund HPCL acquisition.https://t.co/Ye1k5rGpx7 pic.twitter.com/PpKrpLNGHE

Rupee

• Rupee closed at 63.69/$ on Wednesday.

Top Gainers And Losers

Index Trends

F&O Cues

• Nifty January futures trading at 11,083, discount of 2.8 points versus premium of 1.7 points.
• Nifty February futures trade at 11,105, premium of 19 points versus 24 points.
• Across series: Nifty open interest up 2 percent, Bank Nifty open interest up 3 percent.
• India VIX ended at 18, up 11 percent.
• Rollover: Nifty at 41 percent, Bank Nifty at 49 percent.
• Max open interest for February series at 10,800 Call (open interest at 21.1 lakh, up 3 percent).
• Max open interest for February series at 10,500 Put (open interest at 39.9 lakh, up 1 percent).

F&O Ban

• In ban: GMR Infra, HDIL, Jet Airways, Jindal Steel, JP Associates, Reliance Communications.
• New in ban: GMR Infra.
• Out of ban: Dewan Housing, IFCI, Kaveri Seed.

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 1.81 versus 1.89.
• Nifty Bank PCR at 1.43 versus 1.41.

Stocks Seeing High Open Interest Change

Fund Flows

Brokerage Radar

Emkay on L&T Finance Holding

• Initiated ‘Buy' with price target of Rs 250; implying a potential upside of 39 percent from last regular trade.
• Diversified Financial Services players best positioned in current landscape.
• Lending business successfully turned around; Now on strong growth footing .
• Retailisation of balance sheet and P&L underway.
• Fee engine is firing and is likely to be sustainable.
• Return on equity drag from wholesale business likely to end.
• Expect steady move in return on equity towards 20 percent by March 2020
• Expect consolidated net profit to compound at 32 percent over the financial years through March 2020.
• See further scope for valuation re-rating with improving return ratios.

Macquarie on L&T Infotech

• Maintained ‘Outperform'; raised price target to Rs 1,600 from Rs 1,200.
• Revenue growth momentum strong with all around delivery.
• Deal pipeline and go-to market strategy to keep revenue momentum strong.
• Expect LTI to post 12-15 percent year-on-year growth in $ revenues over fiscal 2018-2020, faster than industry.
• L&T Infotech is top pick in the midcap IT space.

IIFL on Himadri Speciality

• Initiated ‘Buy' with price target of Rs 240; implying a potential upside of 32 percent from last regular trade.
• Strong competitive position in base business.
• High-margin new products are key growth drivers.
• New products to add Rs 500 crore to operating income by March 2023.
• Integrated manufacturing, R&D capabilities are key strengths.
• Positives: strong earnings growth, high return ratios and margins.
• Expect EPS to grow compound at 40 percent over Fiscal 2018-2020 and 28 percent over Fiscal 2018-2023.
• Expect Himadri to continue to command premium valuations.

Credit Suisse on Idea Cellular

• Maintained ‘Underperform'; cut price target to Rs 65 from Rs 70.
• Sharp decline in operating income continues.
• Competitive pressures imply this could continue.
• Idea to not participate in the ongoing tariff wars.
• Recently announced capital infusion to be consumed in 5-6 quarters.
• Leverage ratio of combined entity to remain at an uncomfortable 7.8 times.

HSBC on Idea Cellular

• Maintained ‘Reduce'; cut price target to Rs 75 from Rs 78.
• Q3FY18 revenues lower than Jio's.
• Strategy to ring-fence 2G subs may not work.
• Idea's 2G/3G focus is vulnerable as Jio and Bharti driving 4G take-up.
• Key catalyst lies in expediting merger approvals and advancing merger benefits.

Edelweiss on InterGlobe Aviation

• Upgraded to ‘Buy' from ‘Hold'; raised price target to Rs 1,655 from Rs 1,378.
• December Quarter Results' Takeaways: Yield improvement extends; NEO resolution on-track.
• Expect robust 20 percent compounded growth rate in volume over the financial years through March 2020.
• Rising oil price is a concern, but ramp-up of NEOs to moderate the impact.
• Cash balance vs. net debt of peers, reduces operational vulnerability against severe oil shocks.

Credit Suisse on InterGlobe Aviation

• Maintained ‘Outperform' with price target of Rs 1,650.
• December Quarter takeaway: Strong yields and seat factors help drive earnings growth.
• Result reflects crude price of $60/bbl.
• Full impact of rise in crude to get reflected in coming quarters.
• Fleet addition continues at a strong pace with total fleet at 153.
• Indigo has superior positioning and relatively attractive valuations.

Macquarie on Mahindra Finance

• Maintained ‘Neutral'; raised price target to Rs 465 from Rs 345.
• December quarter's net profit was double the expectations.
• Asset quality improved QoQ, but AUM growth remained modest.
• Recoveries picking up as rural economy showing signs of revival.
• Mahindra Finance has been readying itself for upcoming growth through expansion.
• Only growth can drive a further re-rating for the stock.

JPMorgan on Mahindra Finance

• Maintained ‘Underweight' with price target of Rs 230.
• Asset quality improved during previous quarter.
• Beat largely driven by declining NPA trend, better NIMs and lower provisioning.
• Quarter reflects better-than-expected rural recovery.
• Management sounds optimistic for coming quarters.

Nomura on Container Corp

• Maintained ‘Neutral' with price target of Rs 1,324.
• Headline numbers robust but weak underlying.
• Operating income missed largely on account of unusually high employee expenses.
• Underlying segmental margins also affected.

JPMorgan on Container Corp

• Maintained ‘Overweight' with price target of Rs 1,750.
• Revenue beat estimates in previous quarter; Higher employee costs surprise.
• Employee costs dragged down margins; RM/Other expenses showed improvement.
• EXIM segment saw good revenue growth.
• Domestic segment volume momentum continues.

Deutsche Bank on Canara Bank

• Maintained ‘Sell' with price target of Rs 305.
• Q3FY18: Better loan growth; Stable NIM and asset quality.
• Core trends improved in previous quarter; Slippages decline.
• NIMs improve QoQ, Fee income weak, CASA ratio stable.
• Asset quality better, but still a long way to go.

Morgan Stanley on Mphasis

• Maintained ‘Overweight' with price target of Rs 830.
• December quarter results were better than expectations.
• Growth was broad-based across Direct International and HP/DXC channels.
• New deal wins were healthy during the quarter.
• Revenues helped by better than expected hedge gains and one-time settlement.

Jefferies on Petronet LNG

• Upgraded to ‘Buy' from ‘Hold'; price target remained unchanged at Rs 290.
• Firm near term; Solid long term & valuations less stretched.
• Expect Dahej to operate near capacity with imports likely to rise at Kochi.
• Near-term macro is resilient too.
• Domestic gas output fell while LNG imports rose in the previous quarter.

JPMorgan on Pidilite Industries

• Maintained ‘Neutral' with price target of Rs 840.
• Strong December quarter: Second consecutive quarter of revenue beat.
• Pleasantly surprised by strong growth recovery and margin resilience.
• Underlying volume mix growth of 22 percent is big positive.
• December quarter's growth was led by GST stabilisation, demand improvement and benign base.

This alcohol maker has analysts doubting their skills.https://t.co/kD6OUppRpV pic.twitter.com/ejQQsoUywY

Brokerages On Bank Recapitalisation

JP Morgan

• About 60 percent of the capital allocation is biased toward weaker banks requiring corrective action, thus, limiting access to growth capital for larger banks.
• Loan growth recovery is likely to be delayed, probably after March 2019, as the larger banks would lack the growth capital.
• For the banks within coverage, see a capital shortfall of 59-72 percent.
• Focus on SME would raise long-term risks.
• Recommend investors switch out of PSU banks into relatively well-capitalized private high NPL banks that are better positioned for growth.
• Axis bank is our top value pick.

Macquarie

• The recap plan of about Rs 2 lakh crore is likely short by Rs 50,000 crore to meet provisioning requirement and move to IFRS by March 2019.
• The first tranche is skewed towards bailouts than growth.
• Hope that the next tranche is concentrated to a few large, disciplined banks with improving processes and governance.
• BOI receives disproportionately more, SBI receives far less than estimated
• While BOI gets much more capital (near term +ve), this increases dilution and thus delays RoE mean reversion that much more.
• Maintain Axis and ICICIBC as the best plays for the recovery theme.
• Among PSU banks, we like only SBI and would continue to avoid all other PSU banks.

Credit Suisse

• Infusion will translate into a 5-100 percent equity dilution and improve CET-1 by 50-500 basis points.
• Estimate that 55 percent of this recap amount will be used up for provisioning and meeting Basel-III capital requirements and about $6 billion would be available as “growth capital.”
• Continue to prefer SBI, BOB and PNB among PSU lenders.

Motilal Oswal

• CET1 ratio for all PSU banks would reach above 8.5% percent.
• Net stressed assets reducing to 102 percent of net worth from 117 percent earlier.
• SBI and BoB remain our top picks within the PSU banking space.

This is the first tranche of the Rs 2.11 lakh crore recapitalisation plan. https://t.co/3rGisU0O8A

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