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

Stocks in Asia edged higher after a week that's seen the equity rally stall amid conflicting signals on the U.S.-China trade talks front.

Japanese stocks saw modest gains as did their Australian counterparts. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index's performance in India, rose 0.34 percent to 10,926 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 closed mostly higher as a rally in semiconductor shares helped temper concern the America and China may be further from a trade resolution than investors had hoped.
• The yield on 10-year Treasuries fell three basis points to 2.70 percent Thursday.

#BQMarketWrap | U.S. stocks closed mostly higher.

Read more: https://t.co/DIG5NqCovs pic.twitter.com/ryVmXDP8nh

Asian Cues

• Japan's Topix Index rose 0.7 percent.
• Futures on the S&P 500 Index rose 0.2 percent after the underlying gauge rose 0.1 percent.
• Hang Seng futures added 0.6 percent earlier.
• Australia's S&P/ASX 200 Index rose 0.4 percent.

Commodity Cues

• Brent crude declined for the third day, ended 0.1 percent lower at $61.09 per barrel.
• West Texas Intermediate crude rose 0.1 percent to $53.18 a barrel.
• Gold held at $1,280.80 an ounce.

London Metal Exchange

• Aluminium halted a two-day rally, ended 0.97 percent lower.
• Nickel ended higher for the second day, up 0.6 percent.
• Tin ended higher for the second day, up 1.09 percent.
• Lead ended higher for the fifth day, up 2.37 percent.
• Zinc ended higher for the second day, up 0.76 percent.
• Copper resumed declines after a one-day rally, ended 0.5 percent lower.

Indian ADRs

Stocks To Watch

• Yes Bank appointed Maheswar Sahu and Anil Jaggia as independent directors and recommended Ashish Agarwal to the Reserve Bank of India for the post of executive director.

• Interglobe Aviation appointed Ronojoy Dutta as chief executive officer and Meleveeti Damodaran as chairman of the company with effect from Jan. 24.
• Oriental Hotels' Chief Financial Officer Rajneesh Jain resigned from his post with effect from Feb. 4. Sreyas Arumbakkam was chosen as the CFO-designate for the company.
• Linde India promoter BOC Group rejected discovered price of Rs 2,025 per share for the company's delisting. The acquiring entities will launch open offer again after the public announcement for the delisting which will happen on Jan. 25.
• Deepak Fertilisers & Petrochemicals clarified that the company had been repaying commercial papers in accordance with due dates and the company along with its arms have no commercial papers outstanding as on date.
• UPL said that with respect to its 100 percent acquisition of the U.S.-based Arysta LifeScience, both parties obtained all regulatory approvals to complete the transaction, which is expected to close by Jan. 31.
• Laxmi Machine Works launched nine varieties of machining centers and three types of lathes machines for use in heavy duty tools industry and auto industry.

New Offerings

• K. Raheja Corp-Promoted Chalet Hotels may announce shares sale price in IPO; offer opens Jan. 29 and closes on Jan. 31.
• Xelpmoc Design IPO fully subscribed; gets 126 percent demand for shares offered on second day sale. The offer closes today.

Nifty Earnings To Watch

• Larsen & Toubro
• Maruti Suzuki

Other Earnings To Watch

• Dewan Housing Finance
• GATI
• Gruh Finance
• Gujarat State Fertilizers & Chemicals
• Kirloskar Oil Engines
• Mahindra & Mahindra Financial Services
• Rane Engine Valve
• Shriram City Union Finance

• Sundaram Clayton
• V2 Retail,
• Wonderla Holidays
• Foseco
• Jtekt
• Kirloskar Brothers
• Kirloskar Oil Engines
• Poly Medicure
• Swaraj Engines

Earnings Reaction To Watch

PNB Housing Finance (Q3, YoY)

• Net interest income up 36.1 percent at Rs 667.4 crore.
• Net profit up 32 percent at Rs 303 crore.
• Net interest margin at 3.06 percent versus 3.02 percent.
• AUM up 38 percent at Rs 79,737 crore.

Quess Corp (Q3, YoY)

• Revenue up 37.1 percent at Rs 2,172.2 crore.
• Net profit up 4.4 percent at Rs 64 crore.
• Ebitda up 30.1 percent at Rs 118.4 crore.
• Margin at 5.5 percent versus 5.7 percent.

Hatsun Agro Product (Q3, YoY)

• Revenue up 14 percent at Rs 1154.5 crore.
• Net profit up 23.3 percent at Rs 18.5 crore.
• Ebitda up 8.9 percent at Rs 94.6 crore.
• Margin at 8.2 percent versus 8.6 percent.

Biocon (Q3, YoY)

• Revenue up 45.6 percent at Rs 1,540.8 crore.
• Net profit up 2.4 times at Rs 217.2 crore.
• Ebitda up 71.7 percent at Rs 380.7 crore.
• Margin at 24.7 percent versus 21 percent.

Bharat Bijlee (Q3, YoY)

• Revenue down 1.3 percent at Rs 224.8 crore.
• Net profit up 34 percent at Rs 13 crore.
• Ebitda up 34 percent at Rs 18.9 crore.
• Margin at 8.4 percent versus 6.2 percent.

Pfizer (Q3, YoY)

• Revenue up 12.6 percent at Rs 513.8 crore.
• Net profit up 51.3 percent at Rs 131.9 crore.
• Ebitda up 31 percent at Rs 154.4 crore.
• Margin at 30.1 percent versus 25.8 percent.
• Other income up twice at Rs 64.4 crore.

Mphasis (Q3, QoQ)

• Revenue up 3 percent at Rs 1,971 crore.
• Net profit up 2.6 percent at Rs 278 crore.
• EBIT down 1 percent at Rs 311 crore.
• EBIT Margin at 15.8 percent versus 16.4 percent.

Sun Teck Realty (Q3, YoY)

• Revenue down 3.4 percent at Rs 194.7 crore.
• Net profit down 21.2 percent at Rs 43.9 crore.
• Ebitda down 8.7 percent at Rs 81.3 crore.
• Margin at 41.8 percent versus 44.2 percent.

Bulk Deals

• CARE Ratings: Norges Bank sold 2.48 lakh shares or 0.84 percent equity at Rs 985 each.
• Balaji Telefilms: GHI Group sold 24.82 lakh shares or 2.45 percent equity at Rs 89 each.
• Orissa Minerals Development Company: GHI JBD sold 30,900 shares or 0.51 percent equity at Rs 828.65 each.

Shankara Building Product

• UBS Principal Capital Asia acquired 4.6 lakh shares or 2 percent equity at Rs 447.35 each.
• Mondrian Emerging Markets Small Cap Equity Fund sold 2.43 lakh shares or 1.07 percent equity at Rs 447.61 each.
• Ontario Pension Board sold 2.26 lakh shares or 0.99 percent equity at Rs 447.61 each.

Insider Trading

• Future Retail promoter Future Corporate Resources acquired 5.2 lakh shares on Jan. 22.
• Aarti Industries promoter Chandrakant Vallabhaji Gogri sold 12,000 shares from Jan. 21-22.
• Aster DM Healthcare promoter Dr. Azad Moopen acquired 30,000 shares on Jan. 23.

(As reported on Jan. 25)

Trading Tweaks

• KPIT Technologies record date for scheme of amalgamation (spin off).
• SKIL Infrastructure Limited to move into short term ASM Framework.

Money Market Update

• The rupee on Thursday rose for the second straight day to close at 71.07/$ versus Wednesday's closing of 71.33/$.

F&O Cues

• Nifty January futures closed trading at 10868, premium of 18 points.
• Max open interest for January series at 11,000 call, (open interest at 43.9 lakh shares).
• Max open interest for January series at 10,700 put, (open interest at 31.1 lakh shares).

Stocks In F&O Ban

• Jet Airways
• Reliance Capital
• Jain Irrigation

Put-Call Ratio

• Nifty PCR at 1.44 versus 1.43.
• Nifty Bank PCR unchanged at 1.13.

Brokerage Radar

On Yes Bank

CLSA

• Maintained ‘Buy'; hiked price target to Rs 280 from Rs 260.
• Steady operating results and IL&FS pushes-up NPLs.
• New CEO comes with strong corporate banking experience.
• Clarity on strategy and capital raise could drive a rerating.

UBS

• Maintained ‘Sell' with a price target of Rs 150.
• CEO announcement positive; NPL and liabilities still a concern.
• RBI divergence report a key near-term catalyst.
• Due to NPL risks and wholesale funding believe risk-reward is unfavourable.

Macquarie

• Maintained ‘Outperform' with a price target of Rs 310.
• Appointment of Ravneet Gill removes the uncertainty.
• December quarter's net profit down due to miss on other income and provisions taken against IL&FS exposure.
• Catalyst: divergence report, new MD's strategic directions.

On UltraTech

CLSA

• Maintained ‘Sell' with a price target of Rs 3,150.
• December quarter results were results broadly in-line – net earnings ahead.
• Unit Ebitda down to multi-quarter low.
• Management commentary was more cautious on cement pricing.

Macquarie

• Maintained ‘Outperform' with a price target of Rs 4,420.
• December quarter reivew: Weak margins, but worst behind.
• Cost deflation to benefit from Q4, demand remains robust.
• UltraTech to outperform market growth and gain market share in the next two financial years.

Investec

• Maintained ‘Buy'; cut price target to Rs 4,118 from Rs 4,284.
• Ebitda complicated on arms-length Binani transfer, lack of disclosures.
• Management turned less optimistic noting surplus capacity and challenging price environment.
• Preferred large cap play; to trade at premium valuations going forward.

More Calls

UBS on Indian Auto Sector

• See potential headwinds to demand growth with safety norms for premium two wheelers and BS-VI.
• Expect 10-20 percent price increases for two wheelers over FY18-21 causing a slowdown in all segments.
• Bosch is not a material gainer from BS-VI as it has a limited presence in exhaust after treatment.
• Ashok will need to adopt selective catalytic reduction system, it may see sharper cost increases.
• Petrol to offset diesel decline in car market.
• HeroMoto Corp: Downgraded to ‘Sell' from ‘Buy'; cut price target to Rs 2,650 from Rs 3,500.
• Bosch: Downgraded to ‘Sell' from ‘Neutral'; cut price target to Rs 15,500 from Rs 21,000.
• Ashok Leyland: Maintained ‘Sell'; cut price target to Rs 80 from Rs 95.
• Eicher Motors: Maintained ‘Sell'; cut price target to Rs 19,000 from Rs 20,000.
• Bajaj Auto: Maintained ‘Sell'; cut price target to Rs 2,300 from Rs 2,400.
• Maruti Suzuki: Maintained ‘Buy' with a price target of Rs 9,000.
• M&M: Maintained ‘Buy' with a price target of Rs 950.

Investec on PNB Housing

• Maintained ‘Buy'; hiked price target to Rs 960 from Rs 935.
• Good performance in a volatile environment.
• Strong loan growth; Stable asset quality.
• Spreads decline due to increase in cost of funds.

Emkay on Sterlite Tech

• Maintained ‘Buy' with a price target of Rs 520
• Seventh consecutive quarters of record profits; trend to continue for next two years.
• Expect 24 percent EPS CAGR, 34 percent RoE and 30 percent RoCE by FY21E.
• Stock looks cheap; good entry opportunity.

CLSA on Colgate

• Maintained ‘Buy' with a price target of Rs 1,575.
• December quarter marked acceleration in growth rates with healthy margins.
• There may be some concern on margins in near term due to rise in key input prices.
• Remain assured on Colgate's pricing power and see no risk to earnings forecasts.

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