All You Need To Know Going Into Trade On Jan. 3

Asian equities are poised to extend gains after a rally in technology companies on Tuesday boosted U.S. stocks to record highs.

Investors begin 2018 on the heels of a winning year for equities and a losing one for the U.S. currency, which continues to slide even as Treasury yields surge.

The Singapore traded SGX Nifty, an early indicator of Nifty 50 Index's performance in India, was a little changed at 10,503 as of 6:50 a.m.

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DayBreak

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

Global Cues

• Global stocks posted their best performance since 2009 last year, fueled by a synchronous expansion and a go-slow approach toward monetary- stimulus withdrawal in major economies.
• U.S. stocks rose to record highs, Treasuries tumbled and the dollar weakened against all of its G-10 peers in the first official day of trading in 2018.
• Technology shares led the rally and analyst upgrades fueled gains in consumer-discretionary companies.

#BQMarketsNow | Wall Street starts 2018 off on a strong note.https://t.co/zap99beUF6 pic.twitter.com/ZgT94wEWYA

Europe Check

• European stocks started the year in the red, failing to capitalise on a positive Asian session as the strength of the region's common currency weighed on exporters.
• European bonds dropped and the euro strengthened to near a three-year high against the dollar as the region's manufacturing activity expanded in line with estimates in December.

Asian Cues

• Bonds fell in Australia and New Zealand following a drop in Treasuries, while crude oil held above $60 a barrel in New York.
• Japanese markets remain closed.
• Australia's S&P/ASX 200 Index rose 0.2 percent, while New Zealand's benchmark gauge climbed 0.3 percent.
• Futures on Seoul's Kospi Index advanced 0.3 percent, while contracts for Taiwan's main gauge were up 0.3 percent in the most recent trading.
• Contracts for the S&P 500 Index were little changed.

Data To Watch

• MiFID II, the biggest change to European investment industry rules in a decade, takes effect.
• Thailand reports CPI and Hong Kong releases retail sales data.
• FOMC December meeting minutes are due.

Commodity Cues

• Brent crude ended lower at $66.57 a barrel, down 0.5 percent.
• West Texas Intermediate crude rose 0.1 percent to $60.42 a barrel.
• Gold rose 0.3 percent to $1,321.33 an ounce, reaching levels last seen in September.
• Sugar ended near one-month high at 15.33 cents per pound; up 1.1 percent.

Shanghai Exchange

• Steel trades higher for second day; up 0.6 percent.
• Aluminium snaps four-day winning streak; down 0.2 percent.
• Zinc trades higher for fifth day, though marginally.
• Copper trades lower for second day; down 0.2 percent.
• Rubber trades little changed.

Coal India may fall short its production target of 600 million tonnes in FY18. https://t.co/SwmVPQdiGH pic.twitter.com/C2f1tTuPNT

Indian ADRs

Stocks To Watch

• Reliance Industries commissions a refinery off-gas cracker at Jamnagar with a capacity of 1.5 MMTPA.
• Titan says third-quarter jewellery retail growth is in-line with the company's expectation
• Punjab and Sind Bank to raise Rs 1,000 crore via equity
• Apar Industries enters in a 40:60 joint venture with PPS Motors
• SEBI revoked the shell company status of Gallantt Ispat.
• Orient Green Power sold 8 biomass subsidiaries to Janati Bio Power for Rs 49 crore.
• SORIL Holdings and Ventures allotted 3.5 crore warrants to promoters at Rs 132 per share.
• Lasa Supergenerics filed new CEP application with European Medicines Directorate.
• Orient Exports to consider buyback of equity shares on Jan. 5.
• Indowind Energy to raise Rs 30 crore through a QIP or rights issue.
• Dixon Technologies commences manufacturing of CCTVs and DVRs at its Tirupati facility.
• VST Tillers December sales up 79 percent to 3,615 units.

SBI earns more from minimum balance penalty than its Q2 profit. https://t.co/N9JQkF8fll pic.twitter.com/RPhZwrmghB

Bulk Deals

• Capri Global Capital: Promoter Capri Global Holdings Pvt Ltd bought 13.56 lakh shares or 0.8 percent equity at Rs 119.51 each
• Euro Ceramics: Aspire Emerging Fund sold 2.65 lakh shares at Rs 8.07 each
• Reliance Naval: IL&FS Financial Services sold 94 lakh shares or 1.3 percent equity at Rs 63.02 each
• Uttam Galva Steel: Eriska Investment Fund sold 8.50 lakh shares or 0.6 percent equity at Rs 21.83 each
• Ashapura Intimates Fashion: Sunglow Capital sold 3.10 lakh shares or 1.6 percent equity at an average of Rs 453.3 each.

Websol Energy System:

• Garnet International bought 17.62 lakh shares or 7 percent equity at an average of Rs 127.7 each.
• India Max Investment Fund sold 14.14 lakh shares or 5.6 percent equity at Rs 121.31 each.

Trading Tweaks

• Circuit filter revised to 10 percent: IVRCL, Gallant Ispat, Gallant Metal.
• Circuit filter revised to 5 percent: D B Realty.
• Amulya Leasing and Finance name changed to Apollo Pipes Ltd.
• Aarti Industries' last trading day before buyback eligibility date.
• AB Nuvo, Unitech and United Spirits shifted from group A to group B.
• Novartis India last trading day before buyback opens.

Insider Trades

• PTL Enterprises bought 1 lakh Apollo Tyres shares on Dec. 29.
• Jayshree Chemicals promoter sold 75,000 shares on Jan. 1.
• Omax Auto promoters sold 23,000 shares on Dec. 28-Jan. 1.
• Ashapura Intimates promoter bought 50,000 shares on Jan. 2.

Who's Meeting Whom?

• Eris Lifesciences to meet PFCL, Alchemy Capital, Geecee Capital and Lucky Securities on Jan. 3.
• Manappuram Finance to meet Bank of America, IDBI Capital, IIFL Capital, JM Financial PMS, CIMB and others on Jan. 3.
• JMC Projects to meet Kotak Asset Management on Jan. 3.

Indian Rupee Starts 2018 On A High

The Indian rupee hit a two and a half year high in trade on Tuesday, as a weaker dollar pushed up Asian currencies.

The rupee gained for the fourth straight session and closed at 63.48 against the U.S. dollar, compared to its previous close of 63.68. This is the strongest the Indian currency has traded since July 17, 2015.

Top Gainers And Losers

Index Trends

F&O Cues

• Nifty January futures trading at 10,472.2, premium of 30 points versus 64 points.
• Jan. Series: Nifty open interest up 1 percent; Bank Nifty open interest up 3 percent.
• India VIX ended at 13.6, up 2.4 percent.
• Max open interest for January series at 11,000 Call (open interest at 44 lakh, up 7 percent).
• Max open interest for January series at 10,300 Put (open interest at 49.9 lakh, up 6 percent).

F&O Ban

• In ban: GMR Infrastructure, HDIL, IFCI, JP Associates, Reliance Communications, Reliance Power.
• New in ban: GMR Infrastructure, IFCI, Reliance Power.

Only intraday positions can be taken in stocks which are in F&O ban. There will be a penalty in case of a rollover of these intraday positions.

Put-Call Ratio

• Nifty PCR at 1.50 from 1.56.
• Nifty Bank PCR at 0.89 from 0.9.

Stocks Seeing High Open Interest Change

Fund Flows

Brokerage Radar

Goldman Sachs on Indian Steel

• Indian steel sector is in midst of a multi-year upcycle.
• Positives: higher spreads, rising capacity utilization and improving iron ore supply.
• Steel prices to be strong led by supply discipline in China.
• Elevated steel prices with softening input costs to drive profitability.
• Increased focus on infrastructure and rural spending to drive demand.
• Pick up durable/auto sales and real estate to drive demand.

Goldman Sachs on JSW Steel

• Initiated ‘Buy' with price target of Rs 315.
• Best placed to benefit from shift in macro-economic landscape.
• Capex to drive growth and realisations.
• Expect strong free cash flow generation and deleveraging.
• Net debt to EBITDA to reduce to 2.6 times by March 2020.
• Expect revenue, operating income and net profit to grow at a compounded rate of 8.6 percent, 14 percent and 28 percent respectively over the financial years through March 2020.
• Expect return on equity and return on capital employed to expand to 23 percent and 13 percent respectively by March 2020.
• Expect dividend payout to remain stable at 15 percent over the medium term.

Goldman Sachs on Tata Steel

• Initiated ‘Neutral' with price target of Rs 780.
• Phase 1 of Kalinganagar to drive near-term volume growth.
• India profitability to be impacted by narrowing spreads.
• European profitability to remain stable over medium term.
• Don't take view on European JV deal materializing; Estimates don't incorporate European JV.
• Positives have been fairly priced in.
• Expect volume, operating income and net profit to grow at a compounded rate of 6 percent, 10 percent and 21 percent respectively over the financial years through March 2020.
• Expect return on equity and return on capital employed to expand to 17 percent and 8 percent respectively by March 2020.
• Could turn constructive on visibility of timely execution of expansion plan.

BoFAML on Hindustan Zinc

• Initiated ‘Buy' rating with price target of Rs 345.
• Elevated prices to coincide with revival in volume growth.
• Zinc - our favored exposure with strong fundamentals.
• Expect high dividend payout given significant cash needs of parent.
• Captive access to 100 percent of its requirements allows to capture the benefit of positive pricing outlook for zinc.
• Expect volumes to grow at a compounded rate of 13 percent over the financial years through March 2020.
• Premium valuations justified by strong zinc price outlook and superior profitability.

BoFAML on Hindalco

• Initiated ‘Buy' rating with a price target of Rs 340.
• Combination of globally competitive upstream business and world-class downstream business.
• Uniquely positioned on cost leadership and technical expertise.
• Upstream cost positioning improved significantly with higher margins in downstream.
• Deleveraging to continue with 9 percent FCF yield.
• Earnings volatility to reduce providing strong case for upward re-rating.
• Expect Novelis to contribute more than 54 percent of operating income over the financial years through March 2020.

CLSA's top investment themes for the financial sector in 2018. https://t.co/Ne4aB4SFa5 pic.twitter.com/zb08coLUPr

Ventura Securities on Sagar Cement

• Re-initiated ‘Buy' with price target of Rs 1,715; potential upside of 89 percent over 24 Months.
• Enthused by company's astute understanding of the cement cycle.
• Favorite way to play the cement growth story in south India.
• Strong revenue growth on the cards.
• Strategic capacity expansions to help lower freight costs.
• Significant cost savings initiatives to boost profitability.
• Expect EBITDA per ton to grow at a compounded rate of 20 percent.
• Expect volumes and operating income to grow at a compounded rate of 19 percent and 43 percent respectively over the financial years through March 2020.
• Expect net profit to rise to Rs 158 crore by March 2020 versus net loss of Rs 4 crore in the prevous financial year.

Jefferies on Punjab National Bank

• Maintained ‘Hold' with price target of Rs 190.
• Capital boost to allow faster loan book growth.
• Growth to improve from the previous quarter with uptick in corporate loans.
• Stressed assets steady; Provision coverage to improve.
• NIM to improve with IBC or other resolutions coming through.
• Expect pre-provision operating profit to grow at a compounded rate of 22 percent over the financial years through March 2020.

JPMorgan on Titan

• Maintained ‘Overweight'; raised price target to Rs 890 from Rs 750.
• Significant opportunity exists to grow on account of market share gains.
• Expect 8-10 percent share possible over the next 3-4 years vs current 4-5 percent.
• Expect revenue and earnings per share to grow at a compounded rate of 19 percent and 27 percent respectively over the financial years through March 2020.
• Store additions pace could be accelerated for Tanishq.
• Reduction in GST rates for watches/sunglasses/frames bodes well.
• Operating leverage should kick in with scale.
• Premium valuations to sustain.

Goldman Sachs on Titan

• Maintained ‘Buy' with price target of Rs 826.
• Trading update in the previous quarter was in-line with estimates.
• Previous quarter was driven by strong festival season, new collections and market share gains.
• Tanishq has increased focus on high ticket jewellery - more collections and lower making charges.
• Expect net addition of 17 new jewellery stores in the current financial year.

IDFC Securities on Indian IT Services

• Overweight as cyclical slowdown is bottoming, expectations remain modest and valuations turn attractive.
• Slowdown cyclical as not visible across all segments.
• Expect growth to improve led by improving U.S. economy.
• Play Infosys and TCS on cyclical recovery; Mindtree on micro growth.
• TCS: Initiated ‘Outperformer' with price target of Rs 2,950.
• Infosys: Initiated ‘Outperformer' with price target of Rs 1,250.
• Wipro: Initiated ‘Neutral' with price target of Rs 290.
• HCL: Initiated ‘Neutral' with price target of Rs 925.
• Tech Mahindra: Initiated ‘Outperform' with price target of Rs 610.
• Mphasis: Initiated ‘Neutral' with price target of Rs 750.
• Mindtree: Initiated ‘Outperform' with price target of Rs 650.

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