All You Need To Know Going Into Trade On June 4 

Asian stocks stabilised in early trading Tuesday after a technology rout sank Nasdaq shares overnight.

Equities fluctuated at the open in Japan, Australia and South Korea. Futures on the S&P 500 Index were flat. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index's performance in India, fell 0.3 percent to 12,077.50 as of 6:45 a.m.

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BQ Live

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

U.S. Market Update

• A sell-off in big technology companies dragged down U.S. stocks on reports the government is considering antitrust investigations.
• The yield on 10-year Treasuries ticked up 1 basis point to 2.08 percent. It fell five basis points Monday.

#BQMarketWrap | Tech giants hit by probe jitters; Treasuries climb.

Read: https://t.co/XCfQ1UVA1G pic.twitter.com/SNw7tETGqf

Asian Cues

• Japan's Topix index rose 0.1 percent.
• Australia's S&P/ASX 200 Index rose 0.1 percent.
• Hong Kong's Hang Seng Index futures rose 0.4 percent.
• S&P 500 futures rose 0.1 percent.

Commodity Cues

• Brent crude fell 0.9 percent to $60.79 per barrel.
• West Texas Intermediate crude lost 0.4 percent to $53.05 a barrel.
• Gold was steady at $1,325.88 an ounce after sliding.

London Metal Exchange

• Copper halted a three-day fall, closed 0.2 percent higher.
• Zinc ended lower for the second day, down 2.2 percent.
• Aluminium closed 0.98 percent lower.
• Nickel ended loser for the second day, down 1.2 percent.
• Lead closed higher for the second day, up 0.28 percent.
• Tin ended 2.32 percent higher.

Key Events To Watch This Week

• U.S. President Donald Trump meets U.K. Prime Minister Theresa May in London Monday.
• Tuesday sees the Reserve Bank of Australia policy meeting, with many expecting an interest-rate cut.
• China President Xi Jinping begins a two-day visit to Russia on Wednesday.
• Theresa May steps down on Friday as leader of the Conservative Party.
• Friday's U.S. jobs report is projected to show payrolls rose by 190,000 in May, unemployment held at 3.6 percent, a 49-year low, and average hourly earnings growth sustained a 3.2 percent pace.

Indian ADRs

Stocks To Watch

• CESC Ventures: acquired 64.6 percent stake in Herbolab India Private Limited for Rs 32.2 crore. The company is involved in manufacturing of Ayurveda medicines and products.
• L&T Technology Services' promoter Larsen & Toubro plans to sell 3.88 percent stake in the company. The promoter will sell up to 40.34 lakh shares at a floor price of Rs 1,650 a piece—a discount of about 4 percent to current market price—through an offer-for-sale, according to an exchange filing.
• Wipro set June 21 as record date for share buyback.
• Dr. Reddys Laboratories to re-launch Zenatane capsules in the U.S. market.
• GE Power India awarded contract worth Rs 738.3 crore by NTPC JV for engineering work on a full turnkey basis.
• Mahindra's arm entered into a partnership with Japan based Mitsui to jointly develop and operate distributed solar power generation projects in India. The unit will continue to hold 51 percent stake in the joint venture.
• Competition Commission of India approved acquisition of up to 75 percent of shareholding in Essel Propack by Epilson Bidco. (Twitter)
• Welspun Enterprises's HAM project in Maharashtra received appointed date for the project as May 26 from Public Works Department. The project has achieved financial closure.
• Lemon Tree Hotels said that it has taken a Chandigarh property of 102 rooms from its arm on a lease basis.
• Saregama India lauched Carvaan Mini in Bengali.
• ICICI Bank's long-term issuer default rating downgraded by Fitch to ‘BB+' (Junk) from ‘BBB-'. Senior unsecured debt rating rated by Fitch to ‘BB+'. Outlook remains stable.
• Axis Bank's long-term issuer default rating downgraded by Fitch to BB+ from BBB-. Senior Unsecured Debt Rating was downgraded by Fitch to BB+ from BBB-. Outlook to stable from negative.

Bulk Deals

Mahindra & Mahindra

• Caisse De Depot Et Placement Du Quebec acquired 2.2 crore shares or 1.86 percent equity at Rs 648 each.
• Promoter MM Benefit Trust sold 1.92 crore shares or 1.63 percent equity at Rs 648 each.

Bharat Financial Inclusion

• Goldman Sachs Singapore acquired 8.32 lakh shares or 0.59 percent equity at Rs 1,004 each.
• Europacific Growth Fund sold 8.32 lakh shares or 0.59 percent equity at Rs 1,004 each.

Swaraj Engines

• Mahindra & Mahindra acquired 1.77 lakh shares or 1.46 percent equity at Rs 1,387 each.
• Jupiter India Fund sold 1.77 lakh shares or 1.46 percent equity at Rs 1,387 each.

Allsec Technologies

• Conneqt Business Solutions acquired 53.9 lakh shares or 35 percent equity at Rs 319 each.
• Promoter Adiseshan Saravanan sold 27.31 lakh shares or 17.9 percent equity at Rs 319 each.
• Promoter Ramamoorthy Jagadish sold 26.56 lakh shares or 17.4 percent equity at Rs 319 each.

Pledge Share Details

• Adani Enterprises promoter group Gautam Adani revoked pledge of 41.62 lakh shares on May 31.
• Sun Pharma promoter group Shanghvi Finance revoked pledge of 41 lakh shares on May 30.
• Adani Ports & SEZ promoter group Gautam Adani revoked pledge of 40.21 lakh shares on May 30.
• Max Financial Services promoter group Max Ventures Investment Holdings created pledge of 5 lakh shares on May 30.
• Sical Logistics promoters created pledge of 17.2 lakh shares and revoked pledge of 6 lakh shares from May 8-30.
• Atul promoter Aagam Holdings revoked pledge of 1.5 lakh shares on May 30.
• Future Lifestyle Fashions promoter Ryka Commercial Ventures revoked pledge on 25 lakh shares on May 31.
• Chambal Fertilisers & Chemicals promoter groups created pledge of 8.4 lakh shares on May 30.
• AU Small Finance Bank promoter Chiranjilal Agarwal created pledge of 25.5 lakh shares from May 10-13.

Trading Tweaks

• Kridhan Infra, Symphony to move into short term ASM Framework

Who's Meeting Whom

• TCI Express to meet HSBC, Allard Partners and other investors from June 5-6.
• Gujarat Pipavav Ports to meet Utilico Emerging Markets and Motilal Oswal Financial Services on June 4.
• Torrent Power to meet Abu Dhabi Investment Authority and Utilico Emerging Markets from June 5-12.
• Shriram City Union Finance to meet Ward Ferry Management on June 5.
• All Cargo Logistics to meet ICICI Securities on June 4.

Money Market Update

• Indian rupee on Monday strengthened for the second straight session to close at 69.26/$ versus Friday's 69.69/$.

F&O Cues

June Futures

• Nifty futures closed at 12,104, premium of 16 points
• Nifty Futures open interest up 9 percent, adds 15.9 lakh shares
• Bank Nifty futures closed at 31,679.9, premium of 26 points
• Bank Nifty futures open interest up 9 percent, adds 1,6 lakh shares in open interest

Options

• Nifty PCR at 1.75 Vs 1.3 (across all series)

Nifty Weekly Expiry June 6

• Max open interest call side at 12,100 (14.8 lakh shares)
• Max open interest on put side at 12,000 (25.9 lakh shares), 11,900 (25 lakh shares)
• open interest addition seen at 12,000P (+21 lakh shares), 11,900 P (+13.4 lakh shares)
• open interest shedding seen at 12,000C (-12.9 lakh shares)

Nifty Monthly Expiry June 27

• Max open interest on call side at 12,500 (18 lakh shares)
• Max open interest on put side at 11,500 (26 lakh shares)

Brokerage Radar

On Indian Autos

Nomura

• May-19 volumes: Passenger vehicles surprise positively, while other segments disappoint.
• Measures to address liquidity and recent fall in oil prices can lead to demand recovery in the second half of the current financial year.
• Recovery likely to be slower than expectation.
• Most companies are likely to see further consensus estimate cuts.

UBS

• Demand softness continues; two-wheelers demand sluggish.
• Passenger vehicles and tractors volumes slump.
• Trucks remain weak but Ashok Leyland volumes relatively better.

More Calls

HSBC on Maruti Suzuki

• Maintained ‘Hold' with a price target of Rs 7,200.
• Some green shoots but a long, tough ride ahead.
• Maruti retail traction remains weak as well.
• On a positive note, enquiries picked up post-election; quality and sustenance of these is critical.

UBS on Indian Consumer Sector

Key Highlights From Q4FY19:

• Volume growth was 6.4 percent, a sharp slowdown from 9.9 percent growth in the first nine-months of FY19
• Growth differential between rural and urban significantly narrowed in the fourth quarter.
• Gross margin trends and commentary were different across sub-segments.
• Discretionary companies grew at an average rate 2.2 times that of staples in 2018-19.
• It indicates robust urban demand despite the uncertain rural outlook.
• Our top picks in the sector: ITC, Asian Paints, Godrej, Titan and Britannia.

JM Financial on AMC

• Price hikes across liquid schemes should mitigate total expense atio-cut pain.
• Four of top five AMCs take price hikes in liquid MF schemes.
• Banning of upfront commissions will continue to aid profitability in the transition period.
• Larger AMCs will be able to maintain their profitability in the current financial year.

Citi on IndusInd Bank

• Maintained ‘Buy' with a price target of Rs 1,980.
• Expects growth in CV financing segment to remain healthy.
• Reiterated that entire 1.9 percent exposure to stressed groups is part of below investment grade.
• Expects the merger to get formal NCLT approval in few weeks and will deliver synergies from day one.

Citi on HDFC Bank

• Maintained ‘Buy' with a price target of Rs 2,800.
• The lender is looking to step-up its branch presence from the current network of 5,103 branches.
• Management depth remains strong.

Citi on Ambuja Cements

• Maintained ‘Buy' with a price target of Rs 285.
• Pace of capacity additions has slowed down since 2005-11 and should decline further.
• Management expects industry demand should grow 7-8 percent in 2019-20.
• Pricing to be resilient in the North, Centre and West.
• Management is evaluating solar power and participation in captive power projects to save cost.

Citi on Havells India

• Maintained ‘Buy' with a price target of Rs 850.
• For room ACs, summers have been good and Havells has put through a price hike.
• Next focus area is launching refrigerators; expect definite announcements over next 6-9 months.
• Started working on expanding its distribution network to tier-3/ tier-4 towns.

Citi on Balkrishna Industries

• Balkrishna growth to outperform industry growth.
• FY20 volume growth guidance for Balkrishna is 3-5 percent versus negative 15-20 percent for the tyre industry.
• Margins to remain in 25-28 percent range; currently, margins are at lower end of this range.
• Balkrishna could be carbon black surplus with both phases of the carbon black plants operational.

Citi on Varroc Engineering

• Despite slowdown in auto industry, management noted that there are no pricing pressures.
• Volume growth in 2019-20 expected to be in range of 7-10 percent, Ebitda Margin to be in double-digits.
• Varroc should benefit from BS-VI transition with increase in demand.
• FY20 revenues from BS-VI related components expected to be Rs 550 crore versus Rs 100 crore.

CLSA on FY19 GST Collection

• Weak end to FY19 fiscal builds FY20 worries.
• GST collections weaken, cess issues may emerge.
• FY20 has seen a sluggish start adding to concerns of limited fiscal space.
• This puts a floor to the bond yield correction despite our expectation of a 100 basis point policy rate cut
• GST compliance measures are badly needed.
• Government's ability to give a fiscal boost rests largely on RBI's return of capital.

CLSA on India Financials

• See limited impact of Fitch Ratings' downgrade of ICICI Bank and Axis Bank below investment grade.
• Incremental issuances may become a tad difficult, and risks can arise from other downgrades.
• With slippages moderating see turnaround in earnings from FY20 as credit costs normalise.

CLSA on United Spirits

• Maintained ‘Sell' with a price target of Rs 450.
• Management sounded positive on India and reiterated its double-digit medium-term growth and margin guidance of mid-to-high teens.
• Focus to remain on execution, cost optimisation, working capital savings and agility.
• Cost saving is in the DNA, but easy gains are already made; further upsides looks difficult.

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