All You Need To Know Going Into Trade On May 7

Stocks To Watch

• Hindustan Unilever: GSK Group to sell 5.69 percent stake in the company for $3.3-3.5 billion. The offer prices for 13.37 crore shares ranges between Rs 1,850 - 1,950 per share. The offer prices is at a 3-8 percent discount to Wednesday's closing price. Offering is done via secondary placement of shares. Expected trade date for the same is May 7. Post this, the GSK group would have completely offloaded their holding in the company.
• Vedanta: Bloomberg News reports that the sale of its stake in its oil arm Cairn worth over $1 billion is said to stall.
• Dr. Reddy’s Laboratories: Received approval for Celecoxib oral solution from the U.S. FDA. The said drug is used to treat migraine.
• Aster DM Healthcare: The company's clinical arm, Aster Clinical Lab LLP has started to provide RT-PCR confirmatory test services for Covid-19 in Bengaluru. The lab is fully equipped with advanced instruments to serve routine & specialized investigation e.g. Biochemistry, Haematology, Microbiology, Molecular Diagnostics, Cytogenetics, Digital Histopathology etc.
• TCS: Continental Bank selects TCS BaNCS Cloud to offer richer, digitalised customer experiences. TCS BaNCS will help Continental Bank unify its offerings, integrate lease applications and offer its small and medium business customers a superior banking experience.
• Canara Bank: Revises Marginal Cost of Fund Based Lending Rate (MCLR). Overnight and one-month MCLR now at 7.5 percent while one-year MCLR at 7.85 percent. Repo Rate Linked Lending Rate for retail and MSME loans now at 7.3 percent from May 7.
• Indian Overseas Bank: The bank revises its Marginal Cost of Fund Based Lending Rate (MCLR). While the overnight and one-month MCLR is unchanged, the one-year MCLR is now at 8.25 percent from 8.15 percent while the two and three-year MCLR is at 8.30 and 8.35 percent respectively.
• BPCL: Bloomberg News reports that the Numaligarh Refinery has awarded a Rs 300 crore contract to Thyssenkrupp.
• NHPC: Board approved raising debt of Rs 2,000 crore for the fiscal year 2021.
• Adani Transmission: Board to consider raising funds on May 9.
• Coal India: Fine worth Rs 43.3 crore imposed on the company for illegal mining in Assam forest.
• Eicher Motors: Board approved appointment of Kaleeswaran Arunachalam as the Chief Financial Officer.
• HDFC: To raise Rs 5,000 crore via NCDs.
• ACC: The company will hold a board meeting to consider and approve revoking the recommendation for payment of final dividend for 2019, to cancel the earlier record date fixed for the purpose of the final dividend, to declare payment of interim dividend for 2019 if any and to fix a new record date for payment of interim dividend if declared.
• Hindustan Aeronautics: The Ministry of Finance has appointed IDBI Capital Markets, SBI Capital Markets and Yes Securities as merchant bankers and selling brokers for divestment of 15 percent of the government's stake in the company through an Offer for Sale (OFS). Trilegal has been appointed as the legal advisor for the same.
• Maruti Suzuki: To restart production of vehicles at its Manesar plant from May 12.
• Other Companies That Resumed Operations: Escorts, Arvind Fashions, Whirlpool, Pidilite, TVS Srichakra, Munjal Auto, Ganesha Ecosphere, Cochin Shipard, Gabriel India, Sundram Fasteners, Talbros Engineering, Lux Industries.
• Non-Nifty Earnings Today: RBL Bank, ICICI Securities, Solara Active Pharma, Cigniti Technologies, Cyient, Gilette, SKF, 5Paisa Capital.
• Workhardt: Promoter Themisto Trustee released a pledge of 73.5 lakh shares on May 6.
• Tata Steel: To meet Nippon MF and Morgan Stanley between May 8-11.
• Mindtree: Promoter Subroto Bagchi sold 2,000 shares on May 4.

Earnings Estimates: HCL Technologies Q4FY20

• $ revenue seen 0.3 percent higher at $2,550 million as per a BloombergQuint poll
• Revenue in rupee terms seen 1.9 percent higher at Rs 18,473 crore
• Ebit seen 1 percent lower at Rs 3,635 crore
• Ebit Margin seen narrowing to 19.7 percent from 20.2 percent
• Net profit seen 5 percent lower at Rs 2,884 crore
• Barring $ revenue, all other numbers are Bloomberg Estimates
• All estimates are consolidated and compared on a sequential basis

Key Factors In Focus For HCL Technologies:

• Annual revenue guidance growth of 16.5-17 percent implies 0.2-2 percent growth in Q4
• IP acquisitions likely to support topline
• Margins may see pressure owing to transitions to Work From Home costs
• Had indicated earlier that there will be little impact of Covid-19 on Q4
• Assumptions underlying FY21 guidance, impact of deal closures due to the lockdown, mega deal pipeline are some of the other factors to watch.

Brokerage Radar

Jefferies On Indian Property

• All-time best residential affordability
• Bet for the long run
• Consolidation to accelerate as Covid-19 exacerbates funding crunch
• Survivors set to make disproportionate gains
• Rental assets to see near-term pressure
• Best in two decades affordability and 7-year-long weak residential cycle set a good base to bounce back

CIMB On Indian Auto

• Covid-19 accelerated volume correction fears
• Basic modes of personal transport preferred over luxury
• Supply shocks followed by demand challenges to hit volumes severely in H1FY21
• Expect recovery in H2FY21; two-wheelers, three-wheelers in rural markets
• Cut FY21/22 earnings estimates across coverage by 9-50 percent on lower sales volumes

ICICI Securities On OMCs

• Steep excise duty hike that OMCs have to absorb to dent outlook and sentiment
• Bring marketing margins down sharply from hefty levels
• Decline in crude throughput and sales volume appears imminent in FY21
• Recent plunge in Diesel cracks also a matter of concern

Jefferies On Adani Ports

• Buy rating maintained
• Price target cut to Rs 315 from Rs 320
• Operationally weak results
• April 2020 volumes are down 20-25 percent compared to management expectations
• 10 percent change in volumes is a 17 percent impact on net profit
• Management delivering on balance sheet is key for upside

BofA Securities On Indian Pharma

• Pharma demand check in the U.S. in times of Covid-19
• Prescriptios down but eaches/units up in consumption
• High demand in respiratory, injectables; low in topicals
• Covid-19 drives HCQs, azithromycin among few others
• Secondary sales growth greater than expectations for many firms in Q4
• HCQs may recede but demand may not going ahead
• Sector can re-rate if more price erosion further lowers and demand remains strong

Bulk Deals

• Apollo Pipes: Promoter Sameer Gupta acquired 1.51 lakh shares (1.15 percent) at Rs 315.01 per share
• Supreme Petrochem: Promoter Supreme Industries acquired 10.68 lakh shares (1.11 percent) at Rs 163.8 per share.

Trading Tweaks

• Move Into ASM Framework: Digicontent
• Move Into Short-Term ASM Framework: Healthcare Global Enterprises
• Move Out Of Short-Term ASM Framework: Nippon Life India Asset Management, Unichem Laboratories, Shreyas Shipping & Logistics, Aurionpro Solutions

F&O Cues

• Nifty May futures closed at 9,281; premium widens to 10 points from 3 points
• Nifty May futures shed 6.3 percent in Open Interest and 5.2 lakh shares
• Nifty Bank May futures closed at 19,672; premium at 22 points from 25 points
• Nifty Bank May futures add 6.8 percent in Open Interest and 94,000 shares
• Nifty Put-Call Ratio at 1.3 from 1.23 across all series

Nifty Weekly Expiry: May 7

• Maximum Open Interest on Call side at 10,000 strike (19.2 lakh shares)
• Maximum Open Interest on Put side at 9,000 strike (16.9 lakh shares)
• Active Options: 10,000 Call (-8 lakh shares), 9,200 Put (+3.7 lakh shares)

Nifty Monthly Expiry: May 28

• Maximum Open Interest on Call side at 10,000 strike (14.9 lakh shares)
• Maximum Open Interest on Put side at 9,000 strike (24.5 lakh shares)