All You Need To Know Going Into Trade On Sept. 26

Asian stocks opened mixed today, with Japan's Topix index retreating from the highest in almost eight months, as traders awaited the Federal Reserve meeting.

Hong Kong futures were little changed as traders return from a holiday. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index's performance in India, rose 0.5 percent to 11,128 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 edged lower as oil drillers rallied with crude while industrial shares lagged behind.
• The yield on 10-year Treasuries were little changed at 3.09 percent after touching 3.1 percent, the highest since May.

#BQMarketWrap | U.S. stocks drift lower as oil gains, Treasuries fall.

Read: https://t.co/jnpznO3HS4 pic.twitter.com/B5XNQnHIqD

Europe Market Check

• European shares gained, posting their seventh gain in eight sessions, as advances in the oil and mining sectors overshadowed continued concerns over trade.

Asian Cues

• Japan's Topix index fell 0.6 percent.
• Australia's S&P/ASX 200 Index rose 0.2 percent.
• Futures on Hong Kong's Hang Seng Index were little changed.
• FTSE China A50 futures rose 0.1 percent.
• S&P 500 futures were little changed.

Commodity Cues

• West Texas Intermediate crude dropped 0.5 percent to $71.93 a barrel, while Brent fell 0.5 percent to $81.45.
• Gold traded at $1,201.30 an ounce.

Shanghai Exchange

• Steel traded lower for fourth day; down 0.7 percent.
• Aluminium traded higher; up 0.1 percent.
• Zinc traded lower; down 0.2 percent.
• Copper traded higher for third day; up 0.7 percent.
• Rubber traded lower for second day; down 0.04 percent.

India is cutting imports of Iranian oil to zero in November.

Read: https://t.co/0NbIPSui31 pic.twitter.com/Qv8xydJJew

Here are the key events to watch out for this week:

• Japanese Prime Minister Shinzo Abe meets with President Donald Trump in New York to discuss trade.
• The Fed decision on Wednesday will be followed by a press conference with Chairman Jerome Powell.
• Thursday sees durable goods, GDP data and jobless claims for the U.S.

Indian ADRs

Stocks To Watch

• Yes Bank board formed a search panel to identify current CMD Rana Kapoor's successor. The board also sought extension of Rana Kapoor's tenure till September 30, 2019 from the RBI. For the long-term succession plan within the bank itself, Rajat Monga and Pralay Mondal have been appointed as executive directors, subject to RBI approval. RBI had approved Rana Kapoor's tenure extension till January 31 next year.
• Glenmark Pharma to consider buyback of its foreign currency debt worth $200 million on Sept. 28.
• Minda Industries board approved setting up a new manufacturing plant of two-wheeler alloy wheel in Maharashtra. The investment will be around Rs 500 crore for the project and production is expected to start from Nov. 2019.
• Tech Mahindra announced a strategic partnership with U.S.-based Cloudleaf Inc. The company will leverage Cloudleaf's patented sensor fabric to deliver internet of things solutions across manufacturing telecom, aerospace, healthcare and automotive industries, according to Bloomberg report.
• Blue Dart to invest Rs 200 crore for its expansion plans in tier II, IIII and IV towns. The plan aims to cover more than 19,100 pin codes by December.
• Adani Green Energy won a tender to setup 300MW wind generation project floated by Solar Energy Corporation of India. The project is expected to be commissioned by the second quarter of financial year 2021. The tender is for Rs 2.76/KWH for 25-year period.

Offerings

• Garden Reach IPO day 3. Issue subscribed 0.03 times on second day of bidding.
• Avaas Financers IPO day 2. Issue subscribed 0.03 times on first day of bidding.
• Flair Writing seeks SEBI's approval for Rs 450 crore.

Bulk Deals

• Ujjivan Financial Services: IIFL acquired 9.01 lakh shares or 0.74 percent equity at Rs 267.58 apiece.
• ICICI Lombard General Insurance: Tamarind Capital sold 72.1 lakh shares or 1.59 percent equity at Rs 800.01 apiece.

Who's Meeting Whom

• Greaves Cotton to meet Karma Capital, Alchemy Capital and other investors from Sept. 25-26.
• Tailbros Automotive Components to meet investors on Sept.26.
• PSP Projects to meet IDFC Securities on Sept. 26.
• Som Distilleries & Breweries to meet investors on Sept. 26.

Insider Trades

• Bajaj Holdings & Investments promoter group Niraj Bajaj acquired 44,500 shares from Sept. 19-21.
• Plastiblends India promoter Jyoti Kabra acquired 10,000 shares from Sept. 18-21.
• KEC International promoter Instant Holdings acquired 1.5 lakh shares on Sept. 21.

(As reported on Sept. 25)

Trading Tweaks

• Vakrangee circuit filter revised to 5 percent.
• Lasa Supergenerics removed from ASM framework.
• Kirloskar Pneumatic ex-date for stock split to Rs 2 from Rs 10 per share.
• Igarashi Motors last trading day before ex bonus.

Money Market Update

• Rupee weakened for second day; ended 0.1 percent lower at 72.70 against the U.S. dollar.
• Sovereign bonds end the day little changed even after the announcement of OMO bond purchase by the RBI. The 10-year benchmark bond yield ended steady at 8.13 percent.

F&O Cues

• Nifty September futures closed trading at 11,087 at premium of 20 points versus 31 points.
• September series-Nifty open interest down 16 percent; Bank Nifty open interest down 23 percent.
• Nifty Rollovers at 30 percent while Nifty Bank Rollovers is at 27 percent.
• India VIX ended at 16.7, down 4.3 percent.
• Max open interest for September series at 11,500 strike price call option (open interest at 25.3 lakh, open interest down 17 percent)
• Max open interest for September series at 11,000 strike price put option (open interest at 37.5 lakh, open interest up 10 percent)

F&O Ban

• In Ban: Adani Power, DHFL
• Out of Ban: Adani Enterprises

Put-Call Ratio

• Nifty PCR at 1.13 versus 1.05.
• Nifty Bank PCR at 0.7 versus 0.53.

Brokerage Radar

Brokerages On Yes Bank

Macquarie

• Maintained ‘Outperform' with a price target of Rs 425.
• Extension request may not be entertained given the nature of the allegations.
• RBI may not approve internal candidates as they may be construed equally responsible for bank operations.
• Believe an external candidate may not be able to quickly take over the reins of the bank.
• Stock re-rating now hinges on outcomes of stated action plans as well as 2017-18 divergences.

JP Morgan

• Maintained ‘Overweight' with a price target of Rs 400.
• Outcome was widely anticipated.
• Lack of visibility on succession plan prevails.
• Unsure what view RBI will take on the Board's request.

IDFC Securities

• Maintained ‘Underperform' with a price target of Rs 230.
• RBI unlikely to review tenor; Reason for extension goes against RBI's broad basing principle.
• Madhu Kapur and RBI both have to approve Rajat Monga and Pralay Mondal as EDs.
• Board meet has done nothing to address management uncertainty.

Other Brokerage Calls

UBS on Reliance Industries

• Maintained ‘Sell'; raised price target to Rs 1,100 from Rs 870, implying a potential downside of 11 percent from the last regular trade.
• Expect strong show from petchem and retail businesses to continue.
• Raise refining and petchem estimates on the rupee depreciation.
• Expect strong subscriber addition for Jio, but ARPU to remain subdued.

Morgan Stanley on Titan

• Maintained ‘Overweight'; raised price target to Rs 1,250 from Rs 1,120, implying a potential upside of 57 percent from the last regular trade.
• Expect revenue growth acceleration and margin expansion ahead of expectation.
• Expect 35 percent growth for jewellery business in the second quarter; Shift in festive season implies strong third quarter.
• Risk-reward is firmly skewed to upside; Growth runway long with high visibility.

CLSA on Oil & Gas

• Expect a very tight crude market, particularly in the second half of 2019.
• Big concern for OMCs marketing margins as it coincides with key elections.
• ONGC's stock implies no downside even if asked to share subsidy.
• Gail, Vedanta and ONGC are preferred Buys.

Credit Suisse on NBFCs

• Expectation of softer margins and slowdown in loan growth rate impacting NBFCs.
• Expect 19-33 percent earnings hit under these changes.
• Fall in stock price does not factor in this scale of change yet.
• Not yet time to start hunting for value in the sector.

Goldman Sachs on India Financials

• Liquidity concerns exaggerated; Business momentum strong.
• Believe sell off in financials has been overdone; Profitability is on the mend.
• NBFCs would be better off having better capitalisation levels.
• Asset quality pain largely over; Banks to achieve desired levels of coverage in the current financial year.

Credit Suisse on Two Wheelers

• Exports outlook strong; forex will aid margins.
• Bajaj is the main beneficiary of the pickup in exports.
• Fairly cautious view on domestic demand outlook.

Macquarie on Jubilant Life

• Maintained ‘Outperform' with a price target of Rs 1,192, implying a potential upside of 61 percent from the last regular trade.
• Pharma business is witnessing broad-based growth across segments.
• Channel checks suggest subdued second quarter for LSI, but better second half.
• Valuations attractive; Remain bullish on Jubilant.

BofAML on Bharat Electronics

• Maintained ‘Buy' with a price target of Rs 109, implying a potential upside of 43 percent from the last regular trade.
• Worst case impact of margin cap to be 100 basis points, management said.
• Payment started to flow-in, but working capital improvement unlikely.
• Valuations to re-rate as the company continues delivering.

Morgan Stanley on Eicher Motors

• Maintained ‘Overweight' with a price target of Rs 34,104.
• Insurance, rear disc and ABS will increase cost by Rs 26,000, management said.
• Customer demand for rear disc is higher than expected.
• Overall sales in Maharashtra flat; Festive demand is key monitor.

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