All You Need To Know Going Into Trade On September 05

Asian equities were mixed at the open, and gold and the yen maintained their gains as traders awaited further developments on the North Korea front.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index's performance in India, gained 0.17 percent to 9,943 as of 6:45 a.m.

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

Global Cues

• S&P 500 Index futures were modestly higher with the cash market closed on Monday for Labour Day.
• European stock markets dropped across the board, with the Stoxx Europe 600 index snapping a three-session winning streak.

Asian Cues

• Japan's Topix index swung between gains and losses, while South Korea's Kospi index rose 0.2 percent. Australia's S&P/ASX 200 Index slipped about 0.1 percent.
• Contracts on Hong Kong's Hang Seng Index were 0.2 percent higher.
• The MSCI Asia Pacific Index declined 0.1 percent. It slid 0.6 percent on Monday, the steepest drop since Aug. 11.

Commodity Cues

• Gold was trading at $1,333.48 an ounce, little changed after a 0.6 percent gain.
• West Texas Intermediate crude climbed 0.2 percent to $47.39 a barrel.
• ICE Sugar ended flat 13.75 cents a pound

Shanghai Exchange

• Steel trades lower; down 0.41 percent
• Aluminium trades lower; down 0.66 percent
• Zinc trades lower; down 0.17 percent
• Copper trades higher; up 0.42 percent
• Rubber trades higher for fourth day; up 0.61 percent

Earnings To Watch

• Aegis Logistics
• Ortel Communications
• Sharda Motors
• Skipper

Earnings Reaction To Watch

FIEM Industries (Q1FY18, YoY)

• Revenue grew 19.7 percent to Rs 325.5 crore
• EBITDA unchanged at Rs 31 crore
• Margin at 10.7 percent from 12.7 percent
• Profit fell 13 percent to Rs Rs 10 crore

Gandhi Special Tubes (Q1FY18, YoY)

• Revenue grew 6.9 percent to Rs 31 crore
• EBITDA up 11.1 percent to Rs 10 crore
• Margins at 35.7 percent from 34.6 percent
• Profit went up 1.1 percent to Rs 8.8 crore

Manali Petro (Q1FY18, YoY)

• Revenue down 4.7 percent to Rs 163 crore
• EBITDA fell 62 percent at Rs 6 crore
• Margins at 4.1 percent from 10.2 percent
• Profit declined 81.8 percent to Rs 2 crore

Stocks To Watch

• Reliance Housing Finance will be demerged from Reliance Capital. ICICI Direct valued Reliance Housing at Rs 115-119 per share. Edelweiss valued it at around Rs 137 per share.
• Gujarat Textile in focus as Gujarat government extends Textile Policy 2012-17 for one more year
• Shriram Transport says merger talks with IDFC still on
• Indraprastha Gas is said to win India's Karnal City Gas license, according to Bloomberg
• IRB Infra starts toll collection, construction at Udaipur tollway
• Karnataka Bank reduces one year MCLR by 5 basis point to 8.85 percent per annum
• Indian Overseas Bank allots 2.85 percent stake to government on a preferential basis
• LIC sells 2 percent stake in Bank of Baroda as per exchange disclosures
• American PE firm Marigold Capital agrees to acquire Leela Palace Chennai property for Rs 700 crore (Economic Times)
• Thomas Cook in race to acquire IFCI's 26.09 percent stake in Tourism Finance Corp (Mint)

Bulk Deals

• Career Point: Fidelity Asian Values sold 11.8 lakh shares (3.1%) at Rs 125.75 each
• Religare Enterprises: HDFC sold 11.35 lakh shares (0.6%) at Rs 44.71 each
• Apex Frozen Foods: BNP Paribas Arbitrage sold 2 lakh shares (2.3%) at Rs 211.95 each, while GIRIK Wealth bought 3.1 lakh shares (3.5%) at Rs 211.91 each

Rupee

• The rupee closed at 64.05 a dollar, down 0.04% from its Friday's close of 64.03.

Top Performers In Second Quarter

• Himachal Futurist Communication: Up 81.9 percent
• Bombay Dyeing & Manufacturing: Up 66.9 percent
• Future Consumer: Up 61.1 percent
• Sterlite Technologies: Up 57.9 percent
• Future Retail: Up 54.7 percent

Worst Performers In Second Quarter

• Religare Enterprises: Down 74.6 percent
• Nitin Fire: Down 55.9 percent
• JMT Auto: Down 39.4 percent
• JBF Industries: Down 35.9 percent
• J.Kumar Infraprojects: Down 35.5 percent

Index Trends

F&O Cues

• Nifty September futures closed at a premium of 14.6 points from 33 points earlier
• Nifty September futures closed at 9927.65, open interest up 3 percent
• India's volatility index surged 12.7 percent to close at 13.1
• September series' highest call base at 10000 (open interest at 44.6 lakh, open interest up 27 percent)
• September series highest put base at 9700 (open interest at 44.6 lakh, open interest up 11 percent)
• Call strikes 9,900, 10000, 10,100 see open interest addition
• Put strikes 9,600, 9700 see open interest addition & unwinding seen at 9900

F&O Ban

• In Ban: Indiabulls Real Estate, JSW Energy
• New In Ban: JSW Energy
• Only intraday positions can be taken in stocks which are in F&O ban, in case of rollover there is a penalty

Put-Call Ratio

• Nifty PCR at 1.30 from 1.38
• Nifty Bank PCR at 0.92 from 1.15

Stocks Seeing High Open Interest Change

• Oil India saw open interest addition of 21 percent on long side
• United Spirits saw open interest addition of 14 percent on long side
• Berger Paints saw open interest addition of 11 percent on short side
• IOC saw open interest addition of 11 percent on short side
• Tata Elxsi saw open interest addition of 9 percent on long side
• OFSS saw open interest addition of 9 percent on long side
• Cipla saw open interest addition of 9 percent on short side
• IndusInd Bank saw open interest shedding of 9 percent, long unwinding seen

Fund Flows

Brokerage Radar

CLSA on United Spirits

• Maintain Sell; hike target price to Rs 1,750 from Rs 1,600
• Upside from IPL drives 13-15 percent EPS upgrades to FY19-20
• Maintain Sell on earnings risk due to a tough regulatory environment
• Continue to value alcohol business at 22x EV/EBITDA and value the IPL at $380 million

Credit Suisse on Sun TV

• Maintained Outperform with target price of Rs 980
• Sun to witness strong FY19 with IPL and TN digitisation
• Tamil Nadu digitisation to give Sun Rs 20 per subscriber
• Subscription revenue to grow at 25 percent CAGR over FY17-19
• IPL to go from Rs 30 crore loss to Rs 130 crore profit in FY19

CLSA on Sun TV

• Maintain Buy; hike target price to Rs 965 from Rs 890
• Upgrade FY19 IPL revenues by 45 percent
• Sun TV to earn profit before tax of Rs 150-170 crore in FY19-20
• Strong subscription outlook with digitisation rolling in Tamil Nadu
• Subscription revenue to grow at CAGR of 20 percent over FY17-20
• Triggers:- Advertising growth, strong subscription revenue and IPL

Credit Suisse on Bharat Financial Inclusion

• Maintained Outperform; Hike target price to Rs 1,055 from Rs 920
• BFIL gained 60 basis points market share to 9.1 percent of micro-finance institution assets in India
• BFIL continues to enjoy best funding costs, employee productivity ratios and geographic reach
• BFIL remains one of the best capitalised players in the market
• FY19/20 EPS estimates hiked by 3/6 percent on better long-term outlook

Citi on Indraprastha Gas Management Meet

• Maintain Buy with target price of Rs 1,390
• Expect volumes to grow at CAGR of 10 percent in next 2-3 years
• Capex to rise to more than Rs 1,000 crore in next 2 years
• Expects access to rest of Gurgaon (current 25 percent) in next court hearing on October 4
• Citi expects ample scope of higher payouts given healthy financials

ICICIDirect on Reliance Housing Finance

• Expect Listing at Rs 115-120
• RHF management targets AUM to reach Rs 50,000 crore by FY20
• RHF management expects return on equity to sustain at 15 percent
• RHF networth seen at Rs 1,400-1,500 crore at time of listing
• Reliance Capital's market price can adjust lower by Rs 70-80 a share post demerger

Edelweiss on Reliance Housing Finance

• RHF valued at Rs 3,360 crore translating to Rs 137 a share
• Demerger will entail sharper focus and more efficient capital allocation
• RHF currently high growth average margins business
• Scaling business along with cost focus to improve cost and return ratios
• Return on assets to improve to 1.5 percent versus current 1 percent

KRChoksey on Jain Irrigation Systems

• Initiating Buy with target price of Rs 162; Potential Upside of 64 percent
• MIS opportunity in Maharashtra pegged at Rs 1,500-3,000 crore in next 2 years; Jain has 60 percent market
• Revenue/Net profit to grow at CAGR of 21/72 percent over FY17-19
• Net profit performance is due to lower finance cost post refinancing & conversion of debentures
• Net debt/EBITDA expected to fall to 2.4x by FY19 versus 3.8x in FY17
• Interest coverage to improve to 2.7x by FY19 versus 1.5x in FY17
• Better monsoon and increase Agriculture spending to further boost financial performance

Morgan Stanley on Reliance Industries

• Maintain Overweight with target price of Rs 1,823
• Unfortunate natural disaster hurricane Harvey pushed Singapore GRMs to $10.5 a barrel
• Every 10 percent rise in refining margins has an 8-12 percent impact on RIL's earnings
• RIL is likely to surprise in upcoming earnings season
• Midstream polyester margins to rise 25 percent in FY18 driven by supply cut
• Triggers:- Refining margins reaching highs, chemical margins recovering, clarity on telecom improving

HSBC on Tech Mahindra

• Maintain Buy with target price of Rs 460
• Focused on improving profitability and willing to go of low margin business in the near term
• Recovery in telecom cycle may help TechM outperform overall IT services industry
• Operating earnings are likely to pick up in FY19 after 4-5 years of no growth
• FY18 EPS estimates hiked by 9 percent on significant hedging gains

IDFC on IPCA Labs

• Maintain Neutral with target price of Rs 455
• Limited near-term upside given muted FY18E earnings and uncertainty on FDA resolution timelines
• Revenue/EBITDA/net profit to grow at a CAGR of 12/18/25 percent over FY17-19
• Margins to expand by 130 basis points over FY17-19 to 14.6 percent
• Underutilised fixed cost base could lead to pick-up in revenues from FY19
• Key Risk:- High operating leverage, an inability to achieve projected revenue

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