Asian stocks fell as nations grapple with how to deal with escalating provocations from North Korea. The yen was near its strongest level for the year and U.S. Treasury yields were at their lowest since the aftermath of Donald Trump's November election win.
The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index's performance in India, declined 0.28 percent to 9,947 as of 6:46 a.m.
Here's a quick look at all that could influence equities on Wednesday.
Global Cues
- U.S. stocks slipped while Treasuries rallied the most in 10 months as tensions with North Korea mounted and another Atlantic hurricane threatened to make landfall.
Europe
- European stocks erased early gains and ended mostly lower led by lenders on Tuesday, as geopolitical concerns kept investors from taking big bets.
- Traders await clarity from Mario Draghi on paring the European Central Bank's bond-buying programme when he speaks after a policy decision on Thursday.
Asian Cues
- Japan's Topix index fell 0.4 percent. The Kospi index in South Korea slid 0.2 percent and Australia's main gauge was down 0.5 percent.
- Hang Seng Index futures dropped 0.2 percent.
Data To Watch
- China trade figures are anticipated to show another month of solid export growth, while FX reserves probably continued to rise on stricter capital controls, robust growth and a stronger yuan, according to Bloomberg Intelligence.
Commodity Cues
- West Texas Intermediate crude was steady at $48.64 a barrel following a 2.9 percent gain.
- Gold was little changed at $1,339.92 an ounce after increasing 0.4 percent to the highest in a year.
- ICE Sugar gained 2 percent to 14.03 cents a pound
Shanghai Exchange
- Steel trades lower for a second day; down 0.59 percent
- Aluminium trades lower for a second day; down 1.57 percent
- Zinc trades lower for second consecutive session; down 4.27 percent
- Copper trades lower after trading higher for three consecutive sessions; down 0.94 percent
- Rubber trades higher for fifth day; up 0.78 percent
Indian ADRs
Earnings To Watch
- Butterfly Gandhimati
- Jay Shree Tea
- Kakatiya Cement
- MT Educare
Earnings To Watch
Ortel Communications (Q1FY18, YoY)
- Revenue fell 7.8 percent to Rs 47 crore
- EBITDA grew 5 percent to Rs 10.5 crore
- Margins expanded to 22.3 percent from 19.6 percent
- Net loss of Rs 2.85 crore compared to a profit of Rs 1 crore
Stocks To Watch
- RBI says FPI investment in Bharat Financial shares reached trigger limit
- ICICI Bank will be in focus as ICICI Lombard gets SEBI nod for Rs 6,000 crore IPO
- Bajaj Finance QIP opened with at floor price of Rs 1,771.9 a piece.
- Merck says its holding company is considering full or partial sale of its $1 billion consumer health business
- HCL Technologies acquired 100 percent stake in U.K.-based ETL Factory Ltd. for 7 million pounds
- Phoenix Mills increases stake in subsidiaries Offbeat Developers, Vamona Developers, Classic Mall and Alliance Spaces
- Music Broadcast says Radio City will offer customized content across all Lucknow metro stations
- Hospital stocks: NPPA asks companies to display knee implant system cost on websites within three days
- Government eyes Rs 2,500 crore from selling 15 percent stake in NLC India (Mint)
- IndiGo may buy stake in Jet Airways if Air India bid fails (Mint)
IPO Watch
- Dixon Technologies IPO opens today. Issue price of Rs 1,760 - Rs 1,766
Brokerage View
Centrum: ‘Avoid' rating on the back of low margin business, high valuations, 90 percent of the issue is offer for sale. There are better investment opportunities in the market.
Angel Broking: Subscribe for a mid-to-long term period as the company will report higher revenue, margin improvement owing to its presence in high growth segments, experienced management and growing share of original design manufacturer segment.
- Bharat Road Network IPO opens today. Issue price of Rs 195 - Rs 205
Brokerage View
Angel Broking: Neutral rating as valuations leaves limited scope for further appreciation to issue price. Company present only in build–operate–transfer (BOT) project segment; lack of engineering, procurement, and construction segment makes its highly dependent on the traffic growth and price increase for improving its profitability.
ICICI Securities: Avoid rating as valuations are at par with other established players. At Rs 205, issue valued at 1.4 times FY17 price-to-book value; price band should have been at a discount to IRB Infrastructure (trading at similar levels).
Bulk Deals
Justdial:
- HDFC Mutual Fund bought 32.06 lakh shares (4.6%) at Rs 375 each
- SCI Growth Investments II sold 13.93 lakh shares (2%) at Rs 375.27 each
- Sequoia Capital India Growth Investment Holdings I sold 14.94 lakh shares (2.1%) at Rs 375.55 each
- Sequoia Capital India Investment Holdings III sold 7.11 lakh shares (1%) at Rs 375.28 each
Salasar Techno Engg. Ltd: KIFS Enterprise bought 1 lakh shares at Rs 243.2 each.
Jenburkt Pharmaceuticals: Girik Wealth Advisors Private Limited sold 30,794 shares (or 0.7 percent equity) at Rs 433.26 each
MSR India:
- Aspire Emerging Fund bought 5 lakh shares (0.8 percent) at Rs 33.35 each
- TVNR Securities and Holdings Pvt Ltd sold 4.02 lakh shares (0.6 percent equity) at Rs 33.47 each
Rupee
- Rupee ends at 64.12 against the dollar on Tuesday versus 64.05 previous session.
Top Performers This Month
- JBF Industries: Up 15.49 percent
- Bombay Dyeing: Up 13.79 percent
- Kolte-Patil: Up 13.62 percent
- Sunteck Realty: Up 12.25 percent
- JMT Auto: Up 9 percent
Worst Performers This Month
- Kwality: Down 15.71 percent
- Religare: Down 5.8 percent
- Just Dial: Down 5.46 percent
- Shilpi Cable: Down 5 percent
- Adani Power: Down 4.9 percent
Index Trends
F&O Cues
- Nifty September Futures closed at a premium of 19.4 points versus 14.6 points
- Nifty September futures closed at 9971.6; open interest up 4 percent
- September series' highest call base at 10000 (open interest at 41.7 lakh, down 7 percent)
- September series' highest put base at 9700 (open interest at 46.3 lakh, up 4 percent)
- Call strikes 9900, 10000, 10,100 see unwinding of open interest
- Put strikes 9800, 9900, 10000 see open interest addition
F&O Ban
- In Ban: Indiabulls Real Estate, JSW Energy
- No new changes to ban list
Only intraday positions can be taken in stocks which are in F&O ban; in case of rollover there will be a penalty
Put-Call Ratio
- Nifty PCR at 1.35 from 1.30
- Nifty Bank PCR at 0.98 from 0.93
Stocks Seeing High Open Interest Change
- Ramco Cement saw 57 percent addition on long side
- V Guard saw 27 percent addition on long side
- L&T Finance saw 17 percent addition on long side
- Hexaware saw 16 percent addition on short side
- OFSS saw 13 percent addition on short side
- Ceat saw 11 percent addition on long side
- Titan saw 10 percent addition on long side
- Berger Paints saw 10 percent addition on long side
Fund Flows
Brokerage Radar
JP Morgan On Kotak Mahindra Bank
- Upgrades stock rating to ‘Overweight', raises target to Rs 1,100 from Rs 875
- Parent bank strongly positioned while the subsidiaries are in a sweet spot
- Stock has been upgraded as the bank is strongly positioned for growth
- Subsidiaries give investors a diversified exposure across high-growth segments
IDFC On Mahanagar Gas
- Upgrades rating stock to ‘Outperform', raises target by 13 percent to Rs 1,220
- Estimate average growth of 4.7 percent in volumes over FY18-19
- Revise our earnings per share (EPS) estimates for FY18-19 higher on stronger margins across segments
- Q1FY18 margins not an aberration, expect FY18 to see sustained strength
CLSA On Sun Pharma
- Maintain ‘Sell' for target of Rs 370
- EBIT margin ex-Taro of 5 percent despite Ranbaxy synergy is worrying
- Key products witnessing a declining sales trend except Absorica
- Limited support from specialty pipeline in the near term
- Trades at an expensive 25 times FY19 and 20 times FY20 earnings; does not capture concerns
CLSA On Reliance Industries
- Maintain ‘Buy' for target of Rs 1,920
- A big cut in interconnect usage charge (IUC) will be a huge positive
- Positives from JioPhone are still under appreciated
- Strong downstream margins, capacity starts and other triggers reiterate ‘Buy'
CLSA On Astral Poly Technik
- Maintain ‘Buy' for target of Rs 785
- Adhesives to drive incremental EPS growth, return on capital employed (RoCE) expansion
- Expect revenue to grow at compounded annual growth rate (CAGR) of 22 percent over FY17-20 in the adhesives business
- Adhesives is a high-RoCE business with 6-8 times asset turn
Citi On Bharat Electronics
- Maintains ‘Buy', raises target to Rs 220 from Rs 213
- Management has guided for 12-15 percent growth during FY18 in annual report
- Management has also guided for 100-150 basis points EBITDA margin contraction in FY18
- See 14 percent EPS CAGR with return on equity (RoE) increasing from 18.2 percent to 20.6 percent over FY17-20
- BEL, NBCC and L&T are among Citi's top India industrial picks
Morgan Stanley On Cement
- Demand recovery is underway and is geographically broad based
- Higher capacity utilization will drive expansion in EBITDA/tonne and ROE
- Shree Cement is our top pick while Dalmia Bharat is our preferred mid-cap play
Edelweiss On Divi's Laboratories
- Maintain ‘Reduce' with a target of Rs 545
- Unit-II remediation is the top priority of the management
- Uphill task for Divi's going forward as Unit-I is also due for U.S. FDA inspection
- Resolution of import alert will take at least 2 years going by the past experience
Citi On Jindal Steel & Power
- Maintain ‘Buy' for target Rs 200
- FY17 annual report focuses on cash generation and improving product profile
- FY17 cash generation was healthy and substantially more than profits
- FY17 debt reduced marginally despite ongoing capex
Deutsche Bank on Marico
- Management expects a near-normal 2QFY18, despite some impact of de-stocking in July
- Management guides for 8-10 percent volume growth for rest of FY18
- Urban consumption has recovered a tad, however, rural is still slow
- Bangladesh is back on track and it expects double-digit growth in FY18
- Worst appears over in Middle East and Egypt and expect growth to return in second half of the year
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