All You Need To Know Going Into Trade On Feb. 7

Asian equity markets recovered some of the losses sustained in the global rout after U.S. shares rallied amid a welter of calls to “buy the dip.”

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index's performance in India, snaps six-day losing streak and rose 1.1 percent to 10,613.50 as of 6:50 a.m.

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DayBreak

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

Global Cues

• U.S. stocks rebounded from a violent selloff to post the biggest rally in 15 months as investors poured back into some of the most beaten-down sectors.
• Technology, materials and consumer shares paced a 1.7 percent gain in the S&P 500 Index, while DowDuPont and Home Depot led a 567 point surge in the Dow Jones Industrial Average, the biggest gain in two years.
• The ride wasn't straight up, though. The Dow plunged more than 500 points at the open, adding to anxiety after Monday's rout -- the worst in almost seven years.
• The benchmark for U.S. share volatility went through wild gyrations after hitting a two-year high.
• Treasury yields swung before nudging higher.

#BQMarketsNow | Stocks recover from rout with best day since 2016.https://t.co/CkDvhQNxA4 pic.twitter.com/WriAVBmJzJ

What global policy makers are saying about the stock slide.https://t.co/yW6koDCpiU pic.twitter.com/RZm0V5XU2u

Europe Check

• European stocks posted their worst decline since the aftermath of the Brexit referendum as traders in the region caught up with a selloff in the U.S.
• After a strong start to 2018, most European stock benchmarks have wiped out gains for the year amid worries over rising government bond yields and the outlook for the trajectory of interest rates. U.S. equity benchmarks fluctuated on Tuesday.

Asian Cues

• Japan's Topix index advanced 3.2 percent and the Nikkei 225 Stock Average jumped 3.1 percent.
• Australia's S&P/ASX 200 Index rose 1 percent. The Kospi index in South Korea was up 0.9 percent.
• Futures on Hong Kong's Hang Seng Index advanced 0.5 percent.
• Futures on the S&P 500 fell 0.1 percent. The underlying measure gained 1.7 percent Tuesday.
• The MSCI Asia Pacific Index climbed 1.3 percent.

Here are some of the key events scheduled for this week:

• India's central bank will probably hold and maintain a neutral stance Wednesday. Governor Urjit Patel is in a bind, needing to both reduce inflation and keep rates low enough to ensure Prime Minister Narendra Modi can bridge a wider fiscal deficit. The Reserve Bank of India is probably overestimating CPI and economic growth, allowing policy makers to tilt back toward easing by midyear, Bloomberg Economics said.
• Monetary policy decisions are also due this week in Russia, Brazil, Poland, Romania, the U.K., New Zealand, Serbia, Peru and the Philippines.

RBI may hold interest rate for the third time in a row.https://t.co/ICJLKXxuLr pic.twitter.com/NZlWfTwz8q

• Earnings season continues with reports from SoftBank, Sanofi, Philip Morris, Tesla, Rio Tinto, L'Oreal and Twitter.
• New York Fed President William Dudley and Dallas Fed President Robert Kaplan are among policy officials due to speak.

Commodity Cues

• West Texas Intermediate crude gained 0.8 percent to $63.89 a barrel.
• Brent crude trades 0.5 percent higher at $67.22 per barrel after slipping 1.2 percent.
• Gold rose 0.1 percent to $1,325.65 an ounce.
• Sugar snaps three-day winning streak; ends lower at 13.84 cents per pound; down 0.4 percent.

Shanghai Exchange

• Steel trades lower; down 0.1 percent.
• Aluminium trades lower for third day; down 1 percent.
• Zinc trades lower for third day; down 0.5 percent.
• Copper trades lower; down 0.2 percent.
• Rubber trades lower for seventh day; down 0.4 percent.

World Gold Council estimates up to 800 tonnes demand in 2018, below the five-year average in India.https://t.co/Sfaq4y2OKS pic.twitter.com/Gr5XtNUxdK

Indian ADRs

Nifty Earnings To Watch

• Aurobindo Pharma
• Cipla
• Eicher Motors

SGX Nifty 50 Futures gets back above 100-DMA. https://t.co/CkDvhQNxA4 pic.twitter.com/DSxMNDp1oY

Other Earnings To Watch

• BEML
• ICRA
• Indraprastha Gas
• Ipca Laboratories
• IRB Infra
• Kaveri Seed Company
• Polaris
• Prestige Estates
• Reliance Home Finance
• SRF
• Torrent Power
• Voltas

Earnings Reaction To Watch

KEC International Q3 (YoY)

• Revenue up 26 percent at Rs 2,405 crore.
• Net profit up 79 percent at Rs 112 crore.
• EBITDA up 34 percent at Rs 244 crore.
• Margin at 10.1 percent versus 9.5 percent.

Ashapura Intimates Q3 (YoY)

• Revenue up 116 percent at Rs 78 crore.
• Net profit up 14.5 times at Rs 37.8 crore.
• Other income of Rs 38 crore versus Rs 0.3 crore.
• EBITDA up 117 percent at Rs 13 crore.
• Margin flat at 16.7 percent.

Gandhi Special Tubes Q3 (YoY)

• Revenue up 27 percent at Rs 28 crore.
• Net profit up 22 percent at Rs 9.3 crore.
• EBITDA up 50 percent at Rs 10.5 crore.
• Margin at 37.5 percent versus 31.8 percent.

Gujarat Alkalies and Chemicals Q3 (YoY)

• Revenue up 27 percent at Rs 618 crore.
• Net profit up 138 percent at Rs 112 crore.
• EBITDA up 112 percent at Rs 180 crore.
• Margin at 29.1 percent versus 17.5 percent.

Shanthi Gears Q3 (YoY)

• Revenue up 17 percent at Rs 54 crore.
• Net profit up 43 percent at Rs 6.7 crore.
• EBITDA up 28 percent at Rs 11 crore.
• Margin at 20.4 percent versus 18.7 percent.

Vidhya Telelinks Q3 (YoY)

• Revenue up 55 percent at Rs 320.5 crore.
• Net profit up 54.5 percent at Rs 17 crore.
• EBITDA up 48 percent at Rs 41.5 crore.
• Margin at 12.9 percent versus 13.5 percent.

Ramco Industries Q3 (YoY)

• Revenue up 24 percent at Rs 181 crore.
• Net profit at Rs 12 crore versus Rs 5 crore.
• EBITDA at Rs 18.5 crore versus Rs 7.5 crore
• Margin at 10.2 percent versus 5.1 percent.

Hero Motocorp Q3 (YoY)

• Revenue up 15 percent at Rs 7,305 crore.
• Profit up 4.3 percent at Rs 805 crore.
• EBITDA up 7.2 percent at Rs 1,158 crore.
• Margin at 15.9 percent versus 17 percent.

Thermax Q3 (YoY)

• Revenue up 18 percent at Rs 1,117 crore.
• Net profit up 6.5 percent at Rs 58.6 crore.
• EBITDA up 8.5 percent at Rs 95.5 crore.
• Margin at 8.5 percent versus 9.3 percent.

Heritage Foods Q3 (YoY)

• Revenue up 27 percent at Rs 579 crore.
• Net profit down 20 percent at Rs 16 crore.
• EBITDA up 27 percent at Rs 35.5 crore.
• Margin flat at 6.1 percent.

Tasty Bites Q3 (YoY)

• Revenue up 12 percent at Rs 73 crore.
• Net profit up 45 percent at Rs 6.8 crore.
• EBITDA unchanged at Rs 10 crore.
• Margin at 13.7 percent versus 15.4 percent.

REC Q3 (YoY)

• Net Interest Income down 9 percent at Rs 2,064.5 crore.
• Net profit down 26 percent at Rs 1,296 crore.

Dish TV Q3 (YoY)

• Revenue down 1 percent at Rs 741 crore.
• Net loss of Rs 0.75 crore versus net profit of Rs 10 crore.
• EBITDA down 15 percent at Rs 201 crore.
• Margin at 27.1 percent versus 31.8 percent.

DIC India Q3 (YoY)

• Revenue up 11 percent at Rs 199.5 crore.
• Net loss of Rs 3.5 crore versus net profit of Rs 5 crore.
• EBITDA down 10 percent at Rs 4.5 crore.
• Margin at 2.3 percent versus 2.8 percent.

Cupid Q3 (YoY)

• Revenue down 25 percent at Rs 21 crore.
• Net profit down 37.5 percent at Rs 4 crore.
• EBITDA down 38 percent at Rs 6.5 crore.
• Margin at 31 percent versus 37.5 percent.

#Q3WithBQ | Hero MotoCorp profit matches estimates on strong sales.https://t.co/tcRqQg4Z9m pic.twitter.com/pWBvttIfk4

Stocks To Watch

• KEC International gets orders worth Rs 2,035 crore.
• Canara Bank Board approves raising Rs 4,870 crore via preferential issue to the government.
• Max Financial board to consider raising fund to invest in Max Life on Friday.
• Bajaj Electricals gets order worth $4.1 million in Zambia.
• Praj Industries gets letter of acceptance for Rs 16.75 crore BPCL order.
• Mcnally Bharat gets orders worth Rs 68.3 crore.
• Government raises import duty on sugar to 100 percent.
• Ashapura Intimates Board approves plan for expansion of Indian Ethnic Nightwear in Southern parts of India.
• Orient Press starts commercial production of Flexible Packaging Material at its Noida unit.
• HDFC could move to acquire controlling stake in CanFin Homes (Economic Times).
• Vodafone in final talks to sell its 42 percent stake in Indus Towers (Economic Times).

$30 Billion hit looms for India banks on new accounting rule.https://t.co/NNdR0l4hHU pic.twitter.com/KscWptdE9G

Bulk Deals

• Veto Switchgear Cable: Reliance Wealth Mgmt ltd sold 1 lakh shares or 0.5 percent equity at RS 190.21 each.

Trading Tweaks

• Circuit filter revised to 10 percent: Waterbase, Gini Silk, Virinchi .
• Circuit filter revised to 20 percent: Ramky Infra, HEG, Apex Frozen Foods, Talbros Auto, Morepen Labs, Centrum Capital, Unitech, Praj Industries, Ludlow Jute, Liberty Shoes, Archies, Adani Transmission
• Circuit filter revised to 5 percent: Vakrangee .
• Technocraft Industries buyback period from Feb. 7-22.
• Shilpi Cable Technologies shifted to B group from Z group.
• BEL last trading day before determining buyback eligibility.

New India exchange-traded fund will let investors bet on bonds of state companies.https://t.co/ZlskZHLMvt pic.twitter.com/68r5nMQke0

Who's Meeting Whom?

• L&T Infotech to meet investors from Feb. 7-27.
• VRL Logistics to meet Batlivala & Karani Securities on Feb. 7.
• Jyothy Labs to meet Saif partners on Feb. 7.
• Shriram Transport to meet Credit Suisse on Feb. 7.
• Mahindra Life to meet HDFC Securities on Feb. 7 and Kotak Securities on Feb. 8.

Insider Trades

• Jayesh B Bhansali, promoter of BEPL, bought 2.5 lakh on Feb. 5-6.
• Ravi Mazumdar, promoter of Biocon, bought 1.5 lakh shares on Feb. 1.
• KCP Sugars and Industries promoter bought 10,000 shares on Jan. 30.
• Ganesh Housing promoter Shekar Patel sold 2 lakh shares on Feb. 5.
• Supreme Shine Steel promoter sold 10.5 lakh shares on Feb. 2.

Rupee

• Rupee closed at 64.25/$ on Tuesday from 64.07/$ on Monday. This is the rupee's lowest level since Dec. 14, 2017.

Top Gainers And Losers

Index Trends

F&O Cues

• Nifty February futures trade at 10,513 premium of 15 points from 18 points.
• February series: Nifty open interest down 1 percent; Bank Nifty open interest down 2 percent.
• India VIX ended at 20, up 24.6 percent.
• Max open interest for February series at 11,500 call strike (open interest at 57.7 lakh, down 7 percent).
• Max open interest for February series shifts to 10,000 put from 10,500 strike (open interest for 10,000 put strike at 49.5 lakh, up 28 percent).

F&O Ban

• In ban: Fortis Healthcare, HDIL, Jain Irrigation.
• New in ban: Jain Irrigation.
• Out of ban: India Cement, Wockhardt.

Only intraday positions can be taken in stocks which are in F&O ban. There is a penalty in case of a rollover of these intraday positions.

Put-Call Ratio

• Nifty PCR at 1.13 from 1.09.
• Nifty Bank PCR at 0.81 from 0.74.

Stocks Seeing High Open Interest Change

Fund Flows

Brokerage Radar

Jefferies on Engineering and Construction

• Sharp downside has given good entry opportunities.
• Expect capex announcement driven cycle recovery over the next 12-18 months.
• December quarter's order flows and rise in budgetary infra outlay are encouraging.
• BEL: Upgraded to ‘Buy'.
• L&T, ABB, Voltas, KEI are top picks.
• BHEL/Thermax are ‘Underperformers'

Jefferies on BEL

• Upgraded to ‘Buy' from ‘Hold'; maintained price target at Rs 190.
• Recent correction provides a good entry point.
• Double-digit revenue growth to continue.
• Macro defence story – still in BEL's favour.
• Remain positive on company's momentum in order flow and execution.

JPMorgan on Siemens India

• Maintained ‘Underweight' with price target of Rs 1,000.
• December quarter's operating income beat compensates for topline miss.
• Order inflow growth sedate at 2 percent.
• Estimate revenue to grow 15 percent over the financial years through March 2019.
• Estimate earnings per share growth at 16 percent and 24 percent for the current and the next financial year respectively.

Axis Capital on Punjab National Bank

• Maintained ‘Hold' with price target of Rs 175.
• Higher provisions dent profitability.
• Asset quality improved optically with GNPA ratio declining.
• Lower slippages and improved loan growth are key positives.
• Earnings to remain under pressure given higher provisions.

JPMorgan on Punjab National Bank

• Maintained ‘Neutral' with price target of Rs 195.
• December quarter missed estimates on higher treasury losses.
• Asset quality improved but stayed weak with slippages.
• Credit costs trended higher, but was sequentially in line.
• Opex growth picked-up sequentially but stayed under control.
• Expect asset quality pressures to continue in coming quarters.

Credit Suisse on Hero MotoCorp

• Maintained ‘Neutral' with price target of Rs 3,560.
• December quarter was slightly better than expected operationally.
• Marginal beat on higher spare part sales.
• Management expects double-digit growth for the industry in the next financial year.
• Hero can gain market share led by multiple launches planned.
• Management to pass on higher acquisition and commodities costs.

Deutsche Bank on Hero MotoCorp

• Maintained ‘Hold' with price target of Rs 4,100.
• December quarter results were broadly in line.
• Building in robust volume growth of 8 percent over the financial years through March 2020.
• Cautious on margins due to raw material inflation.
• Management expects demand uptick to continue in near-term.

CLSA on Lupin

• Maintained ‘Buy'; cut price target to Rs 1,000 from Rs 1,060.
• U.S. sales increased 5 percent on a sequential basis, but margins were weak.
• Key U.S. launches on track in next fiscal; Solosec launch on track in mid-2018
• Lupin expects to resolve USFDA warning letter on two plants in 2018.
• Lupin expects U.S. price erosion to bottom out over the next few quarters.
• Remain constructive as stock is trading at an attractive valuation.

Credit Suisse on Lupin

• Maintained ‘Neutral' with price target of Rs 850.
• December quarter reported weak margins results in significant miss.
• Operating margin (pre R&D) was the lowest in past five years.
• Positive in December quarter was no negative surprise in the U.S. sales.
• Japan sale finally starts growing again.

Deutsche Bank on Castrol

• Maintained ‘Buy' with price target of Rs 235.
• December quarter was significantly above estimates.
• Strong volume growth post GST.
• Market share grew in commercial vehicle segment.
• Despite higher raw material costs margins improved.
• Expect robust margins and volume growth.

Porinju Veliyath (@porinju) wants investors to focus more on microeconomic fundamentals and not global macroeconomic developments.https://t.co/WEC7ZU6Cdr

CLSA on JSW Energy

• Maintained ‘Sell'; raised price target to Rs 69 from Rs 66.
• Net profit aided by treasury income and lower interest cost.
• Regulated business disappoints, dark spreads continue to contract.
• Core business weakens, risks to return on equity deterioration limits upside.

CLSA on Dish TV

• Maintained ‘Buy' with price target of Rs 108.
• December quarter subscription revenues were in line.
• Subscriber addition to continue.
• Dish to be a beneficiary of government's growing investments to boost rural incomes.
• Merger with Vd2H to be effective Feb-18.
• Merged company to deliver 13 percent compounded growth rate in operating income over the financial years through March 2020.

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