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All You Need To Know Going Into Trade On August 20

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Asian equities open mixed Monday as traders look for clues from earnings reports, developments in the trade war and a meeting of central bankers in Jackson Hole later in the week to gauge the outlook for markets.

Japan’s shares were off to a muted start, while South Korea’s equities rose and futures indicated Hong Kong shares may open with small declines. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India traded 0.3 percent higher at 11,516.50.

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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 rose in light summer trading Friday on strength in technology hardware shares and optimism for a resolution in America’s trade dispute with China amid reports that President Donald Trump and Chinese President Xi Jinping will meet in November in an attempt to end the roadblock.
  • The yield on 10-year Treasuries was at 2.86 percent.

Also Read: Big Questions on Global Economy Hang Over Jackson Hole Gathering

Europe Market Check

European shares fell, taking this week’s loss to the largest since the end of June, amid persistent concerns over global trade, turmoil in Turkey and the technology sector.

Also Read: Tariffs Will Hurt U.S. More Than Rest of World, Maersk Says

Asian Cues

  • Japan’s Topix index fell 0.2 percent.
  • Australia’s S&P/ASX 200 Index rose 0.2 percent.
  • South Korea’s Kospi index gained 0.6 percent.
  • Futures on Hong Kong’s Hang Seng Index dropped 0.4 percent.
  • S&P 500 futures were flat.

Also Read: China’s Belt and Road Has That Soviet Feeling: Weekend Edition

Commodity Cues

  • WTI crude slipped 0.2 percent to $65.79 a barrel.
  • Brent crude traded flat at $71.81 a barrel.
  • Gold was flat at $1,184.39 an ounce.

Shanghai Exchange

  • Steel traded higher for second day; up 2.9 percent.
  • Aluminium traded lower; down 0.4 percent.
  • Zinc traded higher; up 0.4 percent.
  • Copper traded higher for second day; up 0.3 percent.
  • Rubber traded lower for third day; down 0.3 percent.

Key Events To Watch

  • Companies announcing earnings include Alibaba, Royal Bank of Canada, Lowe’s, Target, BHP Billiton, Qantas, Ping An and China’s Bank of Communications.
  • Central bankers gather at the Kansas City Fed’s annual Jackson Hole symposium, where Federal Reserve Chairman Jerome Powell speaks Friday.
  • Fed releases the minutes from its July 31 - Aug. 1 FOMC meeting.

Also Read: Musk Defends Relentless Work Hours as Tesla Enters Fateful Week

Indian ADRs

Stocks To Watch

  • Infosys’ CFO MD Ranganath resigned.
  • L&T to consider share buyback on Aug. 23.
  • Goa Carbon’s Goa unit resumed operations after maintenance.
  • IHH Group makes open offer to acquire 19.7 crore shares of Fortis Healthcare at Rs 170 each.
  • CG Power & Industrial Solutions entered into agreement with Malaysia based Tenaga Switchgear.
  • Jet Airways clarified that it will keep evaluating alternatives for fleet utilisation.
  • Prism Johnson awarded LOI for 5 captive solar power projects, to invest Rs 8 crore for 26 percent stake in JV.
  • Mangalore Chemicals & Fertilizers received environmental clearance for expansion of a fertiliser plant.
  • Navin Fluorochemicals MD Shekhar Khanlokar resigned.
  • Alibaba has revived talks with Reliance, Tata on India push (Economic Times).
  • BSE, NSE may suspend nine firms’ trading from Sept. 10. (PTI).
  • BPCL Hydrocracker unit may stay shut for at least two months (Reuters).
  • SJVN seen as possible selloff candidate by Government, NHPC likely suitor (Times of India).
  • Amazon along with Goldman Sachs and Samara Capital to form a consortium to acquire Aditya Birla Group's More at an enterprise valuation of Rs 4,500 - Rs 5,000 crore (Economic Times).

Also Read: GDP Debate: Back Series Data Of GDP Estimates Not Official - Statistics Ministry

Kerala Floods

The worst floods in a century in India’s southern state of Kerala have killed 324 people, caused $2.8 billion in damage and left more than 220,000 homeless since start of the monsoon season in June as the armed forces and rescue teams try to evacuate low-lying areas in which others are still stranded.

Also Read: Kerala Flood Relief: How You Can Help Kerala Get Back On Its Feet

Also Read: Inside A Kerala Flood Relief Camp

Bulk Deals

  • Hatsun Agro Product: Promoter Chandramorgan RG acquired 10 lakh shares or 0.66 percent equity at Rs 719.99 each.

Who’s Meeting Whom

  • Great Eastern Shipping to meet ULJK on Aug. 20.
  • Wipro to meet investors on Aug. 20.
  • DCM Shriram to meet Ambit Capital on Aug. 20.
  • Lemon Tree Hotels to meet investors on Aug. 20.

Insider Trades

  • Chambal Fertilisers & Chemicals promoter acquired 10,000 shares on Aug. 16.
  • Nava Bharat Ventures promoter acquired 10,000 shares on Aug. 16.
  • R Systems International promoter acquired 26,600 shares from Aug. 14-16.
  • Page Industries promoters sold 9,000 shares from Aug. 14-16.
  • Skipper promoters acquired 56,200 shares on Aug. 16.

(As reported on Aug.17)

Trading Tweaks

  • Stocks added to ASM list: Responsive Industries, International Paper APPM, Tamil Nadu Newsprint & Papers, Lincoln Pharmaceuticals and WPIL.

F&O Cues

  • Nifty August futures closed trading at 11,488.4 premium of 17.7 points versus 25.9 points.
  • August series-Nifty OI up 3 percent and Bank Nifty OI up 3 percent.
  • India VIX ended at 13.1, down 3.5 percent
  • Max OI for Aug series at 11,500 Call, OI at 36.5 lakh, OI down 20 percent.
  • Max OI for Aug series at 11,000 Put OI at 46.1 lakh, OI down 4 percent.

F&O Ban

  • In Ban: Adani Enterprises, Adani Power, Jet Airways, Jain Irrigation, Raymond.
  • New in Ban: Raymond.
  • Out of Ban: None.

Put-Call Ratio

  • Nifty PCR at 1.66 versus 1.60.
  • Nifty Bank PCR at 1.38 versus 0.81.

Fund Flows

Brokerage Radar

BofAML on Dalmia Bharat

  • Initiated ‘Buy’ with a price target of Rs 3,335.
  • Best placed for 'Housing for All' on higher share in east.
  • Cost controls to keep profitability above average of peers.
  • Premiumisation, acquisitions to spur EPS growth and return on equity.
  • Ongoing litigation for Binani Cement acquisition remain an overhang.

ICICI Direct on Elgi Equipments

  • Initiated ‘Buy’ with a price target of Rs 350.
  • Aspiring market leader with solid fundamentals.
  • Indian manufacturing cycle uptick to strongly benefit Elgi.
  • Sustained turnaround in foreign subsidiaries remains key.
  • Expect revenue, operating income and net profit to grow at a compounded annual growth rate of 18 percent, 22 percent and 29 percent over FY18-20.

JPMorgan on Life Insurance

  • Believe low penetration and rapid growth justify premium over China’s peers.
  • SBI Life and ICICI Prudential Life are most attractive.
  • New India Assurance: Moderation of underwriting cycle and new IFRS accounting to benefit.
  • General Insurance Corp: Product mix limits underwriting margin improvement potential.
  • HDFC Standard Life and ICICI Lombard: Outstanding insurers, but their strong positives look priced in.
  • SBI Life: Initiated ‘Overweight’ with a price target of Rs 1,000.
  • ICICI Prudential: Maintained ‘Overweight’; raised price target to Rs 560 from Rs 520.
  • HDFC Life: Initiated ‘Neutral’ with a price target of Rs 520.
  • New India: Initiated ‘Overweight’ with a price target of Rs 360.
  • ICICI Lombard: Initiated ‘Neutral’ with a price target of Rs 710.
  • General Insurance Corp: Initiated ‘Neutral’ with a price target of Rs 390.

Deutsche Bank on BHEL

  • Maintained ‘Buy’ with a price target of Rs 112.
  • Fructification of FGD orders has just started; Rs 17,000 crore potential in 2018-19.
  • Elections could delay finalization to 5.6GW in 2018-19 out of 14GW opportunity.
  • Rising power tariffs on demand recovery - indicator for new investments.
  • Buy on compelling valuations and expected recovery of capital cycle in power.

Nomura on AIA Engineering

  • Maintained ‘Neutral’; raised price target to Rs 1,955 from Rs 1,585.
  • Strong recovery in volumes and margin stabilisation visible from the second half of the current financial year.
  • Stabilising ferro-chrome prices and rising volumes key drivers.
  • INR depreciation to further increase competitiveness.
  • Stock rally appears to price in growth; Valuation turning expensive.

CLSA on Indian Pharma

  • June quarter was the second-consecutive stable quarter for Indian pharma.
  • Pace of earnings downgrades eases significantly.
  • U.S. sales decline on a sequential basis, but likely to pick-up in the second half of the current financial year; commentary improving.
  • Redesign of cost structure continues.
  • Remain positive on pharma; Sun and Cipla best ideas.

BofAML on Infosys

  • Infosys announced the resignation of its CFO.
  • Resignation is unlikely to have parallels with resignation of prior CFO and others in October 2015.
  • Triggers: Pace of improvement in US, financial services business and dollar-rupee.

Brokerages On Godrej Consumer

Macquarie

  • Maintained ‘Outperform’ with a price target of Rs 1,465.
  • The current financial year can be a turnaround year led by HI recovery and distribution expansion.
  • Lower competitive intensity and new product launches to drive recovery in HI segment.
  • Doubling sales in general trade by March 2021 can be a game changer.

CLSA

  • Fairly impressed with strategy and execution in Indonesia.
  • June quarter showed pick-up with festive season witnessing expansion after a few years.
  • Strong launch pipeline with disruptive products to aid distribution expansion.
  • Double-digit growth and sustaining its margin are its targets for the current financial year.

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