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All You Need To Know Going Into Trade On Feb. 21

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Asian stocks traded mixed following a decline in their American counterparts while shorter-dated U.S. Treasuries extended losses amid a massive debt issuance.

The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.5 percent to 10,383 as of 6:59 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 halted a six-day rally as disappointing results from Walmart Inc. weighed on major indexes as the dollar pushed higher.
  • Treasuries fell amid a heavy slate of U.S. debt issuance, with short-end auctions drawing some of the highest yields in almost a decade. The 10-year rate was up to 2.89 percent.
  • While speculators are turning bearish, money managers are looking at the highest U.S. yields in years as a buying opportunity in a world where shorter-term Japanese and German notes still carry negative yields.

Europe Check

  • European stocks rose for the fourth time in five days, resuming gains as the U.S. market reopened after a three-day weekend with equities looking to add to last week’s rally.

Asian Cues

  • Japan’s Topix index was flat as of 9:18 a.m. in Tokyo.
  • Australia’s S&P/200 Index dropped less than 0.1 percent.
  • Futures on the S&P 500 rose 0.2 percent.
  • The MSCI Emerging Market Index declined 0.5 percent, the biggest drop in more than a week.

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

  • The Federal Reserve will release minutes on Wednesday of its Jan. 30-31 meeting, Janet Yellen’s last as chair, where officials kept the rate unchanged.
  • Fed policy makers speaking this week include New York Fed President William Dudley and Atlanta Fed President Raphael
  • Bostic. Cleveland Fed President Loretta Mester is among speakers at the U.S. Monetary Policy Forum in New York City.
  • Companies announcing earnings this week include Glencore, Woolworths, Barclays and Royal Bank of Scotland.
  • Chinese markets reopen on Thursday after holidays.
  • India’s Monetary Policy Committee minutes after 5 pm.

Commodity Cues

  • West Texas Intermediate crude fell 0.2 percent to $61.65 a barrel.
  • Gold rose 0.1 percent to $1,330.47 an ounce after dropping 1.3 percent.

Indian ADRs

Earnings Reactions To Watch

Mahindra CIE Q4 (YoY)

  • Revenues up 40 percent to Rs 561.5 crore.
  • Net profit up 33 percent to Rs 14.6 crore.
  • Ebitda up 72 percent to Rs 58.5 crore.
  • Margin at 10.4 percent versus 8.5 percent.

Huhtamaki PPL Q3 (YoY)

  • Revenues up 7 percent to Rs 562 crore.
  • Net profit up 75 percent to Rs 21 crore.
  • Ebitda up 11 percent to Rs 60 crore.
  • Margin at 10.7 percent versus 10.3 percent.

Stocks To Watch

  • Reliance Industries to acquire 5 percent stake in Eros International Plc for $48.75 million, announces Joint Partnership to set-up an Rs 1,000 crore corpus to co-produce and consolidate content.
  • Union Bank said that it classified Rotomac Global account as a non-performing asset in October 2016.
  • Bank of Baroda discloses Rs 456.6 crore exposure to Rotomac Global.
  • Weizmann Forex postponed the demerger of wind power operations in Karma Energy for fundraising.
  • Edelweiss units invoke 3.9 percent stake in Fortis Healthcare; reduces shareholding to 4.17 percent.
  • Dilip Buildcon bags order worth Rs 380 crore from NHAI in Karnataka.
  • The NSE to exclude futures and options contracts of HDIL from April 27.
  • Central Bank of India to consider raising up to Rs 4,835 crore via preferential issue on Feb. 23.
  • Nitin Spinners approves preferential issue of 3.32 lakh equity shares at Rs 120.5 apiece to promoters.
  • Mawana Sugar to acquire the entire stake of Usha International in Mawana Foods Pvt. Ltd. for Rs 24.83 crore.
  • Max India said that its joint venture partner is exploring stake in Max Healthcare.
  • High Court asked cops to probe into allegations against Gitanjali Gems promoter Mehul Choksi.

Bulk Deals

Fortis Healthcare

  • Societe Generale bought 76.64 lakh shares or 1.5 percent equity at Rs 142.95 each, on an average.
  • ECL Finance sold 1.49 crore shares, or 2.9 percent equity at Rs 141.38 each, on an average.

Century Enka

  • Cygnet Industries bought 4.15 lakh shares, or 1.9 percent equity at Rs 349.5 each.
  • Camden Industries sold 4.15 lakh shares, or 1.9 percent equity at Rs 349.5 each.

Kesar Petroproducts

  • Aspire Emerging Fund sold 7 lakh shares, or 0.7 percent equity at Rs 44.04 each.

Mangalam Cement

  • Cygnet Industries bought 8 lakh shares, or 3 percent equity at Rs 336.5 each.
  • Camden Industries sold 8 lakh shares, or 3 percent equity at Rs 336.5 each.

Mangalam Timber Products

  • Cygnet Industries bought 6.53 lakh shares, or 3.6 percent equity at Rs 31.5 each.
  • Camden Industries sold 6.53 lakh shares, or 3.6 percent equity at Rs 31.5 each.

Who’s Meeting Whom

  • NBCC to meet Wellington Management Group on Feb. 21.
  • PI Industries to meet HDFC Mutual Fund on Feb. 22.
  • Greenlam Industries to meet several fund houses including Edelweiss, JM Finance and Antique on Feb. 22.

Insider Trades

  • Apollo Tyres promoter Neeraj Consultants Pvt. acquired 1.05 lakh shares on Jan. 19.
  • Lumax Industries promoter Dhanesh Kumar Jain (HUF) acquired 8,500 shares on Jan. 14.
  • Lasa Supergenerics promoter Svaks Biotech India Pvt. sold 8,429 shares between Feb. 15-16.
  • KCP Sugar & Industries’ promoters acquired 50,000 shares between Feb. 15-16.

Rupee

  • Rupee ended at Rs 64.79 per U.S. dollar on Tuesday versus Rs 64.21 per U.S. dollar on Friday.

Index Trends

Top Gainers And Losers

F&O Cues

  • Nifty February futures closed at 10,343.7, discount of 16 points.
  • Nifty March Futures at 10,371, premium of 11 points versus 37 points on Monday.
  • All series-Nifty open interest up 22 percent, Bank Nifty open interest up 11 percent.
  • Rollover: Nifty Rollover at 30 percent, Bank Nifty at 21 percent.
  • India VIX ended at 16.8, up 1.2 percent.
  • Maximum open interest for February series at 11,100 call strike; open interest at 48.4 lakh, open interest down 1 percent.
  • Maximum open interest for February series at 10,300 Put, open interest at 54.8 lakh, up 20 percent.
  • March series maximum open interest at 10,000 Put and 11,000 Call.

F&O Ban

  • In Ban: Balrampur Chini, Dish TV, Fortis Healthcare, GMR Infra, IFCI, Jain Irrigation, JP Associates
  • New in ban: IFCI
  • Out of ban: HDIL, Oriental Bank

Alert: 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 1.10 versus 1.06.
  • Nifty Bank PCR at 0.79 versus 0.89.

Stocks Seeing High Open Interest Change

Fund Flows

Brokerage Radar

Macquarie on Indian IT services

  • Next fiscal guidance hints at marginal improvement.
  • Strong GDP growth momentum in developed markets to aid growth.
  • Expect most large companies in India to grow at industry level in the next financial year.
  • Headcount growth to remain lower than revenue growth rate.
  • Expect fiscal revenue growth to be marginally better than current fiscal.
  • Large cap pecking order: HCL Tech > Infosys > TCS > Wipro and Tech Mahindra.
  • In Mid-cap space: prefer L&T Infotech and Hexaware.

Deutsche Bank on Ambuja Cement

  • Maintained ‘Hold’; raised price target to Rs 275 from Rs 252.
  • December quarter results surprise positively.
  • Ebitda significantly above estimates due to better volumes and margins.
  • Realisations improved marginally, but barely adequate to compensate cost inflation.
  • Expect earnings per share to grow at a compounded rate of 17 percent by 2019.

Macquarie on Ambuja Cement

  • Maintained ‘Neutral’ with price target of Rs 300.
  • December quarter’s operating income was significantly higher than estimates due to an inventory gain.
  • Strong volume push in previous quarter.
  • Capacity to constrain volume growth.
  • Ambuja-ACC merger final step still awaited.

Deutsche Bank on Titan

  • Maintained ‘Buy’ with price target of Rs 970.
  • Expect growth of exchange gold usage to sustain through the financial years till March 2020.
  • Use can increase as flat gold prices since 2013 means gold is not an appreciating asset.
  • Exchange gold possess a risk to near to medium term revenue growth.

Macquarie on Titan

  • Maintained ‘Outperform’ with price target of Rs 907.
  • Believe recent bank fraud case has implications on Titan’s market share.
  • Big opportunity for Titan to accelerate the pace of market share gains.
  • Demand from trusted players like Tanishq to further accelerate.
  • Big opportunity for Tanishq for store expansion in medium term.
  • Compulsory Hallmarking- another step towards formalization of jewellery.

Morgan Stanley on Coal India

  • Maintained ‘Underweight’ with price target of Rs 221.
  • Execution and timelines for private coal mining are key.
  • Could take few years for mining to start.
  • Positive for India's coal production; Pose downside risk to coal imports.
  • For Coal India, key will be aggression in auction bids.

Morgan Stanley on Maruti Suzuki

  • Maintained ‘Overweight’ with price target of Rs 10,563.
  • Expect Japanese Yen to rise sharply against U.S. dollar.
  • Impact on next fiscal’s earnings per share will be moderate, but the earnings per share is expected to take a hit by 4-8 percent in the financial year-ending March 2020.
  • With Maruti’s focus on reducing FX exposure, risk is manageable.

Credit Suisse on Tata Steel

  • Maintained ‘Outperform’ with price target of Rs 860.
  • Bhushan bid implies EV at six times adj. Ebitda.
  • Valuation not cheap, but with steel cycle picking up; Deal can be EPS accretive.
  • Disagree with market concerns about bid being too aggressive.
  • Minor working capital plus capex would be needed for the asset.

Macquarie on Tata Steel

  • Maintained ‘Outperform’ with price target of Rs 800.
  • Bid appears 10–15 percent higher than expectations.
  • See Bhushan assets as an attractive strategic fit for Tata.
  • Quality assets with high integration.
  • Assets offer growth optionality and attractive strategic fit.
  • Valuations need to evaluate factors beyond headline capacity.
  • Stock correction on headline bid provides a buying opportunity.

Credit Suisse on Hexaware

  • Maintained ‘Neutral’; raised price target to Rs 330 from Rs 265.
  • Strategy looks well thought-out and realistic.
  • Business can sustain low to mid-teen growth.
  • Not much scope for margin expansion.
  • Expect dividend payout to increase.
  • Rich valuations and stake sale by Baring an overhang.

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