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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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Here’s a quick look at all that could influence equities on Wednesday.
- 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.
- 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.
- 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.
- 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.
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.
RIL will buy 5% stake in Eros International Plc for $48.75 million. pic.twitter.com/xaZeQ21tbR— BloombergQuint (@BloombergQuint) February 20, 2018
- 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.
- 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.
- Aspire Emerging Fund sold 7 lakh shares, or 0.7 percent equity at Rs 44.04 each.
- 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.
- 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 ended at Rs 64.79 per U.S. dollar on Tuesday versus Rs 64.21 per U.S. dollar on Friday.
Top Gainers And Losers
- 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.
- 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.
- Nifty PCR at 1.10 versus 1.06.
- Nifty Bank PCR at 0.79 versus 0.89.
Stocks Seeing High Open Interest Change
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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