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Asian stocks tracked gains in U.S. equities and the offshore yuan advanced as China refrained from detailing retaliation plans against threatened U.S. tariff increases.
Japan, Australia and South Korea all rose at the start of equity trading Friday. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, traded 0.2 percent higher at 11,041.50 as of 6:50 a.m.
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Here’s a quick look at all that could influence equities today.
U.S. Market Check
- Stocks rallied as trade tensions appeared to ease after China held off from immediately retaliating against the latest U.S. salvo.
- Technology shares led gains, sending the Nasdaq Composite Index to a record.
- The yield on 10-year Treasuries was little changed at 2.85 percent.
Europe Market Check
European shares rebounded after Wednesday’s slide on signs China may take a less aggressive approach after the U.S. threatened to impose tariffs on more Chinese goods.
- Japan’s Topix index advanced 0.7 percent.
- Australia’s S&P/ASX 200 Index rose 0.2 percent.
- Hang Seng futures climbed 0.5 percent.
- Futures on the S&P 500 Index rose 0.1 percent. The underlying gauge climbed 0.9 percent Thursday.
- The MSCI Emerging Market Index headed for its first weekly advance in five.
- The Japanese yen slipped 0.1 percent to 112.65 per dollar.
- The offshore yuan was up 0.2 percent at 6.6798.
- West Texas Intermediate crude was flat at $70.36 a barrel.
- Brent crude traded 0.1 percent lower at $74.37 a barrel.
- Gold slid 0.1 percent to $1,246.25 per ounce.
- Steel traded higher for fifth day; up 1.3 percent.
- Aluminium traded lower; down 0.1 percent.
- Zinc snapped three-day losing streak; up 0.6 percent.
- Copper traded higher for second day; up 0.7 percent.
- Rubber traded lower; down 0.6 percent.
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Here are some key events coming up this week:
- Earnings season gets into gear with JPMorgan Chase & Co. and Citigroup Inc. among the largest companies due to give results, as well as India’s Infosys Ltd.
- Chinese trade data due Friday will probably show slightly slower export growth, after early indicators pointed to softer overseas demand and weaker export orders, Bloomberg Economics said.
Earnings To Watch
- 3i Infotech
- Bajaj Corp
Earnings Reaction To Watch
Cyient Ltd. (Q1 FY18, QoQ)
- Revenue up 1.7 percent at Rs 1,080 crore.
- EBIT down 14.3 percent at Rs 95 crore.
- Operating margin at 8.8 percent versus 10.4 percent.
- Net profit down 30.3 percent at Rs 82.5 crore.
Stocks To Watch
- HCL Technologies board has approved buyback of up to 3.64 crore (2.61 percent) shares worth Rs 4,000 crore at Rs 1,100 each.
- NCLT approved demerger of Tata Communications and Hemisphere Properties India.
- HIL acquired European flooring solutions company Parador for 72.3 million euros.
- Vakrangee entered into alliance with Reliance Nippon Life Asset Management to offer mutual fund distribution.
- SBI clarified that a 100 percent provision has been made for the Topworth Group case.
- Allahabad Bank plans to divest stake in joint ventures, associates and sell some immovable properties.
- Hindustan Oil Exploration Co. completed drilling of two wells.
- HCC failed to provide resolution timeframe for Lavasa Project (Financial Express).
- Avendus- KKR Frontrunner to buy IDFC MF (Economic Times).
- HDFC’s board to meet on July 17 to consider and approve issue price of preferential allotment.
- Varroc Engineering to set up new facilities at Chennai (India) and Poland for manufacturing exterior lighting components.
- Avanti Feeds: Thai Union Group committed to remain invested. Will keep shareholding between 20 percent to 25 percent.
- Coffee Day Enterprises: ICICI Lombard General Insurance Co Ltd sold 17.7 lakh shares or 0.84 percent equity at Rs 270 each.
- Ruchi Soya Industries: JM Financial Products sold 18 lakh shares or 0.54 percent equity at Rs 11.37 each.
- Goldman Sachs Singapore Pvt acquired 25 lakh shares or 1.34 percent equity at Rs 180 each.
- Next Orbit Ventures Fund sold 25 lakh shares or 1.34 percent equity at Rs 180 each.
- Goldman Sachs Singapore Pvt acquired 5 lakh shares or 2.63 percent equity at Rs 480 each.
- Mentor Capital Ltd sold 5 lakh shares or 2.63 percent equity at Rs 480 each.
Who’s Meeting Whom
- Gabriel India to meet investors on July 13.
- Endurance Technologies to meet Cartica Management on July 13.
- HEG to meet investors on July 16.
- Man Infra promoter group Vatsal P Shah acquired 16,000 shares on July 11.
- JSW Steel promoter group acquired 16.65 lakh shares from July 9-11.
- Singer India promoter sold 1.33 lakh shares from July 10-11.
- Rupee closed at 68.57/$ on Thursday from 68.77/$ on Wednesday.
- Nifty July futures closed trading at 11,016.2 discount of 7 points versus 9.7 points
- July series: Nifty open interest up 3.5 percent, Bank Nifty open interest unchanged
- India VIX ended at 12.5, down 2 percent
- Maximum Open Interest for July series at 11,000 Call, Open Interest at 38.3 lakh, Open Interest down 11 percent.
- Maximum Open Interest for July series at 10,600 Put. Open interest at 51.5 lakh, Open Interest down 2 percent.
- In ban: Jet Airways
- Out of ban: IDBI Bank
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
Stocks Seeing High Open Interest Change
Put Call Ratio
- Nifty PCR at 1.73 versus 1.66
- Nifty Bank PCR at 1.10 versus 1.11
IDBI Capital on Jamna Auto
- Initiated ‘Buy’ with a price target of Rs 107.
- Demand for parabolic spring to raise due to higher tonnage trucks.
- Believe the opportunity for increase in content per vehicle is enormous.
- Increase in truck axle load by 20-22 percent would help boost aftersales segment.
- M&HCV tonnage growth to outpace volume growth.
- Big push to infrastructure projects – a key demand driver in mid-term.
- Expect revenue, Ebitda and net profit growth rate at 19 percent, 25 percent and 30 percent respectively over the fiscal 2018-2020.
HDFC Securities on Radico Khaitan
- Initiated ‘Buy’ with a price target of Rs 473.
- Attractive play in the IMFL space.
- Strong presence in fast growing and niche segment.
- Captive ENA manufacturing provides raw material tailwinds.
- Deleveraging to further boost profitability.
- Expect revenue, Ebitda and net profit growth rate at 10 percent, 14 percent and 24 percent respectively over the fiscal 2018-2020.
HDFC Securities on United Spirits
- Maintained ‘Sell’ with a price target of Rs 570.
- Competitive intensity on rise.
- Potential increase in excise duty in Maharashtra.
- Volume growth and premiumisation weak in Karnataka.
- See strong earnings CAGR of 18 percent over the fiscal 2018-2020.
- Rich valuations and regulatory adversity leave limited upsides.
Kotak Securities on Balkrishna Industries
- Downgraded to ‘Reduce’ from ‘Buy’; maintained price target at Rs 1,260.
- Like Co.'s competitive positioning in global off highway tire industry.
- Believe valuations are fair and do not offer much upside from current levels.
- Expect 24 percent EPS CAGR over fiscal 2018-2021 led by volume growth and price hikes.
Edelweiss on Cyient
- Maintained ‘Buy’; hiked price target to Rs 913 from Rs 785.
- June quarter results miss estimates due to anticipated slowdown in certain projects.
- 2018-19 guidance maintained for revenue and profitability amid robust demand outlook.
- Expect dollar revenue growth rate of 11.9 percent over the fiscal 2018-2020, led by double-digit growth in A&D, turnaround in industrial and utilities.
Macquarie on Zee Entertainment
- Maintained ‘Outperform’; cut price target to Rs 615 from Rs 675.
- Zee5 is relying on original content with right pricing.
- Marketing intensity to pick starting July as it is launched in APAC and Europe.
- Expect Zee5 to almost breakeven in the financial year-ending March 2021.
- Expect valuations to trade lower till Zee remains unhurt from digital disruption.
- Expect continued thrust towards investment in original digital content for next 10 years.
Deutsche Bank on Indian IT Services
- Skills and not scale to drive next leg of growth.
- Rupee depreciation is a tactical tailwind.
- Sector-wide growth outlook remains muted.
- Acquisitions, platforms and partnerships hold the key to overcoming challenges.
- TCS: Initiated ‘Hold’ with a price target of Rs 1,740.
- Infosys: Initiated ‘Buy’ with a price target of Rs 1,495.
- HCL Tech: Initiated ‘Buy’ with a price target of Rs 1,070.
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