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Asian stocks eked out modest gains at the open after a mixed U.S. session ahead of midterm elections.
Equities climbed in Japan, Australia and South Korea, while Hong Kong and China futures also tipped gains. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.4 percent to 10,600 as of 7:20 a.m.
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Here’s a quick look at all that could influence equities today.
U.S. Market Check
- U.S. stocks climbed, with Warren Buffett’s Berkshire Hathaway Inc. powering gains in the S&P 500 Index.
- The yield on 10-year Treasuries held at 3.20 percent.
Europe Market Check
- European shares reversed earlier gains to end a five-day rising streak as a U.S. tech slump spread to Europe and optimism over a U.S.-China trade deal faded.
- Japan’s Topix index rose 0.5 percent.
- Australia’s S&P/ASX 200 Index rose 0.5 percent.
- FTSE China A50 futures rose 0.3 percent.
- Hong Kong Hang Seng Index futures added 0.2 percent.
- S&P 500 Index futures were little changed.
- West Texas Intermediate crude fell 0.4 percent to $62.86 a barrel.
- Brent crude traded 0.3 perrcent lower at $72.96 a barrel.
- Gold was little changed at $1,230.82 an ounce.
- Copper snapped a three-day rally, down 0.5 percent.
- Zinc traded lower for the second day, down 0.1 percent.
- Steel halted its six-day decline, up 0.4 percent.
- Aluminium traded 0.3 percent higher.
- Rubber traded lower for the second day, down 0.1 percent.
Here are the key events to watch out for this week:
- On Tuesday, U.S. mid-term elections will determine whether Republicans keep control of Congress, and set the stage for Trump’s 2020 re-election bid
- Reserve Bank of Australia November policy decision Tuesday
- Federal Reserve policy makers are expected to leave the main interest rate unchanged Thursday at their penultimate gathering of 2018
- Trump plans to meet Russian President Vladimir Putin on the sidelines of Armistice Day celebrations Nov. 11
Stocks To Watch
- The Government of India reduced its stake in Coal India by 3.19 percent to make its holding stand at 75.13 percent of the equity share capital of the company.
- Fortis Healthcare said the group was able to continue as going concern on positive cash flow. They also added that approvals were in place for the Rs 4,000 crore fund infusion from IHH Healthcare. (Bloomberg News)
- HCL Tech tied up with Deutsche Bank to provide digital cheque processing platform to the bank.
- Wipro tied up with Check Point Software to offer cloud solutions to the company.
- Jet Airways said that a media report on TATA buying stake in the company is speculative in nature. (Bloomberg News)
- Godrej Agrovet: Adi Godrej stepped down from non-independent director position citing personal reasons while Pirojsha Godrej gets appointed as additional director. Both actions were effective from Nov. 5.
- Bank of Baroda increased its MCLR by 10 basis points across various tenors with effect from Nov. 7. Overnight MCLR was at 8.15 percent and One Year MCLR at 8.65 percent.
- Indo Count Industries said that workers at its spinning unit in Maharasthra had resorted to illegal strike from Nov. 4 due to higher demand of bonus.
- Hindustan Construction board approved a rights issue of Rs 500 crore. The meeting to decide details of the rights issue will be undertaken by the Rights Issue Committee on Nov. 12.
- Natco Pharma board approved a share buyback of 8.22 percent of total paid-up equity capital at Rs 1,000 per share, aggregating to Rs 250 crore.
- Minda Industries board approved investment setting up of manufacturing plant of controller and telematics for two-wheelers and four wheelers in Maharashtra for supplies to OEMs. The total investment for this project is pegged at Rs 76.52 crore.
- Bodal Chemicals said that the majority of Dye Intermediate operations had restarted.
- Adani Gas plans to invest up to Rs 8,000 crore in five years.
Earnings To Watch
- Aditya Birla Capital
- Automotive Axles
- Camlin Fine Sciences
- Dr. Lal Path Labs
- Graphite India
- Manappuram Finance
- Balmer Lawrie Investments
- Jtekt India
- Sanghi Industries
Earnings Reactions To Watch
Power Grid Corporation (Q2, YoY)
- Revenue up 14.2 percent at Rs 8283 crore.
- Net profit up 7.9 percent at Rs 2309.5 crore.
- Ebitda up 7.7 percent at Rs 6972.4 crore.
- Margin at 84.2 percent vs 89.3 percent.
PNB Housing Finance (Q2, YoY)
- Net Interest Income up 31.8 percent at Rs 579.4 crore.
- Net profit up 33.1 percent at Rs 253 crore.
- Loan assets up 37 percent at Rs 66,792crore.
- AUM at Rs 73,842 crore.
- GNPA at 0.45 percent versus 0.34 percent.
Allcargo Logistics (Q2, YoY)
- Revenue up 12.3 percent at Rs 1,737.3 crore.
- Net profit down 3.1 percent at Rs 61.8 crore.
- Ebitda up 19.4 percent at Rs 125 crore.
- Margin at 7.2 percent vs 6.8 percent.
- Operating expenses at Rs 1,254.2 crore versus Rs 1,113 crore.
Godrej Agrovet (Q2, YoY)
- Revenue up 11.4 percent at Rs 1,588.4 crore.
- Net profit up 16.6 percent at Rs 99.1 crore.
- Ebitda down 3.7 percent at Rs 140.7 crore.
- Margin at 8.9 percent versus 10.2 percent.
Sheela Foam (Q2, YoY)
- Revenue up 10.2 percent at Rs 535.5 crore.
- Net profit down 28.9 percent at Rs 24.4 crore.
- Ebitda down 26.6 percent at Rs 42.4 crore.
- Margin at 7.9 percent vs 11.9 percent.
Phoenix Mills (Q2, YoY)
- Revenue up 9.2 percent at Rs 404.7 crore.
- Net profit up 48.3 percent at Rs 62 crore.
- Ebitda up 11 percent at Rs 198.1 crore.
- Margin at 48.9 percent versus 48.1 percent.
Balkrishna Industries (Q2, YoY)
- Revenue up 18.9 percent at Rs 1,325.5 crore.
- Net profit up 9.5 percent at Rs 222.3 crore.
- Ebitda up 9.1 percent at Rs 332.7 crore.
- Margin at 25.1 percent versus 27.4 percent.
- Other expenses at Rs 312.6 crore versus Rs 201.7 crore.
- Cut volume guidance to 2.1-2.2 lakh MT for FY19 from 2.25-2.3 lakh MT earlier
Fortis Healthcare (Q2, YoY)
- Revenue down 4.8 percent at Rs 1,139.9 crore.
- Net profit loss at Rs 166.7 crore versus net loss at Rs 45.7 crore.
- Ebitda down 39.8 percent at Rs 64.1 crore.
- Margin at 5.6 percent versus 8.9 percent.
- Exceptional loss at Rs 96.1 crore.
Inox Wind (Q2, QoQ)
- Revenue up 1.4 percent at Rs 436.7 crore.
- Net profit down 85.6 percent at Rs 1.5 crore.
- Ebitda down 14.6 percent at Rs 58.1 crore.
- Margins at 13.3 percent vs 15.8 percent.
- BEML: Reliance Strategic Investments sold 2.63 lakh shares (0.63 percent) at Rs 711.23 each.
- NIIT Technologies:
William Blair And Company LLC sold 4.04 lakh shares (0.66 percent) at Rs 1176.9 each.
Matthews International Funds acquired 3.51 lakh shares (0.57 percent) at Rs 1176.9 each.
Who’s Meeting Whom
- Mahanagar Gas to meet Grandeur Peak & Stockpro Advisors on Nov. 15.
- Meghmani Organics promoters acquired 5.63 lakh shares on Oct. 2.
- Coal India promoter Government of India sold 19.8 crore shares from between Oct. 31 to Nov. 1.
- Shalimar Paints ex-date for rights issue 3:2 at premium of Rs 62.5 per share.
- BHEL record date for buyback eligibility.
- Redington India buy back window opens till Nov. 22.
- Usha Martin price band revised to 10 percent.
Money Market Update
Rupee closed at 73.12/$ on Monday versus Friday’s closing of 72.43/$.
- Nifty October Futures closed trading at 10,551, premium of 27 points
- Nifty November Open interest up 0.7 percent; Nifty Bank November open interest up 0.5 percent.
- Max open interest for November series at 11,000 strike value call option (open interest at 25.8 lakh shares).
- Max open interest for November series at 10,000 strike value put option (open interest at 49.5 lakh shares).
Put Call Ratio
- Nifty PCR at 1.58 from 1.63.
- Nifty Bank PCR at 1.31 from 1.30.
- Maintained ‘Buy’ with a price target of Rs 370, implying a potential upside of 25 percent from the last regular trade.
- Asset quality normalising; Deferral of provisioning on Essar Steel lifts earnings.
- Moderation in credit costs to support sharp recovery in profit from the next financial year.
- Casa uptick is key to support loan growth.
- Maintained ‘Neutral’; cut price target to Rs 265 from Rs 280, implying a potential downside of 10 percent from the last regular trade.
- Growth disappoints; Strong on asset quality.
- Mgmt. expects recoveries from NCLT List 1&2 in the second half of the current financial year.
- Key Catalyst: reduction in slippages, pick-up in loan growth.
- Maintained ‘Buy’ with a price target of Rs 360, implying a potential upside of 22 percent from the last regular trade.
- September quarter performance was better on core pre-provisioning operating profit and in line on asset quality.
- Expect NIMs to improve from current levels with normalised credit costs in the next financial year.
- Valuation reasonable, given the improving pricing power and stable asset quality.
Deutsche Bank Research
- Maintained ‘Buy’ with a price target of Rs 365, implying a potential upside of 24 percent from the last regular trade.
- September quarter review: Turning the corner; expect better trends ahead.
- Asset quality trends improve; GNPA declines QoQ despite lower recoveries.
- Pace of recovery should sustain; expect credit costs to decline.
Deutsche Bank Research
- Maintained ‘Hold’; hiked price target to Rs 395 from Rs 365, implying a potential upside of 6 percent from the last regular trade.
- A strong boost from gas trading.
- Gas transmission and trading business report robust profitability.
- Concern over potential loss on the U.S. LNG contracts has receded.
- Maintained ‘Buy’; hiked price target to Rs 465 from Rs 450, implying a potential upside of 25 percent from the last regular trade.
- Record quarter for gas transmission and trading; Petchem and LPG also ahead.
- Gas trading profit may stay high as US LNG and spot LNG arbitrage continues.
- Pending tariff hikes for key pipelines may be announced within three months.
- Downgraded to ‘Outperform’ from ‘Buy’; cut price target to Rs 620 from Rs 800, implying a potential upside of 10 percent from the last regular trade.
- Disappointing September quarter results with an all-round miss.
- Weak near-term outlook drives 15-18 percent EPS cut.
- Still positive on Cipla due to improving outlook in the U.S. and strong India positioning.
- Maintained ‘Outperform’; cut price target to Rs 658 from Rs 746, implying a potential upside of 17 percent from the last regular trade.
- Muted September quarter despite good U.S. sales traction; Guided for challenging for the second half of the current financial year.
- Challenges: sanctions/EM uncertainty, supply chain realignment, increased API prices and pressure in tender business.
- Cipla’s progress in the direct-to-market business is promising.
On Exide Industries
- Maintained ‘Buy’; cut price target to Rs 295 from Rs 320, implying a potential upside of 18 percent from the last regular trade.
- September quarter was below estimates as gross margins disappoint.
- Management notes healthy demand but mounting cost pressures.
- Expect margins to improve with diesel prices cooling off and stable lead prices.
- Maintained ‘Buy’; cut price target to Rs 285 from Rs 301, implying a potential upside of 14 percent from the last regular trade.
- Sharp rupee depreciation and crude rise poses a surprise.
- Market share story intact; Strong gains post GST implementation.
- Like industry structure and its potential to create long term shareholder value.
CLSA on Power Grid Corp
- Maintained ‘Outperform’ with a price target of Rs 213, implying a potential upside of 15 percent from the last regular trade.
- September quarter’s net profit growth slows down as HVDC project scheduled for the second half.
- EPS slowdown ahead and capitalisation peaked in the previous financial year.
- Generation & green corridor capex pick-up—the key item to monitor.
Deutsche Bank Research on IGL
- Maintained ‘Buy’; cut price target to Rs 315 from Rs 320, implying a potential upside of 11 percent from the last regular trade.
- September quarter results were marginally below; volume growth steady.
- Price hike should improve margins in the third quarter.
- IGL well placed to benefit from expansion and focus on pollution control.
. Read more on Markets by BloombergQuint.