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Asian stocks edged higher with U.S. stock futures, indicating some respite from the recent global sell-off at the start of the week.
Shares in Japan, Australia and South Korea rose, while Hong Kong and China futures pointed to a higher start. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, rose 0.7 percent to 10,118.50 as of 7:10 a.m.
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Here’s a quick look at all that could influence equities today.
U.S. Market Check
A rout in technology shares deepened Friday, threatening to push the S&P 500 Index into corrective territory along with the Nasdaq Composite Index, in one of the most volatile weeks this year.
Europe Market Check
European shares fell on Friday, dragged down by losses in basic resources and technology sectors.
- Japan’s Topix index added 0.9 percent.
- Australia’s S&P/ASX 200 Index rose 0.7 percent.
- South Korea’s Kospi added 0.6 percent.
- FTSE China A50 Index futures added 0.9 percent.
- Futures on Hong Kong’s Hang Seng Index advanced 0.8 percent.
- S&P 500 futures rose 0.2 percent.
- West Texas Intermediate crude added 0.2 percent to $67.70 a barrel.
- Brent crude extended gains for the third day, up 0.3 percent.
- Gold was flat at $1,232.66 an ounce.
- Copper traded 0.2 percent lower.
- Zinc resumed rally after a one-day blip, up 1.1 percent.
- Steel snapped a two-day rally, down 0.7 percent.
- Aluminium extended declined for the third day, down 0.3 percent.
- Rubber resumed declines after a one-day rally, down 1.6 percent.
Here are the key events to watch out for this week:
- Highlights from earnings season will include: Facebook, HSBC, Komatsu, Ping An Insurance, PetroChina, Macquarie, Apple, Alibaba, China Telecom, Fanuc, GE, Airbus, Credit Suisse, Exxon Mobil, Shell and BP.
- Monetary policy decisions are due in Japan and the U.K.
- On Friday, the final U.S. jobs report before the November midterm elections may show hiring improved as payrolls rose about 190,000, and the unemployment rate held at a 48-year low of 3.7 percent, analysts forecast.
Stocks To Watch
- Axis Bank to sell 19.79 lakh shares or 4.95 percent equity in NSDL to HDFC Bank for Rs 163.34 crore.
- Dr. Lal Path Labs received NCLT, New Delhi bench’s approval for merger of Delta Ria and Pathology with self. However, the said merger is subject to approval from NCLT, Ahmedabad.
- Peninsula Land to acquire 71 percent stake in RR Mega City Builders for Rs 5.04 crore.
- Cox & Kings to sell HB Education, wholly owned subsidiary to U.K. based Midlothian Capital Partner for and enterprise value of £467 million, i.e., Rs 4,380 crore. HB Education contributed 21 percent and 47 percent to the revenue and net worth of Cox & Kings. Deal expected to complete by Nov. 23.
- Bombay Dyeing and Manufacturing Company agreed to convert debt given to its subsidiary Five Star Textile Indonesia, into equity in order to wind up the subsidiary in due course. The company will convert debt worth nearly Rs 207 crore into equity. Post conversion the holding will increase to 97.4 percent from 86 percent..
- The U.S. FDA completed inspection of Dishmam Carbogen Amcis’s Bavla facility without any major or critical observations.
- Birla Corporation’s wholly owned subsidiary approved the 1.2 MTPA cement capacity expansion plan. The company will incur a capex of Rs 250 crore which will be funded through a mix of debt and internal accruals.
- India Cements to acquire Springway Mining Pvt. Ltd. for Rs 183 crore with an objective of setting up of a cement plant in Madhya Pradesh.
- Hitachi’s India unit to acquire 26 percent of SBI Payment Services, according to Bloomberg report.
Nifty Earnings To Watch
- Bharat Petroleum Corporation
Other Earnings To Watch
- HDFC Asset Management Company
- Coffee Day Enterprises
- Just Dial
- Tata Power Company
- Sun Pharma Advanced Research Company
- Century Textiles & Industries
- Colgate Palmolive
- Thirumalai Chemicals
- LIC Housing Finance
- Vijaya Bank
- DCM Shriram
- Union Bank of India
- Wonderla Holidays
Earnings Reactions To Watch
ICICI Bank (Q2, YoY)
- NII up 12.4 percent at Rs 6,418 crore.
- Net Profit of Rs 909 crore versus Rs 2,058 crore.
- Total Provisions at Rs 3,994 crore versus Rs 5,971 Cr (QoQ).
- GNPA (as percent of gross advances) at 9.30 percent versus 9.65 percent QoQ.
- NNPA (as percent of gross advances) at 4.05 percent versus 4.67 percent QoQ.
Eros International Media (Q2, YoY)
- Revenue up 9 percent at Rs 293 crore.
- Net profit up 40 percent at Rs 77 crore.
- EBITDA flat at Rs 82.5 crore.
- Margin at 28.2 percent versus 30.8 percent.
Shoppers Stop (Q2 YoY)
- Revenue up 3 percent at Rs 864.5 crore.
- Net profit of Rs 13 crore versus net loss of Rs 22 crore.
- Exceptional loss of Rs 34 crore in base quarter
- Ebitda up 5 percent at Rs 54.5 crore.
- Margin at 6.3 percent versus 6.2 percent.
Jindal Stainless (Q2, YoY)
- Revenue up 18 percent at Rs 3081 crore.
- Net loss of Rs 36 crore versus net profit of Rs 27 crore.
- Exceptional loss of Rs 53 crore in current quarter.
- Ebitda down 10 percent at Rs 231 crore.
- Margin at 7.5 percent versus 9.9 percent.
Deepak Nitrite (Q2, YoY)
- Revenue up 22 percent at Rs 433 crore.
- Net profit up 22 percent at Rs 28 crore.
- Ebitda up 34 percent at Rs 69 crore.
- Margin at 15.9 percent versus 14.5 percent.
Nestle India Ltd (Q2, YoY)
- Revenue up 17 percent at Rs 2939 crore.
- Net profit up 30 percent at Rs 446 crore.
- Ebitda up 24 percent at Rs 724.5 crore.
- Margin at 24.7 percent versus 23.2 percent.
Emami Paper Mills (Q2, YoY)
- Revenue up 30 percent at Rs 407.5 crore.
- Net profit at Rs 17 crore versus Rs 0.5 crore.
- Ebitda up 114 percent at Rs 61 crore.
- Margin at 15 percent versus 9.1 percent.
PI Industries (Q2, YoY)
- Revenue up 29 percent at Rs 723 crore.
- Net profit up 17.5 percent at Rs 94 crore.
- Ebitda up 10 percent at Rs 134 crore.
- Margin at 18.5 percent versus 21.7 percent.
Nucleus Software Exports (Q2, QoQ)
- Revenue up 7.5 percent at Rs 121.5 crore.
- Net profit up 8 percent at Rs 19 crore.
- EBIT up 3 percent at Rs 17.5 crore versus Rs 17 crore.
- Margin at 14.4 percent versus 15.0 percent.
Aavas Financiers (Q2, YoY)
- Revenue up 28 percent to Rs 164 crore.
- Net Profit up 7 percent to Rs 35 crore.
- Higher finance, employee and other expenses lowered profit growth.
- AUM for H1FY19 up 49 percent at Rs 4,759 crore.
- Disbursements for H1FY19 up 37 percent at Rs 1,089 crore.
- NIMs for H1FY19 flat at 8.8 percent.
- GNPA for H1FY19 at 0.57 percent versus 0.81 percent as of H1FY18.
Seshasayee Paper & Boards Q2, YoY)
- Revenue up 46 percent at Rs 331 crore.
- Net profit up 92 percent to Rs 50 crore.
- Ebitda up 70 percent to Rs 82 crore versus Rs 48 crore.
- Margin at 24.8 percent versus 21.1 percent.
- Other income up 131 percent to Rs 4.6 crore.
- Lower cost of material aided financials.
HT Media (Q2, YoY)
- Revenue down 6 percent to Rs 513 crore versus Rs 545 crore.
- Net Loss of Rs 39 crore versus net profit of Rs 77 crore.
- Ebitda Loss of Rs 19.5 crore versus Rs 95.5 crore profit.
- Exceptional loss of Rs 24 crore as the company provided for a contingent loss related to a dispute pending hearing.
- Higher other expense and higher cost of raw materials led to Ebitda loss.
- Finance cost rose 65 percent to Rs 33 crore versus Rs 20 crore.
Divi’s Lab (Q2, YoY)
- Revenue up 44 percent at Rs 1,285 crore
- Net profit up 92 percent at Rs 398 crore.
- Ebitda up 85 percent at Rs 514 crore.
- Margin at 40 percent versus 31 percent
- Other income up 138 percent at Rs 80 crore versus Rs 34 crore due to forex gain.
- Forex Gain up 40 percent at Rs 53 crore versus Rs 11 crore.
DCM Shriram Industries (Q2, YoY)
- Revenue down 3 percent at Rs 415 crore.
- Net Profit up 16 percent at Rs 24.7 crore.
- Ebitda down 1 percent at Rs 38 crore.
- Margin at 9.2 percent versus 9 percent.
- Other income up 39 percent at Rs 5.22 crore.
Vinati Organics (Q2, YoY)
- Revenue up 57 percent at Rs 253 crore.
- Net profit up 123 percent at Rs 65 crore.
- Ebitda up 107 percent at Rs 95 crore.
- Margin at 37.7 percent versus 28.6 percent
- Other income up 113 percent at Rs 11 crore versus Rs 5 crore.
- Lower cost of material, lower finance cost and higher other income aided financials.
Gujarat Ambuja Exports (Q2, YoY)
- Revenue flat at Rs 776 crore.
- Net profit up 58 percent to Rs 33 crore.
- Ebitda up 48 percent at Rs 74 crore.
- Margin at 9.6 percent versus 6.5 percent.
IFB Agro Industries (Q2, YoY)
- Revenue up 4 percent at Rs 465 crore.
- Net profit up 0.3 percent at Rs 11.51 crore.
- Ebitda up 3 percent at Rs 21 crore.
- Margin at 4.4 percent versus 4.5 percent.
- Agro Tech Foods: Pari Washington India Master Fund bought 2.12 lakh shares or 0.9 percent equity at Rs 499.41 each.
- Indiabulls Integrated Services: Infinium Natural Resources Investments Pvt Ltd sold 5.02 lakh shares or 0.6 percent equity at Rs 333.04 each.
- Srinidhi Infin Limited bought 10.26 lakh shares or 0.8 percent equity at Rs 34.52 each.
- Promoter Setco Engineering Private Limited sold 10.28 lakh shares or 0.8 percent equity at Rs 34.52 each.
- Franklin India Focused Equity Fund bought 10 lakh shares or 0.8 percent equity at Rs 174.55 each.
- Franklin India High Growth Companies Fund bought 13.17 lakh shares or 1.1 percent equity at Rs 179.02 each.
- Maharashtra Seamless promoter SWOT Trading & Services LLP acquired 2,225 shares on Oct. 23.
- Centrum Capital promoter BG Advisory Services LLP acquired 2.11 lakh shares from Oct. 23-24.
- Mayur Uniquoters promoter acquired 200 shares on Oct. 25.
- Axis Bank promoter LIC sold 14.97 lakh shares on Oct. 25.
- Dynemic Products promoter Vimlaben B. Patel acquired 2,000 shares on Oct. 25.
- Sobha promoter Ravi Pnc Menon acquired 735 shares on Oct. 25.
(As reported on Oct. 26)
Money Market Update
- Rupee ended at 73.47/$ on Friday versus 73.28/$ on Thursday.
- Nifty November Futures closed trading at 10054, premium of 24 point.
- Nifty Nov OI up 3.6 percent; Nifty Bank Nov OI up 6.2 percent.
- Max OI for Oct series at 10500 Call, OI at 20.1 lakh shares.
- Max OI for Oct series at 10,000 Put, OI at 34.0 lakh shares.
Stocks In F&O Ban
- Adani Power
Put Call Ratio
- Nifty PCR at 1.44 from 1.49.
- Nifty Bank PCR at 0.66 from 0.85.
On ICICI Bank
- Maintained ‘Overweight’ with a price target of Rs 460.
- Strong beat on pre-provisioning operating profit and asset quality.
- Expect net interest margins and loan growth to pick up over the next 3-4 quarters.
- Maintained ‘Buy’; cut price target to Rs 410 from Rs 430.
- Topline growth at multi-quarter high; asset quality stabilising.
- Uptick in CASA growth will be key.
- Normalisation of asset quality and rise of RoE to drive rerating.
- Maintained ‘Buy’ with a price target of Rs 390
- September quarter was a good quarter; net interest margins improves and coverage ratio increases.
- Bank continues to focus on improving core operating profit.
- Well positioned in terms of ALM with high CASA ratio and high share of floating rate loans.
- Maintained ‘Overweight’ with a price target of Rs 320.
- Estimate cigarette volumes grew over 6 percent for the quarter.
- Results include impact of stock damage due to floods and change in health warning graphics.
- Adjusting for one-offs, cigarette EBIT growth was 10 percent.
- Maintained ‘Buy’ with a price target of Rs 360.
- September quarter review: Cigarettes tad below; other segments show positive trend.
- Cigarette volume growth at 6 percent (YoY) highlights underlying stable demand.
- Price hikes taken in December quarter to aid topline and EBIT growth in cigarettes.
- Maintained ‘Buy’ with a price target of Rs 340.
- September quarter review: Steady; healthy 5-6 percent cigarette volume growth.
- Other FMCG profitability continues to improve.
- Hotels and paper shine; agri lackluster.
On Dr Reddy’s
- Maintained Overweight with a price target of Rs 2,729.
- September quarter surpassed estimates as EM made up for domestic market stagnation.
- Base business is showing growth momentum.
- Overweight on potential launch of complex in the U.S. and reasonable valuation.
- Maintained ‘Outperform’ with a price target of Rs 2,750.
- Net profit beat driven by lower tax rate and higher other income.
- Cost controls measures showing up; to be an important driver of earnings in FY19-20.
- U.S. recovery likely only in the next financial year starting with Nuvaring.
- Maintained ‘Buy’ with a price target of Rs 2,704
- September quarter’s results were inline with estimates, after adjusting for one-time revenue/income.
- Despite a decline in the U.S. sales, the company delivered a steady quarter.
- Key near-term events likely to impact earnings and valuation multiples.
- Maintained ‘Buy’; raised price target to Rs 2,680 from Rs 2,270.
- Steady growth and margin improvement in September quarter, but underlying trends mixed.
- U.S. weak but offset by other businesses; margins held up despite pressure.
- Near-term prospects heavily dependent on three key assets in the U.S.
- Maintained ‘Underweight’ with a price target of Rs 8,500.
- Strong top-line and operating performance in December quarter.
- Broad-based volume-led growth in product portfolio led to beat.
- Believe that cost efficiencies-led strong margin expansion already priced in.
- Maintained ‘Buy’; cut price target to Rs 11,600 from Rs 11,650.
- September quarter review: strong all-round show.
- Expansion in margins despite higher marketing spend highlights topline and market share focus.
- Volume growth was broad-based; expect momentum to sustain.
Deutsche Bank Research
- Maintained ‘Buy’ with a price target of Rs 11,750
- Impressive September quarter driven by the robust broad based volume growth.
- Continued its innovation drive and entered three new product segments.
- Volume and margin focus, innovation and favoring agility to drive double digit earnings growth.
- Maintained ‘Overweight’ with a price target of Rs 864.
- Net profit missed estimates, driven by higher tax rate, profit before tax was ahead.
- Revenue growth was driven by strong growth in Latin America.
Deutsche Bank Research
- Maintained ‘Buy’ with a price target of Rs 765.
- Strong LatAm revenue growth a key positive from September quarter’s result.
- Market share gains to continue, but leverage to be elevated.
- Positive outlook on its organic business.
Citi on DB Corp
- Maintained ‘Buy’; cut price target to Rs 225 from Rs 295.
- Unexciting September quarter impacted by shift in festive season and higher cost.
- Growth in December quarter should look significantly better boosted by festival and election timing.
- Management suggests growth in costs may have peaked.
Citi on BEL
- Maintained ‘Buy’ with a price target of Rs 112.
- September quarter’s net profit was significantly ahead on solid execution.
- Key orders won in September quarter.
- New DPSU pricing will not impact margins in the next three years.
CLSA on Shriram Transport
- Maintained ‘Sell’; cut price target to Rs 960 from Rs 1,260.
- Asset growth led by rural markets; see cyclical risks ahead.
- Some pressure on asset quality; impact of contagion on construction sector is key.
- Lower earnings to factor in IndAS transition.
CLSA on ONGC
- Maintained ‘Buy’; cut price target to Rs 225 from Rs 240, implying a potential upside of 48 percent from the last regular trade.
- Higher tax revenue from crude will partly offset slippage in oil subsidy bill.
- Worst is already priced in and risk-reward appears highly favourable.
- Expect clarity on subsidy burden within three months which should be a big trigger.
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