All You Need To Know Going Into Trade On May 2

Stocks in Asia opened lower on Thursday as U.S. equities fell after the Federal Reserve pushed back on market expectations that its next move would be a rate cut.

Sydney and Seoul shares fell, while futures in Hong Kong were little changed. China and Japan remain closed for holidays. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, fell 0.46 percent to 11,792 as of 6:45 a.m.

Short on time? Well, then listen to this podcast for a quick summary of the article!

Here’s a quick look at all that could influence equities today:

U.S. Markets

• U.S. stocks fell with Treasuries, while the dollar advanced as the Federal Reserve pushed back on market expectations that its next move would be a rate cut.

Asian Cues

• Australia’s S&P/ASX 200 Index fell 0.7 percent.
• South Korea’s Kospi index lost 0.3 percent.

Commodity Cues

• Brent crude rose 0.12 percent to $72.17 per barrel.
• West Texas Intermediate crude dipped 0.2 percent to $63.47 a barrel.
• Gold was steady at $1,276.13 an ounce.

London Metal Exchange

• Copper ended 2.8 percent lower.
• Aluminium halted a four-day decline, ended 1 percent higher.
• Nickel ended lower for the third consecutive trading session, down 0.34 percent.
• Tin ended lower for the third consecutive trading session, down 0.51 percent.
• Lead ended lower for the third consecutive trading session, down 3.9 percent.
• Zinc halted a three-day rally, ended 1.9 percent lower.

Key Events To Watch This Week

• The Bank of England sets interest rates on Thursday.
• Friday brings the U.S. jobs report: non-farm payrolls are projected to rise by 187,000 in April. Economists expect an unemployment rate of 3.8 percent, with average hourly earnings growth picking up to 3.3 percent.

Indian ADRs

Stocks To Watch

April Auto Sales (YoY)

• Maruti Suzuki India’s sales fell 17 percent to 1.43 lakh units.
• Escorts’ sales declined 14.9 percent to 5,264 units.
• Atul Auto’s sales rose 22.2 percent to 3,346 units.
• Suzuki Motorcycle India’s sales jumped 9.25 percent to 57,072 units.
• Honda Cars’ sales soared 23.2 percent to 11,272 units.
• Eicher Motors’ Royal Enfield sales fell 17 percent to 62,879 units.

Catch all the live auto sales updates here.

Earnings To Watch

• MRF
• Kansai Nerolac Paints
• Larsen & Toubro Infotech
• Hindustan Zinc
• Laurus Labs
• Arvind SmartSpaces
• Aurionpro Solutions
• Bandhan Bank
• Blue Star
• Bombay Dyeing
• Dabur
• DFM Foods
• Greaves Cotton
• Hatsun Agro Product
• Intellect Design Arena
• International Paper APPM
• JM Financial
• LKP Finance
• LKP Securities
• Mold-Tek Packaging
• Orient Paper & Industries
• Radico Khaitan
• Security and Intelligence Services
• Sundaram Clayton
• Sunteck Realty
• Tanla Solutions
• Tata Power Company
• The Investment Trust Of India
• National Fertilizers
• Kamdhenu
• Cigniti Technologies

Earnings Reactions To Watch

Britannia (Q4, YoY)

• Revenue up 10.3 percent to Rs 2,764 crore.
• Profit up 11.8 percent to Rs 297 crore.
• Ebitda up 10 percent to Rs 436 crore.
• Margin flat at 15.6 percent.
• Recommended dividend of Rs 15 per share.

TVS Motor (Q4, YoY)

• Revenue up 9.4 percent to Rs 4,384 crore.
• Net profit down 19.2 percent to Rs 133.8 crore.
• Ebitda up 4.4 percent to Rs 308.1 crore.
• Margin at 7 percent versus 7.4 percent.

Ambuja Cements (Q1CY19, YoY)

• Revenue up 2.3 percent to Rs 2,927.6 crore.
• Net profit up 57.1 percent to Rs 427 crore.
• Ebitda down 8.6 percent to Rs 463.3 crore.
• Margin at 15.8 percent versus 17.7 percent.
• Other income up 4.7 times to Rs 240.2 crore.
• Sonal Shrivastava appointed as CFO.

Raymond (Q4, YoY)

• Revenue up 11 percent to Rs 1,808.7 crore.
• Net profit up 27.1 percent to Rs 67.5 crore.
• Ebitda up 10.9 percent to Rs 167 crore.
• Margin flat at 9.2 percent.

Ajanta Pharma (Q4, YoY)

• Revenue down 2.8 percent to Rs 515.2 crore.
• Net profit down 5.9 percent to Rs 88.9 crore.
• Ebitda down 8.8 percent to Rs 127.2 crore.
• Margin at 24.7 percent versus 26.3 percent.
• Raw material cost as percent of sales at 25 percent versus 21 percent.

Gruh Finance (Q4, YoY)

• Net interest income down 4.2 percent to Rs 169.7 crore.
• Net profit up 1.2 percent to Rs 129.7 crore.
• Loan assets up 12 percent to Rs 17,408 crore.
• Board approved raising Rs 5,100 crore via debt instruments.

Indian Hotels (Q4, YoY)

• Revenue up 8.8 percent to Rs 1,244.3 crore.
• Net profit up 52.1 percent to Rs 115 crore.
• Ebitda up 16.1 percent to Rs 284.3 crore.
• Margin at 22.8 percent versus 21.4 percent.
• Other income up 81 percent to Rs 37.2 crore.
• Exceptional gain of Rs 14.8 crore versus exceptional loss of Rs 14.4 crore.

Can Fin Homes (Q4, YoY)

• Net interest income up 5 percent to Rs 137.7 crore.
• Net profit down 9.3 percent to Rs 67 crore.

Zensar Technologies (Q4, QoQ)

• Revenue up 2.1 percent to Rs 1,057.4 crore.
• Net profit up 49.5 percent to Rs 82.7 crore.
• EBIT up 23.6 percent to Rs 93.7 crore.
• Margin at 8.9 percent versus 7.3 percent.
• Other income of Rs 25 crore.

Shoppers Stop (Q4, YoY)

• Revenue down 6.9 percent to Rs 791.1 crore.
• Net profit down 44.7 percent to Rs 11.5 crore.
• Ebitda up 14.8 percent to Rs 59.1 crore.
• Margin at 7.5 percent versus 6.1 percent.

Future Lifestyle Fashions (Q4, YoY)

• Revenue up 30.1 percent to Rs 1,271.28 crore.
• Net profit up 40.5 percent to Rs 36.44 crore.
• Ebitda up 21.6 percent to Rs 107.38 crore.
• Margin at 8.4 percent versus 9.0 percent.

DCM Shriram (Q4, YoY)

• Revenue up 20.5 percent to Rs 1,887.92 crore.
• Net profit up 484.28 percent to Rs 292.14 crore.
• Ebitda up 365.7 percent to Rs 398.18 crore.
• Margin at 21.1 percent versus 5.45 percent.

Container Corporation (Q4, YoY)

• Revenue up 11.9 percent to Rs 1,834.29 crore.
• Net profit up 20.6 percent to Rs 352.31 crore.
• Ebitda up 17.2 percent to Rs 467.23 crore.
• Margin at 25.4 percent versus 24.3 percent.

Everest Industries (Q4, YoY)

• Revenues up 7.6 percent to Rs 367.35 crore.
• Net profit down 25.8 percent to Rs 14.69 crore.
• Ebitda down 8.4 percent to Rs 24.3 crore.
• Margin at 6.6 percent versus 7.7 percent.

Bulk Deals

• 63 Moons Tech: Gogia Capital Services acquired 2.35 lakh shares or 0.51 percent equity at Rs 123.85 each.

Goldiam International

• Ramesh Damani acquired 3 lakh shares or 1.31 percent equity at Rs 85 each.
• Diajewel NV sold 5 lakh shares or 2.18 percent equity at Rs 85 each.

Dewan Housing Finance Corporation

• SEI Trust Company LMCG Emerging Markets Collective Fund acquired 21.15 lakh shares or 0.67 percent equity at Rs 133.68 each.

Pledge Share Details

• Chambal Fertilisers & Chemicals promoter group Simon India created a pledge of 17.6 lakh shares on April 25.
• Adani Transmission promoter Gautam Adani revoked pledge of 2.04 crore shares on April 26.
• Adani Enterprises promoter Gautam Adani revoked pledge of 94.54 lakh shares on April 26.
• Adani Ports & SEZ promoter Gautam Adani revoked pledge of 6.78 crore shares on April 26.
• Reliance Power: IDBI Trusteeship Services invoked pledge of 7.62 crore shares on April 30.
• Emami promoters created pledge of 2.6 lakh shares on April 24 and revoked pledge of 9,000 shares on April 25.

Trading Tweaks

• Foods & Inns record date for bonus issue at 2:1.
• Quantity freeze limits for derivative contracts for Bank Nifty at 2,500 points and for Nifty and Nifty IT at 5,000 points, respectively.
• Eveready Industries price band revised to 10 percent.
• 8K Miles Software Services to move out of short term ASM framework.

Who’s Meeting Whom

• Mahindra & Mahindra to meet Hermes Investment Management on May 2.
• TCS to meet Lazard Asset Management on May 8.
• Speciality Restaurants to meet TrustLine Holdings on May 2.

F&O Cues

Futures – May Series

Nifty

• Nifty futures closed trading at 11,791.5, premium of 43.4 points versus 58.9 points.
• Nifty open interest down 2 percent, sheds 3.9 lakh shares in open interest.

Bank Nifty

• Bank Nifty futures closed trading at 29,891.7, premium of 126.9 points versus 164 points.
• Bank Nifty open interest down 9 percent, sheds 1.6 lakh shares in open interest.

Options

• Nifty PCR at 1.48 versus 1.62 (across all series).

Nifty Weekly Expiry 2 May

• Max open interest concentration at 11,800 Call (24.8 lakh shares), 11,900 Call (19.4 lakh shares) 11,700 Put (+17.8 lakh shares).
• Max open interest addition seen at 11,900 Call (+8.8 lakh shares) and 11,850 Call (+7.2 lakh shares), 11,800 Call(+5.4 lakh shares).

Nifty Monthly Expiry 30 May

• Max open interest concentration on Put side at 11,000 (21.8 lakh shares).
• Max open interest on call side at 12,000 (11.9 lakh shares).

Money Market Update

• The rupee on Tuesday strengthened for the second straight session to close at 69.55/$ versus Friday’s 70.02/$.

Brokerage Radar

On Kotak Mahindra Bank

Nomura

• Downgraded to ‘Neutral’ from ‘Buy’; hiked price target to Rs 1,450 from Rs 1,400.
• March quarter was in line; cut to ‘Neutral’ on valuation
• Deposit side best-in-class now along with credit underwriting.
• Fundamentally, franchise is getting stronger.

Jefferies

• Downgraded to ‘Underperform’ from ‘Hold’; hiked price target to Rs 1,175 from Rs 1,160.
• March quarter review: steady quarter; downgrade on premium valuation.
• Tepid NII growth and higher NPL provisions.
• RoEs will remain capped at sub-16 percent on consolidated basis and below 15 percent on standalone basis.

On TVS Motor

Nomura

• Maintained ‘Reduce’; cut price target to Rs 359 from Rs 411.
• March quarter’s margins were significantly below estimates due to higher commodity costs.
• Rising costs and competition to keep margins under pressure.
• As volume growth slows, stock will find it difficult to sustain current valuation.

Jefferies

• Maintained ‘Hold’; cut price target to Rs 540 from Rs 580.
• March quarter’s Ebitda missed estimates despite revenue beat.
• Inventory in check; hopeful of better H2; exports momentum to continue.
• Outperforming peers but burden of expectations to weigh.

On Ambuja Cements

Nomura

• Maintained ‘Buy’ with a price target of Rs 295
• Weak March quarter due to lower realisations and volumes.
• Continue to believe that cement is in an upcycle.
• Cement prices have seen increases recently; expect realisations to move up from June quarter.

CLSA

• Maintained ‘Outperform’ with a price target of Rs 250.
• Weak March quarter operating results.
• Realisation miss even while costs managed well.
• With better spot prices in core market, margin outlook is much better.

More Calls

PhillipCapital on Britannia

• Maintained ‘Neutral’ with a price target of Rs 2,675.
• March quarter results were tad below our expectations.
• Margins flat on account of increase in overheads due to commissioning of new facilities.
• Management cautioned regarding a slowdown in recent months.

HSBC on Castrol India

• Maintain ‘Hold’; Cut target price to Rs 170 from Rs 175
• Q1CY19 miss on weakening demand growth
• Brand strength, product mix and cost control helped protect strong margins
• Believe current tough macro conditions could keep earnings growth under pressure

HSBC on India Power

• Analysis of stressed assets suggests no immediate need for private IPPs to set up thermal power plants.
• Low demand growth, weak discoms and low renewable tariffs discourage discoms from signing new long-term PPAs.
• Remain cautious on BHEL and other capital goods stocks in coverage.

HSBC on ICICI Prudential

• Maintained ‘Buy’; hiked price target to Rs 416 from Rs 385.
• March quarter results were on expected lines but directionally positive.
• 2018-19 was forgettable, turnaround is underway

Nomura on Exide Industries

• Maintained ‘Neutral’; hiked price target to Rs 239 from Rs 236.
• March quarter’s margin beats on lower staff costs and other overhead costs.
• Auto sector demand weak across OEMs and replacement market.
• Believe Exide will continue to face market share pressure.

HSBC on Quess Corp

• Maintained ‘Buy’ with a price target of Rs 1,000.
• Strong momentum in staffing and facilities business to lead to above-average organic growth in March quarter.
• Margin concerns on pricing and acquisitions are overdone; expect margins to improve.
• Believe Quess offers strong double digit revenue growth.

CLSA on Persistent Systems

• Downgraded to ‘Sell’ from ‘Buy’; cut price target to Rs 620 from Rs 700.
• All business units show poor YoY growth, no signs of strength.
• Margins in-line on adjusted basis; don’t see scope for expansion.
• Cut revenue and EPS estimates by 1-2 percent and 2-12 percent respectively over FY20-21; Persistent is likely to remain a value trap.