All You Need To Know Going Into Trade On Dec. 14

Asian stocks began Friday with small losses as the recent recovery in equities showed signs of losing steam.

Shares opened lower in Australia and Japan and futures in China and Hong Kong pointed to a lower start for stocks there. The Singapore-traded SGX Nifty, an early indicator of NSE Nifty 50 Index’s performance in India, erased gains and fell 0.43 percent to 10,779.50 as of 7 a.m.

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BQ Live

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

U.S. Market Check

• U.S. equities languished Thursday, with small caps leading declines, as trade tensions continued to weigh on financial markets.
• The yield on 10-year Treasuries held at 2.91 percent, about where it’s been since Wednesday.

Asian Cues

• Japan’s Topix index slid 0.9 percent.
• Australia’s S&P/ASX 200 Index fell 0.8 percent.
• South Korea’s Kospi slid 1.2 percent.
• Futures on the S&P 500 dropped 0.5 percent.

Commodity Cues

• West Texas Intermediate crude rose 0.3 percent to $52.75 a barrel.
• Brent crude ended 2.16 percent higher at $61.45 per barrel.
• Gold was at $1,241.93 an ounce.

London Metal Exchange

• Aluminium ended 0.36 percent lower.
• Copper ended 0.24 percent higher.
• Nickel ended higher for the second day, up 0.5 percent.
• Zinc ended lower for the second day, down 0.16 percent.
• Lead halted a two-day rally, down 1.37 percent.
• Tin ended higher for the third day, up 0.39 percent.

Indian ADRs

Stocks To Watch

• Indian Oil Corporation’s board announced share buyback and dividend. The Company will buyback 3 percent of the total equity worth Rs 4,435 crore at Rs 149 per share, a premium of 9 percent to last price and dividend of a Rs 6.75 per share aggregating to Rs 7886 crore. Record date for the buyback is set on Dec. 25.
• Telecom tribunal sets aside TRAI’s tariff order of February on predatory pricing and discounted tariff. This brings relief to Bharti Airtel and Vodafone Idea as they continue to offer segmented plans. The tribunal said TRAI cannot impose penalty and has asked the telecom regulator to reconsider the provisions within six months.
• Adani Enterprises’ defence arm acquired 1.3 crore shares in Alpha Design Technologies for Rs 400 crore. The target company belongs to the aerospace and defence industry which develops and manufactures defence electronics and avionics. Its major customers include Global OEM’s, Indian Armed Forces, Defence Public Sector Units and ISRO.
• NMDC Iron Ore sales up to November at 19.3 million tonnes.
• Dilip Buildcon’s arm received financial closure for its HAM project in Madhya Pradesh for Rs 1,004 crore.
• Capital First: NCLT approved amalgamation of Capital First and its two arms Capital First Home Finance and Capital First Securities with IDFC Bank. The company said that the scheme will be effective once the NCLT orders are filed with Registrar of Companies.
• Vijaya Bank increased its MCLR by five basis points across various tenors with effect from Dec. 14. One-month MCLR at 8.3 percent and six-month MCLR at 8.7 percent.
• Indian Energy Exchange’s board to meet on December 20 to consider buyback proposal.
• GTL Infra said that the company is left with Rs 389 crore of operational costs due to non-occupied towers. Due to unprecedented events in telecom sector there is an urgent need of restructuring overall debt to a sustainable level in line with revised cash flows and operational expenditures. The company has received demand for debt and faces potential default.

Media Reports

• Motherson Sumi in early-talks with German based Leoni over a possible merger. Deal could be worth more than $1.14 billion (Reuters)

Data Watch

• 12pm: India November Wholesale Prices Inflation YoY, Bloomberg estimates at 4.64 percent, prior 5.28 percent.
• Dec-13-14: India November trade balance, Bloomberg estimates at -$15.1 billion, prior -$17.1 billion.
  • India November Exports YoY, prior 17.9 percent.
  • India November Imports YoY, prior 17.6 percent.

Earnings To Watch

• IL&FS Investment Manager
• Kwality

Bulk Deals

Ashapura Intimates Fashion

• DSP Small and Mid-Cap Fund sold 17.3 lakh shares or 6.88 percent equity at Rs 19.2 each.
• Victory Expedition Emerging Markets Small Cap Fund sold 3.6 lakh shares or 1.42 percent equity at Rs 19.25 each.

Max Financial Services

• New York Life Insurance Company acquired 50 lakh shares or 1.86 percent equity at Rs 429.5 each.
• Max Ventures Investment Holdings sold 50 lakh shares or 1.86 percent equity at Rs 429.5 each.

Trading Tweaks

• Oriental Aromatics record date for bonus issue 1:1 and stock split from Rs 10 to Rs 5.

Who’s Meeting Whom

• PI Industries to meet Deutsche Bank on Dec. 14.
• Cipla to meet SBI Pension Fund, Mirae Asset Global Investments and other investors from Dec. 14-19.

Insider Trading

• MRF promoter Braga Industries acquired 356 shares on Dec. 10.
• Ramco Industries promoter Sharada Deepa sold 43,000 shares on Dec. 12.
• Aster DM Healthcare promoter Azad Moopen acquired 39,000 shares on Dec. 12.

Rupee

• Rupee closed at 71.69/$ on Thursday versus 72.02/$ on Wednesday.

F&O Cues

• Nifty December futures closed trading at 10825, premium of 34 points.
• Max open interest for December series at 11,000 Call (open interest at 49.4 lakh shares).
• Max open interest for December series at 10,500 Put (open interest at 39 lakh shares).

Stocks In F&O Ban

• Adani Enterprises
• Adani Power

Put-Call Ratio

• Nifty PCR at 1.51 from 1.47
• Nifty Bank PCR at 1.25 from 1.44

Fund Flows

Brokerage Radar

Citi on Yes Bank

• Maintained ‘Neutral’ with a price target of Rs 215.
• Stock to remain range bound despite low valuations.
• Multiple board and management appointments an overhang.
• Uncertainty around divergence report for the previous financial year an overhang.

Citi on United Breweries

• Initiated ‘Buy’ with a price target of Rs 1,550.
• Value growth of beer higher than spirits.
• Expect 8 percent industry volume growth CAGR over the medium term.
• Strong competitive advantages; premiumisation is opportunity.
• Expect 26 percent EPS CAGR over FY18-21 - highest in the peer group.

Kotak on Container Corp

• Maintained ‘Sell’; cut price target to Rs 590 from Rs 630.
• Rail operators losing share in a market witnessing growth acceleration.
• Company likely to absorb haulage cost increase; margins may come under pressure in the second half of the current financial year.
• See downside risks to estimates on further decline in diesel prices.

Kotak on JSW Steel

• Maintained ‘Sell’ with a price target of Rs 285.
• Expansion on schedule for commissioning by March 2020.
• Trial runs started at pipe conveyor system which can save ore transportation costs.
• Management expects minimal impact from closure of NMDC’s Karnataka iron-ore mine.

On L&T

Deutsche Bank Research

• Maintained ‘Buy’; cut price target to Rs 1,620 from Rs 1,650.
• New project announcements down sharply - cutting order inflow estimates.
• Stock has near to medium term order inflow uncertainty, as well as risk of political stability.
• Retain Buy on reasonable valuations and likelihood of a private capex recovery post elections.

JPMorgan

• Maintained ‘Overweight’ with a price target of Rs 1,620.
• Worry around impact on ordering from upcoming General Elections is overdone.
• Expect growth in smaller-sized base orders across water, heavy civil and T&D to fill the gap.
• Big-ticket order prospects likely to spill into the next financial year.