News and Impact
Expect market to open on a flat note on account of global cues. U.S. Dow Jones surged nearly 1% to close record high of above 27k on hope of US Fed to cut interest rate in the next policy meeting on 31st July. US Future is up 87 points or 0.3%.
Asian markets open on a caution note ahead of China economy data (export, import data) will be announced today. Moreover, Singapore GDP data declined -3.4% have a negative impact in the Asian markets. As a results, Nikkei, Hong Kong and China Index are flat to negative. SGX Nifty declined 9 points. European market declined after the IMF concern about trade tension, Brexit and slowdown Italy economy.
Brent Crude spiked to above $67/bbl of 2-month high and FIIs continued net sellers (Yesterday FIIs net sellers Rs3.17bn) which is a major concern in the market. On the other hand, fall in USDINR and 10-year G-Sec Yield 2-year low will be positive for the market. However, traders avoid aggressive buying, buy on dips strategy with strong fundamental stocks (Maruti, UltraTech, ICICI, HDFC Bank).
Yesterday, Nifty gained 0.7% rebounded from their lowest close in nearly two months, tracking regional peers after comments by Federal Reserve Chairman Jerome Powell signaled a willingness to lower interest rates.
Earnings guidance will be closely monitored by investors as economic growth slows. Infosys and IndusInd Bank are the next major Indian companies to report, with their results scheduled today. Inflation and factory data reports also to be announced today which may influence sentiment.
Sector to be watch – Auto, Metal and Tech
Actionable - Maruti, Aurobindo Pharma and Jindal Steel
Momentum Buy – Motherson Sumi, IndiaBull Housing, DHFL.
Brokers Radar – CLSA BUY HDFC TGT 2730, CLSA BUY NTPC TGT 157, Credit Swiss BUY M&M TGT 850, UBS BUY Lupin TGT 900, Nomura BUY Glenmark Pharma TGT 867, Bank of America rasied ACC TGT 1896, Goldman BUY on D-Mart TGT 1740.
Major events today – Infosys and IndusInd Bank will be announced Q1 results today. US delegation will meet today with the government for trade related issue. Industrial Production and Inflation data also will be announced today.
Infosys expectation – Infosys Q1 Dollar term revenue expectation $3122mn (up 2% QoQ), EBITDA margin expectation 23.5% and net profit expectation Rs36.57bn (down 10.3% QoQ).
indusInd Bank – Watch on NPA details and any recovery from IL&FS, As of now Rs30bn exposure on IL&FS.
KPR Mill first company to withdraw share buyback after Budget imposed 20% tax. Expect others companies will be withdraw share buy back – Negative for the market.
Watch on Emami – Company released 17 lakh pledge share – Positive for Emami.
Watch on Ashok Leyland and Tata Motors – Both the companies shut its plant by 10-12 days on account of slowdown demand – as per media report – Negative for Ashok Leyland and Tata Motors
Media news that the government has sought information from the SEBI about the origin of those foreign portfolio investors (FPIs) that use the trust structure and asset they manage. Govt. also want details tax liability, custodians provide all data barring tax information – It may negative impact of foreign flow
DHFL Still in Talks With Aion, Cerberus, Oaktree for Deal: Dewan Housing Finance Corp.’s lenders have assured non-convertible debenture holders of a “comprehensive resolution plan” that would maximize value for all stakeholders - Avoid Dewan Housing.
DHFL resolution plan - Cash-strapped DHFL will be submitting a resolution plan (RP) to its lenders early next week. The RP will be discussed by lenders and the same would thereafter be adopted with modifications/ changes as they deem fit, said sources clued in to the developments. At a meeting on Thursday attended by lenders and non-convertible debenture (NCD) holders, bankers are understood to have agreed to go ahead with the modalities of signing the inter-creditor agreement (ICA). They also want to take the NCD holders into confidence when framing the RP. This is aimed at ensuring that all stakeholders realise their dues to the maximum extent possible – Positive on DHFL.
Rating agency - Fitch affirms Glenmark Pharma at BB, outlook stable - Positive for Glenmark
NTPC plans to sell up to Rs45bn of 10-year Bonds - Positive for NTPC, strong balance sheet and attractive dividend yield.
Housing affordability worsened in India in the last four years. Indians now spend a bigger proportion of what they earn on buying a home than in 2015, according to the RBI’s residential asset price monitoring survey of 13 cities. The house price to monthly income ratio has risen from 56.1 in March 2015 to 61.5 in March 2019. The ratio has remained above 60 since December 2015 – Positive for housing finance stocks like PNB Housing, India Bull Housing, Can Finance Home.
Government increases Coal extraction price for steel, cement firms - Companies including Hindalco Industries, JSW Steel, Tata Sponge Iron and UltraTech Cement will need to pay 3.62% more for every ton of coal extracted from mines they won in auctions - It may not major impact on Cement and Steel sectors. Coal India likely to be positive.
Tata Investment names Abhijit Sen and Jimmy Tata additional Director - Positive development on Tata Investment (Not our coverage)
Gravita India starts output of Aluminum cast alloys at Tanzania - Positive for Gravita India
United Breweries names Berend Odink as CFO - positive for United Breweries
Tata Motor JLR June Global wholesales at 95503 unit, declined 5% YoY - Tata JLR sales volumes increased gradually. Moreover, will be positive for Tata JLR if the US Fed cut interest rate
Glenmark Pharma, Torrent sign pact for Remogiflozin Etabonate - Under the terms of this non-exclusive agreement, Glenmark will manufacture and supply Remogliflozin Etabonate while Torrent will market the drug under its own trademark in India - Positive for Glenmark and Torrent Pharma
Can Fin Homes to consider sale of Rs60bn of debentures July 22 - Positive for Can Finance House
Sun Pharma : U.S. FDA approves Sun Pharma’s Risedronate Sodium ANDA - Positive for Sun Pharma
Vedanta chairman says at AGM - Company plans to invest Rs550bn to increase output across units - Positive for Vedanta
CCL Products Q1net profit Rs347mn (down12.1% YoY), EBITDA margin 25.4% vs 21.5% and sales Rs Rs2.73bn (down 7.2%)
L&T wins orders worth Rs10-25bn - Strong Balance sheet and order book - we are positive on L&T
Trade talks with India and US today - India and U.S. trade negotiators will meet on Friday, with few signs of a compromise on a series of protectionist measures taken by the two governments in recent months that have strained ties between the strategic partners.U.S. President Donald Trump has been putting pressure on India to do more to open its markets, saying this week again on Twitter its high tariffs were unacceptable. - Expect positive outcome of trade talks between US - India. Positive for metal stocks
Watch on Adani group stocks - Gautam Adani to sell data storage services to Amazon, Google. Selling data storage services to companies such as Amazon.com Inc. and Alphabet Inc.’s Google - Expect positive on Adani group stock - Adani Enterprises, Adani Ports (Not our coverage)
Watch on PSU Bank - The heads of Public Sector Banks are likely to meet the Reserve Bank of India (RBI) Governor (RBI) next week to discuss on the future roadmap for the banks including a roadmap for bank recapitalisation - We are positive on SBI, BoB, Indian Bank
Shriram Transport Finance - Fitch Ratings has assigned India based Shriram Transport Finance Company (STFC, BB+/Stable) proposed US dollar-denominated senior securednotes an expected rating of 'BB+(EXP)' - Positive for Shriram Transport Finance - Positive for Shriram Transport
Watch on ADAG stocks - Anil Ambani plans to raise about Rs217bn ($3.2 billion) by selling assets from roads to radio stations in a bid to cut debt. Reliance Infra aims to be zero debt in 2020 - Positive for ADAG group stocks after announced to reduce debt - However, poor balance sheet is a concern - Avoid ADAG stocks.
Dividends – Cera Sanitaryware, DCM Shriram, Jyothy Labs, Kotak Mahindra Bank and Lakshmi Vilas Bank Board Meetings – Hathway Cable, IndusInd Bank, Infosys, Karnataka Bank and Quess Corp. AGM – HDFC Bank, ITC and PNB. Results - Hathway Cable, IndusInd Bank, Infosys, Karnataka Bank