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Actionable (Positional): Buy ICICI BANK, TATA STEEL, TATA GLOBAL

Actionable (Positional): Buy ICICI BANK, TATA STEEL, TATA GLOBAL
November 19
05:13 2019

From : Advisory Desk : Vikash Sahay

19th November 2019 : Market Outlook: DOW Jones closed 31 points up. Asian markets were trading a quater percentage down as the investors would like to see the US-China trade agreement on paper and as the protest in Hong kong intensifies.

Motilal Oswal

On the back of global development, SGX Nifty was trading 30 points down, when reported. FIIs have turned net sellers in last three consecutive trading session. Nifty is holding to a strong support of 11750. We expect Nifty to trade in a range of 11750-12100.

Trade Opportunity: SBI LIFE BLOCK DEAL – Private equity firm Carlyle has launched block deal to sell 3% stake in SBI Life Insurance with price range of Rs.930-940 which is at a discount of 6-7% to yesterday’s closing price.

Actionable (Positional): Buy ICICI BANK, TATA STEEL, TATA GLOBAL

Global market:
DOW: +31
SGX NIFTY: -30 (prev.close 11923)
NIFTY 50 : 11884
Sensex : 40284

FII: -271 Cr
DII: +309 Cr

Dollar: $ 71.94

Gold: $1471 per ounce
Crude: $62.30 per barrel

10 year US bond rate: 1.81
10 year Indian Bond rate: 6.48

Updates :

Tata Steel: Tata steel outlined proposals for a transformation programme to build a stronger and more sustainable business in Europe by focusing on higher value steels,gaining efficiency by optimizing production process and reducing employment and procurement costs .

Telecom Sector : Bharti Airtel and Vodafone idea plans to hike tariffs from next month amid uncertainty over business.

ICICI Bank : As per media reports, ICICI Bank planning to raise Rs.20,000cr capital via QIP by selling 6-7% stake for expanding business.

Derivative View : VIX closed at 15.75. Max Put OI is at 11800 then 11700 strike while Max Call OI is at 11900 then 12000 strike. Option data suggests a broader trading range in between 11700 to 12000.

News and Impact

Expect market to open on a flat note. US-China trade deal and FIIs selling in the last three trading sessions is a concern in the market. Global market, stock benchmarks eked out fresh all-time highs on Monday, Dow closed at all time high, notching slight gains as progress toward a so-called phase-one U.S.-China trade agreement remained elusive. US Dow gained marginally by 31 points to close all time high. U.S.-China trade talks remain a key driver for U.S. equities, with last week’s records supported by rising optimism that a limited, phase-one trade deal will soon be struck.

Asian market open on a soft note. Nikkei Index declined half percent. Both Hong Kong and South Korea Index are trading negative as investors continued to await signs of progress in U.S.-China trade negotiations. US Future declined.

Expect stock specific and rangebound market. Traders buy on dips in the market on account of global market volatility.

Brokers Radar – Morgan Stanley equal weight Bharti Airtel TGT 410 from 360. CLSA BUY ONGC TGT 225, HSBC BUY Castrol TGT 165. Morgan Stanley buy Future Retail TGT 560.

Sector to be watch – Banking and NBFC, Telecom and Pharma

Actionable (Buy) – Bharti Airtel, PFC (not our coverage), SBI and Axis Bank

Market summary – Vodafone Idea and Bharti to increase tariff from December 1, Parag Milk promoters hikes 0.24% stake from open market, Maruti increase in all Wagonr 1L petrol variants, SBI says Essar Steel deal is likely to be closed by the end of November, Brickwork cut Zee Entertainment rating to AA+ from AAA, SBI Life block deal of 3% equity, ICICI Bank QIP Rs20000cr and Eurokids stake sale by ZEE.

Yesterday, Market ended flat in a rangebound trade. There was stock specific action in the market and Nifty 500 stocks advance decline ratio stood favorable at 1.1:1. FIIs being net sellers over Rs2800cr in the last three trading sessions. India Vix gained 4.3% at 15.6. Auto and FMCG stocks witnessed profit booking while Metal, Pharma, Telecom and PSU Banking stocks gained. Glenmark Pharma gained 22% after announced strong Q2 results.

Negative factor in the market that the FIIs were net sellers in the last three trading sessions, poor IIP data, rising Brent Crude price to above $63/bbl and Moody’s downgraded Indian’s rating is a concern. However, positive factors that the good quarterly results, fall in October trade deficit, stable USDINR and continued Government reforms will be boosted growth in economy. Global markets, like US market closed on a record high on the back of hope for progress in U.S.-China trade negotiations. European markets are mostly 6 month to one year high and Asian markets like Nikkei touched over 10 month high.

Watch on SBI Life – Private equity firm Carlyle has launched a block deal to sell around 3 percent stake in SBI Life Insurance and make a part exit with a price range of Rs960-970 a shares (CMP Rs1000). At current market price, a 3 percent stake in SBI Life Insurance is valued at around Rs 3,000 crores – Buy at lower levels (960-970)

Media news that the ICICI Bank may coming a out QIP worth Rs20000cr – Positive for ICICI Bank.

Media news that the Tata Steel Europe division may cut 3000 employee to cost control – Positive for Tata Steel.

Media news that the Eurokids, a leading play school chain controlled by leading private equity fund KKR talks to acquire Asia’s largest play school chain Kidzee from Zee learn for Rs1000-1200cr – own by Subbhas Chandra lead Essel Group. – It will be positive for Zee group company to repay debt from stake sale

Watch on Idea and Bharti Airtel – Vodafone Idea and Bharti to increase tariff from December 1. Expects positive for Idea and Bharti. Bharti Airtel’s 5.65% USD perpetual notes gained, extending Friday’s record rise, after FM suggested the govt could provide support to India’s telecom firms to avert their shutting down – Positive for Bharti Airtel after increased USD Bond

Expect momentum continue on PFC and REC – PFC, the biggest borrower from local-currency bonds this year, priced Rs30b of 5Y bonds at 7.42% coupon rate on Monday. That’s the lowest rate at which the state-owned lender has priced similar tenure bonds in two years – Positive for PFC after a lower interest rate.

Maruti increase in all Wagonr 1L petrol variants – Positive for Maruti after increase price one of the popular variant. Wagonar has 8-10% total Maruti’s volume.

SBI will continue momentum – The Essar Steel deal is likely to be closed by the end of November, said Rajnish Kumar, chairman of SBI, adding that “the process has already started for the money to come back in the account”. – Big positive on SBI

Bank deposit insurance cover may be increased to 5 lakh; RBI to discuss proposal at board meet according by media report. Government is going to hike minimum deposit insurance of Rs 1 lakh for depositors after 26 years. It will be positive if further raise to Rs5 lakh.

Unichem Lab gets USFDA nod for Buspirone Hydrochloride tablets – The product will be commercialized from Unichem’s Ghaziabad plant – Positive for Unichem Labs.

MOIL (CMP 142) board has approved a proposal for the buyback of 2,02,81,009 equity shares (8%) of Rs10 each at a price of Rs152/- per share – Avoid on the stock.

Brickwork cut Zee Entertainment Enterprises Ltd.’s rating to AA+ from AAA – Negative for Zee but stocks already declined sharply concern of debt payment – Wait for outcome by Zee Entertainment on stake sale news

State-owned IOC and GAIL India will pay Adani Group 5 per cent more in hiring charges for using the private firm’s upcoming LNG import facility at Dhamra in Odisha than their own similar terminal, Oil Minister Dharmendra Pradhan said on Monday – Avoid to buy on Adani Group stocks.

Parag Milk gained 15% yesterday after the news that on Friday, 15 November 2019, the company’s promoter, Devendra Shah, acquired 2 lakh equity shares, representing 0.24% stake, through open market.

IHH Healthcare Bhd said it had at no time dealt with nor colluded with Fortis Healthcare founders Malvinder Mohan Singh and Shivinder Mohan Singh or any entities related to them in relation to IHH’s subscription of a 31.1% stake in Fortis. IHH said subscription of the stake comprising 235.29 million new shares in Fortis at INR10 each via Northern TK Venture Pte Ltd was undertaken and completed through a process run by the reconstituted Fortis board after Malvinder and Shivinder were no longer in control of Fortis. – However, Supreme Court verdict not in favour of IHH to raise stake from 30% to 50% is a concern – Traders wait for long on Fortis.

Pidilite Industries name Pradip Menon as CFO – Positive development on Pidilite Industries

Low-cost carrier SpiceJet Ltd. is in talks with Boeing Co. to buy more 737 Max aircraft to feed its expansion plans – Positive for Spice Jet in long term for adding new capacity

Zydus Cadila gets tentative nod from the USFDA for Apremilast Tablets – Positive

Ashoka Buildcon wins orders worth Rs1000cr for NAHI Projects – Positive for Ashoka Buildcon

Zydus Cadila gets tentative nod from the USFDA for Apremilast Tablets – Positive for Cadila

ArcelorMittal said Monday that it expects to complete the acquisition of Essar Steel before the end of the year. The Luxembourg-based steel maker said that it will own and operate the Indian steel producer together with Japanese company Nippon Steel Corporation.- Expect positive for major lenders like SBI, PNB and BoB.

CG Power cut to D from B AT Ind-Ra on delay in debt payment – Avoid CG Power, poor balance sheet is a concern.

Dividends – CARE Rating, Essel Propack, Indostar Capital, Manappuram Finance and P&G. Board meetings – Siemens. EGM – Minde Industries and Results – Siemens

Sambhunath Sa

Vikash Ranjan Sahay, Founder & CEO , Value Management Solution P Ltd, (Exclusive Business Partner of MotiLal Oswal)

Mr. Vikash Sahay can be contacted at +91 9471133334

Actionable: Buy Reliance Industries, Voltas & Tata Global.

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