Market Outlook
July 04, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open negative tracking global indices and SGX Nifty.
BSE Sensex
0.4
114
35,378
U.S. Stocks came under pressure over the course of the abbreviated trading session
Nifty
0.4
42
10,699
on Tuesday. The major averages pulled back off their highs of the session and into
Mid Cap
0.7
105
15,441
negative territory. The pullback by stocks came amid lingering trade concerns as
Small Cap
0.4
70
15,990
tariffs on billions of dollars worth of U.S. and Chinese goods are set to take effect
later this week The Dow Jones was down by 0.5% to 24,174 and the Nasdaq fell by
Bankex
(0.2)
(55)
29,124
0.9% to 7,503.
Global Indices
Chg (%)
(Pts)
(Close)
U.K. stocks were modestly higher yesterday even as caution prevailed ahead of the
July 6 deadline for the Trump Administration's planned imposition of tariffs on
Dow Jones
(0.5)
132
24,174
Chinese imports. The benchmark FTSE 100 was up by 0.6% to 7,593.
Nasdaq
(0.9)
(65)
7,503
FTSE
0.6
45
7,593
On domestic front, Indian shares could end higher on Tuesday with the help of
Gains in pharma and auto stocks, although rising oil prices and caution ahead of
Nikkei
(0.0)
(6)
21,806
the July 6 deadline for the Trump Administration's planned imposition of tariffs on
Hang Seng
(2.8)
(824)
28,131
Chinese imports helped limit the upside. The BSE Sensex was up by 0.4% to 35,378.
Shanghai Com
(0.6)
(16)
2,759
News Analysis
Advances / Declines
BSE
NSE
Supreme Court upholds RBI’s ban on virtual currencies
Advances
1,831
609
Detailed analysis on Pg2
Declines
768
1,196
Unchanged
146
76
Investor’s Ready Reckoner
Key Domestic & Global Indicators
Volumes (` Cr)
Stock Watch: Latest investment recommendations on 150+ stocks
BSE
2,534
r Pg5 onwards
NSE
28,641
Top Picks
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Net Inflows (` Cr)
Net
Mtd
Ytd
Blue Star
Capital Goods
Buy
636
867
35.7
FII
1,738
(2,577)
(4,840)
Dewan Housing Finance
Financials
Buy
624
720
15.4
*MFs
(69)
6,555
65,926
Parag Milk Foods
Others
Buy
309
410
33.8
Bata India
Others
Accumulate
835
948
13.4
Top Gainers
Price (`)
Chg (%)
KEI Industries
Capital Goods
Buy
410
589
43.6
More Top Picks on Pg4
128
8.9
568
7.2
Key Upcoming Events
Previous
Consensus
142
6.8
Date
Region
Event Description
ReadingExpectations
280
6.3
Jul 04, 2018
UK
PMI Manufacturing
54.40
54.00
116
5.9
Jul 05, 2018
Germany PMI Services
53.90
53.90
Jul 06, 2018
US
Change in Nonfarm payrolls
223.00
200.00
Top Losers
Price (`)
Chg (%)
Jul 06, 2018
US
Unnemployment rate
3.80
3.80
Jul 10, 2018
UK
Industrial Production (YoY)
1.80
52
-6.2
More Events on Pg7
483
-5.1
60
-4.9
21
-4.8
407
-3.9
As on July 03, 2018
Market Outlook
July 04, 2018
News Analysis
Supreme Court upholds RBI’s ban on virtual currencies
The Supreme Court on Tuesday refused to stay a Reserve Bank of India (RBI)
circular prohibiting banks and financial institutions from dealing in virtual
currencies such as Bitcoin.
With no interim stay on the circular, all virtual currency transactions through
banks would be blocked from 6 July, effectively resulting in a ban.
A bench comprising chief justice Dipak Misra and Justices A.M. Khanwilkar
and D.Y. Chandrachud was hearing a petition filed by the Internet and Mobile
Association of India (IAMAI) challenging the 6 April RBI circular that prohibited
banking services for dealing in virtual currencies, while giving three months to
banks to settle their accounts with such entities or customers.
The apex court issued a notice to the RBI while asking it to consider the
representations made by the stakeholders in the matter.
RBI has repeatedly through its public notices on December 24, 2013, February
1, 2017 and December 5, 2017, cautioned users, holders and traders of
virtual currencies, including Bitcoins, regarding various risks associated in
dealing with such virtual currencies.
Economic and Political News
GDP, retail inflation base years to be changed to 2017-18 and 2018
CCEA may hike MSP of paddy by Rs 200 a quintal, pulses by Rs 400
Indian aluminium exports jump 36% in 2017-18 on high global demand
Odisha to seek corporate CSR funding for 'Aahaar' scheme
Corporate News
NCLT to pronounce order on Tata-Mistry battle today
Fearing insolvency proceedings, promoters line up to pay their dues
Fearing insolvency proceedings, promoters line up to pay their dues
Jaiprakash Associates moves SC, seeks approval of revival plan for JIL
Vedanta weighs $7 billion merger with Anglo American South Africa
After Sebi orders it to make open offer for NDTV shares, VCPL to appeal
Market Outlook
July 04, 2018
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
Favorable outlook for the AC industry to augur well
for Cooling products business which is out pacing
Blue Star
6,189
636
867
36.3
the market growth. EMPPAC division's profitability to
improve once operating environment turns around.
With a focus on the low and medium income (LMI)
consumer segment, the company has increased its
Dewan Housing Finance
19,997
624
720
16.9
presence in tier-II & III cities where the growth
opportunity is immense.
Well capitalized with CAR of 18.1% which gives
sufficient room to grow asset base. Faster resolution
ICICI Bank
1,77,189
272
416
52.9
of NPA would reduce provision cost, which would
help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,202
410
589
43.6
B2C sales and higher exports to boost the revenues
and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
1,741
307
475
54.7
requirement and 15 year long radio broadcast
licensing.
Strong brands and distribution network would boost
Siyaram Silk Mills
2,423
522
851
63.1
growth going ahead. Stock currently trades at an
inexpensive valuation.
GST regime and the Gujarat plant are expected to
Maruti Suzuki
2,66,471
8,979
10,619
18.2
improve the company’s sales volume and margins,
respectively.
We expect loan book to grow at 24.3% over next
GIC Housing
1,888
347
655
88.8
two year; change in borrowing mix will help in NIM
improvement
Third largest brand play in luggage segment
Increased product offerings and improving
Safari Industries
1,378
622
720
16.1
distribution network is leading to strong growth in
business. Likely to post robust growth for next 3-4
years
Source: Company, Angel Research
Market Outlook
July 04, 2018
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
We expect financialisation of savings and
Aditya Birla Capital
29,320
130
218
63.7
increasing penetration in Insurance & Mutual fund
would ensure steady growth.
One of the leading Indian dairy products
companies in India created strong brands in dairy
products. Rising revenue share of high-margin
Parag Milk Foods
2,636
310
410
30.8
Value Added Products and reduction in interest
cost is likely to boost margins and earnings in next
few years.
We expect MCL to report net revenue CAGR of
~15% to ~`450cr over FY2018-20E mainly due
to strong growth in online matchmaking &
Matrimony.com Ltd
1,637
779
1,016
30.4
marriage related services. On the bottom-line
front, we expect a CAGR of ~28% to `82cr over
the same period on the back margin
improvement.
HDFC Bank maintained its steady growth in the
4QFY18. The bank’s net profit grew by 20.3%.
Steady growth in interest income and other
HDFC Bank
5,48,970
2,073
2,315
9.8
income aided PAT growth. The Strong liability
franchise and healthy capitalisation provides
strong earning visibility. At the current market
price, the bank is trading at 3.2x FY20E ABV.
We expect strong PAT growth on back of healthy
growth in automobile segment (on back of new
launches and facelifts in some of the model ) and
M&M
1,12,788
892
1,050
17.1
strong growth in Tractors segment coupled by its
strong brand recall and improvement in rural
sentiment
Market leader in the room air conditioner (RAC)
outsourced manufacturing space in India with a
market share of 55.4%. It is a one-stop solutions
Amber Enterprises
2,793
1,015
1,230
21.1
provider for the major brands in the RAC industry
and currently serves eight out of the 10 top RAC
brands in India
BIL is the largest footwear retailer in India,
offering footwear, accessories and bags across
brands. We expect BIL to report net PAT CAGR of
Bata India
10,634
836
948
13.4
~16% to ~`3115cr over FY2018-20E mainly due
to new product launches, higher number of stores
addition and focus on women’s high growth
segment and margin improvement
SHTF is in the sweet spot with benefits from
stronger CV volumes, NIMs unaffected by rising
Shriram Transport Finance
29,532
1,298
1,764
37.5
bond yields on the back of stronger pricing power
and an enhancing ROE by 750bps over FY18-
20E, supported by decline in credit cost.
We expect JSPL’s top line to grow at 27% CAGR
over FY19-FY20 on the back of strong steel
demand and capacity addition. On the bottom
Jindal Steel & Power Limited
20,036
208
350
69.1
line front, we expect JSPL to turn in to profit by
FY19 on back of strong operating margin
improvement.
Source: Company, Angel Research
Market Outlook
July 04, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth
CCL Products
3,594
267
360
34.8
trajectory over FY18-20 backed by capacity
expansion and new geographical foray
We forecast Nilkamal to report top-line CAGR of
~9% to `2,635cr over FY17-20E on the back of
Nilkamal
2,379
1,619
2,178
34.5
healthy demand growth in plastic division. On the
bottom-line front, we estimate
~10% CAGR to
`162cr owing to improvement in volumes.
Elantas Beck India is the Indian market leader in
liquid insulation segment used in electrical
equipments like motors, transformers etc. It derives
Elantas Beck India Ltd
1,653
2,034
2,500
22.9
demand from several industries which are expected
to register 10%+ CAGR in demand in the coming
years.
Greenply Industries Ltd (GIL) manufactures plywood
& allied products and medium density fibreboards
(MDF). GIL to report net revenue CAGR of ~14% to
Greenply Industries
2,861
228
395
71.3
~`2,478cr over FY2017-20E mainly due to healthy
growth in plywood & lamination business on the
back of strong brand and distribution network
GMM Pfaudler Limited (GMM) is the Indian market
leader in glass-lined (GL) steel equipment. GMM is
expected to cross CAGR 15%+ in revenue over the
GMM Pfaudler Ltd
1,166
800
1,020
27.5
next few years mainly led by uptick in demand from
user industries and it is also expecting to increase its
share of non-GL business to 50% by 2020.
L&T Fin’s new management is on track to achieve
L&T Finance Holding
30,266
147
210
42.5
ROE of 18% by 2020 and recent capital infusion of
`3000cr would support advance growth.
Amongst the Indian Pharmaceutical companies, we
believe that Aurobindo Pharmaceuticals is well
placed to face the challenging generic markets,
given its focus on achieving growth through
Aurobindo Pharmaceuticals
35,327
627
780
24.8
productivity. We expect Aurobindo to report net
revenue CAGR of ~13% & net profit to grow at
~5% CAGR during FY2018-20E, due to increased
R&D expenditure.
Market Outlook
July 04, 2018
Key Upcoming Events
Global economic events release calendar
Bloomberg Data
Date
Time Country
Event Description
Unit
Period
Last Reported
Estimated
Jul 04, 2018
2:00 PMUK
PMI Manufacturing
Value
Jun
54.40
54.00
Jul 05, 2018
1:25 PMGermany
PMI Services
Value
Jun F
53.90
53.90
Jul 06, 2018
6:00 PMUS
Change in Nonfarm payrolls
Thousands
Jun
223.00
200.00
6:00 PMUS
Unnemployment rate
%
Jun
3.80
3.80
Jul 10, 2018
2:00 PMUK
Industrial Production (YoY)
% Change
May
1.80
7:00 AMChina
Consumer Price Index (YoY)
% Change
Jun
1.80
Jul 11, 2018
US
Producer Price Index (mom)
% Change
Jun
1.00
Jul 12, 2018
India
Imports YoY%
% Change
Jun
14.85
India
Exports YoY%
% Change
Jun
20.18
5:30 PMIndia
Industrial Production YoY
% Change
May
4.90
6:00 PMUS
Consumer price index (mom)
% Change
Jun
0.20
0.20
Jul 13, 2018
7:30 AMChina
Industrial Production (YoY)
% Change
Jun
6.80
Jul 16, 2018
China
Exports YoY%
% Change
Jun
12.60
12:00 PMIndia
Monthly Wholesale Prices YoY%
% Change
Jun
4.43
7:30 AMChina
Real GDP (YoY)
% Change
2Q
6.80
Jul 17, 2018
6:45 PMUS
Industrial Production
%
Jun
(0.09)
2:00 PMUK
Jobless claims change
% Change
Jun
(7.70)
Jul 18, 2018
6:00 PMUS
Housing Starts
Thousands
Jun
1,350.00
6:00 PMUS
Building permits
Thousands
Jun
1,301.00
2:30 PMEuro Zone
Euro-Zone CPI (YoY)
%
Jun F
2.00
2:00 PMUK
CPI (YoY)
% Change
Jun
2.40
Jul 23, 2018
7:30 PMUS
Existing home sales
Million
Jun
5.43
7:30 PMUS
New home sales
Thousands
Jun
689.00
Jul 25, 2018
5:15 PMEuro Zone
ECB announces interest rates
%
Jul 26
-
Source: Bloomberg, Angel Research
Market Outlook
July 04, 2018
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
8.5
10.0
9.0
9.1
7.3
7.5
8.0
7.0
9.0
8.0
8.1
7.6
7.6
7.7
7.0
8.0
7.2
7.0
6.0
6.8
4.8
4.6
4.9
7.0
6.3
5.0
4.1
6.1
5.6
4.0
6.0
3.0
1.8
5.0
2.0
1.0
4.0
1.0
-
3.0
(1.0)
(0.3)
Source: CSO, Angel Research
Source: MOSPI, Angel Research
Exhibit 3: Monthly CPI inflation trends
Exhibit 4: Manufacturing and services PMI
56.0
Mfg. PMI
Services PMI
(%)
6.0
54.0
5.2
5.1
4.9
4.9
52.0
5.0
4.4
4.6
4.3
50.0
4.0
3.6
3.3
3.3
48.0
3.0
2.4
46.0
2.0
1.5
44.0
1.0
42.0
40.0
-
Source: Market, Angel Research; Note: Level above 50 indicates expansion
Source: MOSPI, Angel Research
Exhibit 5: Exports and imports growth trends
Exhibit 6: Key policy rates
(%)
Exports yoy growth
Imports yoy growth
(%)
Repo rate
Reverse Repo rate
CRR
35.0
6.50
30.0
6.00
25.0
5.50
20.0
5.00
15.0
4.50
10.0
4.00
5.0
3.50
0.0
(5.0)
3.00
Source: Bloomberg, Angel Research as on 3 July,2018
Source: RBI, Angel Research
Market Outlook
July 04, 2018
Global watch
Exhibit 1: Latest quarterly GDP Growth (%, yoy) across select developing and developed countries
(%)
8.0
6.9
7.0
5.8
6.0
5.3
5.0
5.0
1.1
3.7
4.0
2.5
3.0
2.2
1.8
2.0
1.5
1.4
0.8
1.0
0.3
-
Source: Bloomberg, Angel Research
Exhibit 2: 2017 GDP Growth projection by IMF (%, yoy) across select developing and developed countries
(%)
6.7
6.8
7.0
6.0
5.4
5.2
5.0
3.7
4.0
3.0
1.8
2.2
2.0
1.7
1.6
2.0
0.7
1.5
0.7
1.0
-
Source: IMF, Angel Research
Exhibit 3: One year forward P-E ratio across select developing and developed countries
(x)
25.0
20.0
15.0
10.0
5.0
-
Source: IMF, Angel Research as on 3 July,2018
Market Outlook
July 04, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
72,840
(5.1)
(14.7)
17.1
Russia
Micex
4,503
1.4
7.1
11.4
India
Nifty
10,657
(0.7)
4.4
12.1
China
Shanghai Composite
2,776
(10.9)
(11.7)
(12.7)
South Africa
Top 40
50,980
2.4
5.9
12.2
Mexico
Mexbol
46,654
4.5
1.8
(6.4)
Indonesia
LQ45
902
(2.3)
(14.5)
(6.8)
Malaysia
KLCI
1,685
(2.0)
(9.4)
(5.8)
Thailand
SET 50
1,058
(6.8)
(10.9)
6.3
USA
Dow Jones
24,307
(0.4)
2.8
13.2
UK
FTSE
7,548
(1.7)
7.1
2.6
Japan
Nikkei
21,812
(1.8)
3.1
8.3
Germany
DAX
12,238
(2.9)
2.5
(1.9)
France
CAC
5,277
(2.3)
2.1
2.4
Source: Bloomberg, Angel Research as on 3 July,2018
Market Outlook
July 04, 2018
Exhibit 7: Historical Angel Top Picks/Fundamental Calls
Date Added
Top Picks/Fundamental
Stocks
Reco Price
Target/Revised Price
Current Status
20-06-2018
Top Picks
Shriram Transport Finance Com
1,466
1,764
Open
01-07-2018
Top Picks
Bata India
862
948
Open
18-06-2018
Top Picks
Bata India
779
896
14-06-2018
Top Picks
Amber Enterprises
1,026
1,230
Open
07-06-2018
Top Picks
M&M
918
1050
Open
04-05-2018
Top Picks
M&M
860
990
03-05-2018
Fundamental
L&T Finance Holding
171
210
Open
02-05-2018
Top Picks
HDFC Bank
1944
2315
Open
04-05-2018
Top Picks
Matrimony.com Ltd
810
1016
Open
20-04-2018
Top Picks
Matrimony.com Ltd
781
984
15-05-2018
Top Picks
Parag Milk Foods Limited
310
410
Open
16-04-2018
Top Picks
Parag Milk Foods Limited
249
333
29-06-2018
Fundamental
GMM Pfaudler Limited
932
1,020
Open
14-05-2018
Fundamental
GMM Pfaudler Limited
818
900
06-04-2018
Fundamental
GMM Pfaudler Limited
712
861
07-03-2018
Fundamental
Ashok Leyland Ltd
139
163
Closed (26/04/2018)
03-03-2018
Fundamental
Greenply Industries
340
395
Open
16-04-2018
Top Picks
Safari Industries
651
750
Open
21-02-2018
Top Picks
Safari Industries
532
650
31-05-2018
Top Picks
HSIL Ltd
348
Closed (31/05/2018)
16-02-2018
Top Picks
HSIL Ltd
433
510
07-02-2018
Fundamental
Elantas Beck India Ltd.
2155
2500
Open
01-02-2018
Top Picks
ICICI Bank
352
416
Open
01-02-2018
Top Picks
Aditya Birla Capital
167
218
Open
04-01-2018
Fundamental
CCL Products
278
360
Open
03-01-2018
Fundamental
Nilkamal Ltd
1880
2178
Open
01-01-2018
Fundamental
Capital First Ltd
693
850
Closed (15/01/2018)
30-12-2017
Fundamental
Shreyans Industries Ltd
205
247
Closed
Fundamental
Prism Cement Ltd
160
Closed (09/05/2018)
21-12-2017
Fundamental
Prism Cement Ltd
118
131
18-12-2017
Fundamental
Menon Bearings Limited
92
114
Closed (17/01/2018)
14-12-2017
Top Picks
Ruchira Papers Ltd.
188
244
Closed (09/02/2018)
17-05-2018
Top Picks
Century Plyboards India
280
Closed(17/05/2018)
28-11-2017
Top Picks
Century Plyboards India
317
400
19-12-2017
Top Picks
LT Foods
85
Closed(18/06/2018)
06-11-2017
Top Picks
LT Foods
74
96
16-10-2017
Fundamental
Endurance Technologies Ltd
1111
1277
Closed (01/12/2017)
11-09-2017
Top Picks
GIC Housing
533
655
Open
10-10-2017
Top Picks
Music Broadcast Limited
404
475
Open
20-07-2017
Top Picks
Music Broadcast Limited
368
434
07-07-2017
Fundamental
L&T Finance Holdings Ltd
149
179
Closed (28/8/2017)
06-07-2017
Fundamental
Syngene International
478
564
Closed (1/3/2018)
05-07-2017
Top Picks
Maruti
7371
10619
Open
05-06-2017
Top Picks
Karur Vysya Bank
127
100
Closed (12/03/2018)
23-05-2018
Top Picks
KEI Industries
481
589
Open
Source: Company, Angel Research
Market Outlook
July 04, 2018
Exhibit 8: Historical Angel Top Picks/Fundamental Calls
Date Added
Top Picks/Fundamental
Stocks
Reco Price
Target/Revised Price
Current Status
04-01-2017
Top Picks
KEI Industries
125
485
31-05-2018
Top Picks
Alkem Lab
1978
Closed (31/05/2018)
01-12-2016
Top Picks
Alkem Lab
1700
2441
17-10-2016
Top Picks
Asian Granito
267
534
Closed (18/02/2018)
17-05-2018
Top Picks
TV Today Network
460
Closed (17/05/2018)
04-08-2016
Top Picks
TV Today Network
297
603
05-04-2016
Top Picks
DHFL
189
720
Open
25-06-2018
Top Picks
Navkar Corporation
207
Closed(25/06/2018)
05-01-2016
Top Picks
Navkar Corporation
207
265
Open
08-12-2015
Top Picks
Blue Star
357
867
Open
30-10-2015
Top Picks
Siyaram Silk Mills
186
851
Open
Source: Company
Market Outlook
July 04, 2018
Research Team Tel: 022 - 39357800
DISCLAIMER
Angel Broking Private Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India
Limited,Bombay Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with
CDSL and Portfolio Manager with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Private Limited is
a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing
/dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public
offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
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