Market Outlook
January 10, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open flat tracking global indices and SGX Nifty.
BSE Sensex
0.3
90
34,443
US stocks moved mostly higher during the last trading session. With the upward
Nifty
0.1
13
10,637
move on the day, the major averages once again climbed to new record closing
Mid Cap
(0.4)
(74)
18,174
highs. The Dow Jones rose to 0.4% to close at 25,386 and the Nasdaq Composite
Small Cap
0.1
15
19,911
edged up to 0.1%, to 7,164.
Bankex
0.0
12
29,049
U.K. shares rose during the trading session after Morrisons, the UK's fourth largest
supermarket, posted better-than-expected Christmas sales. The FTSE 100 was up by
Global Indices
Chg (%)
(Pts)
(Close)
0.4% to close at 7,731.
Dow Jones
0.4
103
25,386
Nasdaq
0.1
6
7,164
On domestic front, Indian shares rose to log fresh record highs even as overall gains
remained modest ahead of macroeconomic data and key corporate earnings due
FTSE
0.4
35
7,731
this week. The Sensex ended on an upside front of 0.3% at 34,443 while the Nifty
Nikkei
(0.2)
(57)
23,793
ended at 10,637 with an upside of 0.1%.
Hang Seng
0.2
68
31,079
Shanghai Com
0.3
11
3,425
News Analysis
Infosys signs the APA with the US Internal Revenue Service.
Advances / Declines
BSE
NSE
Detailed analysis on Pg2
Advances
1,368
761
Investor’s Ready Reckoner
Declines
1,646
1,053
Unchanged
105
45
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Refer Pg5 onwards
Volumes (` Cr)
BSE
5,458
Top Picks
NSE
37,081
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Blue Star
Capital Goods Accumulate
805
867
7.7
Net Inflows (` Cr)
Net
Mtd
Ytd
Dewan Housing Finance
Financials
Accumulate
624
712
14.0
FII
599
2,576
2,576
Asian Granito
Other
Accumulate
589
639
8.5
Navkar Corporation
Other
Buy
209
265
26.9
*MFs
533
(486)
-486
KEI Industries
Capital Goods
Buy
375
436
16.3
More Top Picks on Pg4
Top Gainers
Price (`)
Chg (%)
Godrejprop
791
7.5
Key Upcoming Events
Previous
Consensus
Jktyre
168
6.0
Date
Region
Event Description
Reading
Expectations
Pcjeweller
532
6.0
Jan10
UK
Industrial Production (YoY)
3.60
1.80
Timetechno
224
5.9
Jan10
China
Consumer Price Index (YoY)
1.70
1.90
Jan10
India
Imports YoY%
19.60
Thermax
1,321
5.7
Jan11
US
Initial Jobless claims
250.00
245.00
Jan11
US
Consumer price index (mom)
0.40
0.10
Top Losers
Price (`)
Chg (%)
More Events on Pg7
Jpassociat
24
(7.1)
Rpower
57
(6.6)
Nmdc
155
(4.5)
Niitltd
110
(3.8)
Erosmedia
243
(3.5)
As on January 09 2018
Market Outlook
January 10, 2018
News Analysis
Infosys signs the APA with the US Internal Revenue Service
Infosys announced the signing of the Advanced Pricing Agreement (APA) with the
US Internal Revenue Service Under the new APA, the company and IRS have
agreed on the methodology to allocate revenue and compute the taxable income
of the company’s US operations. This agreement covers financial years from 2011
to 2021. The APA will improve the predictability of the company’s tax obligations.
This APA to result in the reversal of tax provisions of approximately US$ 225
Million in the quarter ended December 31, 2017. As a result, of this "APA"
methodology, the company expects its effective tax rate to be lower by around 100
bps for future periods covered under the "APA". We maintain our accumulate with
a price target of `1120.
Economic and Political News
OPEC's cheer over 2018 oil rally tinged by shale worries
UP demands adequate coal supply for thermal power plants
Govt proposes allowing all sectors to hire workers on fixed-term contracts
Corporate News
Retail revenues to grow at 13% a year, hit $166bn by FY25
Insolvency resolution: Vedanta, Tata Steel submit bids for Electrosteel
Tough 2018 for telcos as Jio price cut will make Arpu recovery harder
Land allotment delay by govt puts IOCL's Paradip petrochem unit in a fix
Market Outlook
January 10, 2018
Top Picks HHHHH
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
Strong growth in domestic business due to its leade`hip
in acute therapeutic segment. Alkem expects to launch
Alkem Laboratories
26,569
2,222
2,341
5.4
more products in USA, which bodes for its international
business.
We expect the company would report strong profitability
Asian Granito
1,771
589
639
8.5
owing to better product mix, higher B2C sales and
amalgamation synergy.
Favorable outlook for the AC industry to augur well for
Cooling products business which is out pacing the
Blue Star
7,719
805
867
7.7
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
19,582
624
712
14.0
presence in tier-II & III cities where the growth
opportunity is immense.
Loan growth is likely to pick up after a sluggish FY17.
Lower credit cost will help in strong bottom-line growth.
Karur Vysya Bank
8,945
124
160
29.1
Increasing share of CASA will help in NIM
improvement.
High order book execution in EPC segment, rising B2C
KEI Industries
2,938
375
436
16.3
sales and higher exports to boost the revenues and
profitability
Expected to benefit from the lower capex requirement
Music Broadcast
2,531
444
475
7.1
and 15 year long radio broadcast licensing.
Massive capacity expansion along with rail advantage
Navkar Corporation
3,144
209
265
26.9
at ICD as well CFS augur well for the company
Strong brands and distribution network would boost
Siyaram Silk Mills
3,594
767
813
6.0
growth going ahead. Stock currently trades at an
inexpensive valuation.
Market leadership in Hindi news genre and no.
2
viewership ranking in English news genre, exit from the
TV Today Network
2,666
447
500
11.9
radio business, and anticipated growth in ad spends by
corporate to benefit the stock.
After GST, the company is expected to see higher
volumes along with improving product mix. The Gujarat
Maruti Suzuki
2,83,555
9,387
10,619
13.1
plant will also enable higher operating leverage which
will be margin accretive.
We expect loan book to grow at 24.3% over next two
GIC Housing
2,528
470
655
39.5
year; change in borrowing mix will help in NIM
improvement
We expect CPIL to report net Revenue/PAT CAGR of
~17%/16% over FY2017-20E mainly due to healthy
7,737
348
400
14.9
growth in plywood & lamination business, forayed into
Century Plyboards India
MDF & Particle boards on back of strong brand &
distribution network.
We expect sales/PAT to grow at 13.5%/20% over next
LT Foods
3,365
105
128
21.7
two years on the back of strong distribution network &
addition of new products in portfolio.
We expect sales/PAT to grow at 13%/16% over next two
years on the back of strong healthy demand in writing
Ruchira Papers
455
203
244
20.2
& printing paper and Kraft paper. Further, China had
banned making paper from waste pulp which would
benefit Indian paper companies.
Source: Company, Angel Research
Market Outlook
January 10, 2018
Key Upcoming Events
Global economic events release calendar
Bloomberg Data
Date
Time Country
Event Description
Unit
Period
Last Reported
Estimated
Jan 10, 2018
3:00 PMUK
Industrial Production (YoY)
% Change
Nov
3.60
1.80
7:00 AMChina
Consumer Price Index (YoY)
% Change
Dec
1.70
1.90
India
Imports YoY%
% Change
Dec
19.60
Jan 11, 2018
7:00 PMUS
Initial Jobless claims
Thousands
Jan 6
250.00
245.00
7:00 PMUS
Consumer price index (mom)
% Change
Dec
0.40
0.10
Jan 12, 2018
US
Producer Price Index (mom)
% Change
Dec
1.40
China
Exports YoY%
% Change
Dec
12.30
10.60
5:30 PMIndia
Industrial Production YoY
% Change
Nov
2.20
Jan 15, 2018
India
Exports YoY%
% Change
Dec
30.60
12:00 PMIndia
Monthly Wholesale Prices YoY%
% Change
Dec
3.93
Jan 16, 2018
3:00 PMUK
CPI (YoY)
% Change
Dec
3.10
Jan 17, 2018
3:30 PMEuro Zone
Euro-Zone CPI (YoY)
%
Dec F
1.40
7:45 PMUS
Industrial Production
%
Dec
0.20
0.30
Jan 18, 2018
7:00 PMUS
Housing Starts
Thousands
Dec
1,297.00
1,270.00
7:00 PMUS
Building permits
Thousands
Dec
1,303.00
1,290.00
7:30 AMChina
Industrial Production (YoY)
% Change
Dec
6.10
6.10
2:00 PMGermany
PMI Services
Value
Jan P
55.80
Jan 24, 2018
7:30 AMChina
Real GDP (YoY)
% Change
4Q
6.80
6.70
2:00 PMGermany
PMI Manufacturing
Value
Jan P
63.30
8:30 PMUS
Existing home sales
Million
Dec
5.81
3:00 PMUK
Jobless claims change
% Change
Dec
5.90
Jan 25, 2018
8:30 PMUS
New home sales
Thousands
Dec
733.00
6:15 PMEuro Zone
ECB announces interest rates
%
Jan 25
-
Jan 26, 2018
3:00 PMUK
GDP (YoY)
% Change
4Q A
1.70
Source: Bloomberg, Angel Research
Market Outlook
January 10, 2018
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
10.0
5.0
4.5
9.1
4.4
4.1
9.0
8.0
7.9
4.0
3.5
7.6
7.5
3.2
8.0
7.3
7.2
2.9
7.0
3.0
2.4
7.0
6.3
2.2
6.1
6.1
5.7
2.0
6.0
1.2
1.0
5.0
1.0
4.0
-
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
4.9
52.0
5.0
3.9
50.0
4.0
3.7
3.6
3.4
3.3
3.3
3.2
3.0
48.0
3.0
2.4
2.2
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
60.0
6.50
50.0
6.00
40.0
5.50
30.0
5.00
20.0
4.50
10.0
4.00
0.0
3.50
(10.0)
3.00
Source: Bloomberg, Angel Research
Source: RBI, Angel Research
Market Outlook
January 10, 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)
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
-
Source: IMF, Angel Research
Market Outlook
January 10, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
78,864
8.7
6.1
32.3
Russia
Micex
2,225
5.3
6.6
0.6
India
Nifty
10,637
4.6
6.5
28.6
China
Shanghai Composite
3,414
4.1
1.1
10.3
South Africa
Top 40
53,184
1.5
4.3
19.6
Mexico
Mexbol
49,701
4.7
(1.7)
9.1
Indonesia
LQ45
1,083
6.6
10.3
28.2
Malaysia
KLCI
1,827
6.3
3.9
11.5
Thailand
SET 50
1,166
6.9
7.8
22.5
USA
Dow Jones
25,386
5.2
11.5
27.9
UK
FTSE
7,731
5.5
2.8
6.0
Japan
Nikkei
23,850
5.0
16.9
24.6
Germany
DAX
13,386
2.6
3.2
15.6
France
CAC
5,524
2.8
3.1
12.2
Source: Bloomberg, Angel Research p68in4
Market Outlook
January 10, 2018
Research Team Tel: 022 - 39357800
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