Market Outlook
March 16, 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)
(150)
33,686
U.S. stocks showed a lack of direction over the course of the trading day. The major
Nifty
(0.5)
(51)
10,360
averages spent the day bouncing back and forth across the unchanged line before
Mid Cap
0.5
80
16,395
closing mixed. The Dow Jones climbed to 0.5% to close at 24,874. The NASDAQ
Small Cap
0.8
142
17,755
dropped down by 0.2% to close at 7,482.
Bankex
(0.5)
(138)
27,923
U.K. stocks finished with a slight gain, helped by advances for supermarket giant
Tesco PLC after a ratings upgrade. The FTSE 100 was up by 0.1% to end at 7,140.
Global Indices
Chg (%)
(Pts)
(Close)
On domestic front, Indian shares ended lower, with investors indulging in some brisk
Dow Jones
0.5
116
24,874
selling past mid afternoon amid lingering concerns over the impact of a trade war
Nasdaq
(0.2)
(15)
7,482
on the global economy and on mostly weak cues from the U.S. and Asian markets.
FTSE
0.1
7
7,140
The BSE Sensex ended down by 0.4% at 33,686.
Nikkei
(0.2)
(53)
21,751
News Analysis
Hang Seng
(0.3)
(98)
31,443
TN govt to focus on aerospace, defence sectors to get Rs 100bn investment
Shanghai Com
0.2
5
3,297
Detailed analysis on Pg2
Advances / Declines
BSE
NSE
Investor’s Ready Reckoner
Advances
1,642
1,100
Key Domestic & Global Indicators
Declines
1,065
674
Stock Watch: Latest investment recommendations on 150+ stocks
Unchanged
157
77
Refer Pg5 onwards
Top Picks
Volumes (` Cr)
CMP
Target
Upside
Company
Sector
Rating
BSE
5,282
(`)
(`)
(%)
Blue Star
Capital Goods
Accumulate
800
867
8.3
NSE
28,279
Dewan Housing FinanceFinancials
Buy
515
720
39.7
Century Plyboards
Forest Product
Buy
331
400
20.8
Net Inflows (` Cr)
Net
Mtd
Ytd
Navkar Corporation
Others
Buy
168
265
58.0
FII
(50)
8,291
8,783
KEI Industries
Capital Goods
Buy
373
436
16.9
*MFs
(273)
(455)
24,750
More Top Picks on Pg4
Key Upcoming Events
Top Gainers
Price (`)
Chg (%)
Previous
Consensus
Date
Region
Event Description
Reading
Expectations
MMTC
62
20.0
Mar 16
India
Exports YoY%
9.10
JPASSOCIAT
19
17.5
Mar 16
US
Industrial Production
(0.05)
0.40
CENTRALBK
87
15.6
Mar 16
Euro Zone Euro-Zone Consumer Confidence
0.10
HINDCOPPER
74
13.1
Mar 16
US
Housing Starts
1,326.00
1,290.00
Mar 16
US
Building permits
1,377.00
1,320.00
FRETAIL
558
8.8
More Events on Pg7
Top Losers
Price (`)
Chg (%)
HDIL
43
(3.4)
CANFINHOME
532
(3.1)
KPRMILL
680
(2.8)
DISHTV
69
(2.7)
IOC
192
(2.7)
As on March 15, 2018
Market Outlook
March 16, 2018
News Analysis
TN govt to focus on aerospace, defence sectors to get Rs 100bn
investment
The Tamil Nadu government will give special emphasis to establish an Aero Space
Park and a defence manufacturing corridor in the state, which is expected to
attract around Rs 100 billion investment. The state government will continue to
offer structured package assistance for large investments on a case by case basis
depending on the investment level, generation of employment opportunities and
other parameters.
The State government is also expected to come out with policies related to Aero
Space and defence manufacturing in the near future. The facilitator SIPCOT has
already created a land-bank of 5,023 acres to promote new industrial units and it
will develop additional land-bank of 9,030 acres to allot sufficient land to new
investors
Economic and Political News
Tamil Nadu govt projects Rs 174.90 billion revenue deficit in 2018-19
Hindustan Unilever's GST benefit deposit offer to Government touches Rs
1.55bn
Government released Rs 125bn to Andhra as special assistance
Corporate News
Air India mopped up Rs 5.43bn from asset monetisation in five years
Tata's Chief Ethics Officer Mukund Rajan quits for entrepreneurial pursuits
Infosys to open fourth innovation hub in Connecticut, to hire 1,000 by 2022
Market Outlook
March 16, 2018
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
Strong growth in domestic business due to its
leadership in acute therapeutic segment. Alkem
Alkem Laboratories
26,378
2,206
2,441
10.6
expects to launch more products in USA, which bodes
for its international business.
Favorable outlook for the AC industry to augur well for
Cooling products business which is out pacing the
Blue Star
7,682
800
867
8.3
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
16,168
515
720
39.7
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 of
ICICI Bank
1,93,695
301
416
38.0
NPA would reduce provision cost, which would help to
report better ROE.
High order book execution in EPC segment, rising B2C
KEI Industries
2,923
373
436
16.9
sales and higher exports to boost the revenues and
profitability
Expected to benefit from the lower capex requirement
Music Broadcast Limited
2,125
372
475
27.6
and 15 year long radio broadcast licensing.
Massive capacity expansion along with rail advantage
Navkar Corporation
2,524
168
265
58.0
at ICD as well CFS augur well for the company
Strong brands and distribution network would boost
Siyaram Silk Mills
2,990
638
851
33.4
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
3,054
512
537
5.1
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
Maruti
2,66,824
8,833
10,619
20.2
Gujarat 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
2,138
397
655
64.9
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
Century Plyboards
7,357
331
400
20.8
growth in plywood & lamination business, forayed into
MDF & Particle boards on back of strong brand &
distribution network.
We expect sales/PAT to grow at 13.5%/20% over next
LT Foods
2,813
88
128
45.5
two years on the back of strong distribution network &
addition of new products in portfolio.
Third largest brand play in luggage segment Increased
product offerings and improving distribution network is
Safari Industries
1,184
532
650
22.1
leading to strong growth in business. Likely to post
robust growth for next 3-4 years
We expect HSIL to report PAT CAGR of ~15% over
FY2017-20E owing to better improvement in operating
HSIL Ltd
2,920
404
510
26.3
margin due price hike in container glass segment,
turnaround in consumer business.
We expect financialisation of savings and increasing
Aditya Birla Capital
33728
150
218
41.5
penetration in Insurance & Mutual fund would ensure
steady growth.
Source: Company, Angel Research
Market Outlook
March 16, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,912
294
360
22.4
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 healthy
Nilkamal
2,499
1,675
2,178
30.0
demand growth in plastic division. On the bottom-line
front, we estimate ~10% CAGR to `162cr owing to
improvement in volumes.
We expect sales/PAT to grow at 9%/14% over next two
years on the back of healthy demand growth in
Shreyans Industries
213
154
247
60.0
printing. Further, China had banned making paper
from waste pulp which would benefit Indian paper
companies.
The prism has diversified exposure in the different
segment such as Cement, Tile & ready mix concrete.
Prism Cement
5,834
116
160
38.1
Thus we believe, PCL is in the right place to capture
ongoing government spending on affordable housing
and infrastructure projects.
Elantas Beck India is the Indian market leader in liquid
insulation segment used in electrical equipments like
Elantas Beck India Ltd
1,610
2,031
2,500
23.1
motors, transformers etc. It derives demand from
several industries which are expected to register 10%+
CAGR in demand in the coming years.
RPL to report healthy top-line CAGR of ~13% over
FY17-20E on the back of healthy demand in printing &
Ruchira Papers Ltd.
401
179
244
36.5
writing paper segments. On the bottom-line front, we
estimate ~16% CAGR over FY17-20E owing to strong
improvement in operating performance.
Greenply Industries Ltd (GIL) manufactures plywood &
allied products and medium density fibreboards
(MDF). GIL to report net revenue CAGR of ~14% to
Greenply Industries
4,107
335
395
17.9
~`2,478cr over FY2017-20E mainly due to healthy
growth in plywood & lamination business on the back
of strong brand and distribution network
Source: Company, Angel Research
Market Outlook
March 16, 2018
Key Upcoming Events
Global economic events release calendar
Bloomberg Data
Date
Time Country
Event Description
Unit
Period
Last Reported
Estimated
Mar 16, 2018
India
Exports YoY%
% Change
Feb
9.10
6:45 PMUS
Industrial Production
%
Feb
(0.05)
0.40
8:30 PMEuro Zone
Euro-Zone Consumer Confidence
Value
Mar A
0.10
6:00 PMUS
Housing Starts
Thousands
Feb
1,326.00
1,290.00
Mar 20, 2018
6:00 PMUS
Building permits
Thousands
Feb
1,377.00
1,320.00
3:00 PMUK
CPI (YoY)
% Change
Feb
3.00
Mar 21, 2018
7:30 PMUS
Existing home sales
Million
Feb
5.38
5.46
3:00 PMUK
Jobless claims change
% Change
Feb
(7.20)
11:30 PMUS
FOMC rate decision
%
Mar 21
1.50
1.75
Mar 22, 2018
2:00 PMGermany
PMI Services
Value
Mar P
55.30
2:00 PMGermany
PMI Manufacturing
Value
Mar P
60.60
5:30 PMUK
BOE Announces rates
% Ratio
Mar 22
0.50
Mar 23, 2018
7:30 PMUS
New home sales
Thousands
Feb
593.00
620.00
Mar 27, 2018
7:30 PMUS
Consumer Confidence
S.A./ 1985=100
Mar
130.80
Mar 28, 2018
1:25 PMGermany
Unemployment change (000's)
Thousands
Mar
(22.00)
Mar 29, 2018
6:00 PMUS
GDP Qoq (Annualised)
% Change
4Q T
2.50
2:00 PMUK
GDP (YoY)
% Change
4Q F
1.40
Mar 31, 2018
6:30 AMChina
PMI Manufacturing
Value
Mar
50.30
Apr 03, 2018
2:00 PMUK
PMI Manufacturing
Value
Mar
55.20
Apr 05, 2018
2:30 PMIndia
RBI Reverse Repo rate
%
Apr 5
5.75
2:30 PMIndia
RBI Repo rate
%
Apr 5
6.00
2:30 PMIndia
RBI Cash Reserve ratio
%
Apr 5
4.00
Apr 06, 2018
6:00 PMUS
Change in Nonfarm payrolls
Thousands
Mar
313.00
6:00 PMUS
Unnemployment rate
%
Mar
4.10
Source: Bloomberg, Angel Research
Market Outlook
March 16, 2018
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
10.0
10.0
9.1
8.8
9.0
7.5
8.0
8.1
8.0
7.1
7.6
7.6
8.0
7.3
7.2
7.2
6.8
6.0
4.8
7.0
6.5
4.4
6.1
4.1
5.7
4.0
3.2
2.9
6.0
1.8
5.0
2.0
1.0
4.0
-
3.0
(0.3)
(2.0)
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
52.0
5.0
4.4
3.9
50.0
4.0
3.6
3.3
3.3
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
March 16, 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
March 16, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
84,928
5.0
17.2
31.2
Russia
Micex
2,272
3.4
8.0
14.0
India
Nifty
10,360
(0.9)
0.4
16.0
China
Shanghai Composite
3,291
(0.4)
0.2
1.7
South Africa
Top 40
51,613
2.4
0.6
15.6
Mexico
Mexbol
47,817
(0.2)
0.2
0.7
Indonesia
LQ45
1,039
(7.2)
1.1
15.3
Malaysia
KLCI
1,845
0.8
7.2
6.7
Thailand
SET 50
1,195
2.7
8.5
22.6
USA
Dow Jones
24,874
1.1
2.0
18.8
UK
FTSE
7,140
(0.4)
(4.8)
(3.8)
Japan
Nikkei
21,804
2.6
(4.4)
13.2
Germany
DAX
12,346
1.2
(6.4)
2.2
France
CAC
5,267
3.1
(2.9)
5.3
Source: Bloomberg, Angel Research p68in4
