Market Outlook
February 22, 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
141
33,845
US stocks came under pressure in afternoon trading session following the release of
Nifty
0.4
37
10,397
the minutes of the latest Federal Reserve meeting. The Dow Jones ended on a
Mid Cap
(0.0)
(8)
16,411
downside front of 0.7% to close at 24,798 and the Nasdaq Composite edged down
Small Cap
(0.2)
(31)
17,800
to 0.2%, to 7,218.
Bankex
0.3
81
28,142
U.K. shares finished higher on last trading session as gains for shares of Lloyds
Banking Group PLC and Glencore PLC, which released financial updates,
Global Indices
Chg (%)
(Pts)
(Close)
accelerated during the session. The FTSE 100 was ended on an upside front of 0.5%
Dow Jones
(0.7)
(167)
24,798
at 7,282.
Nasdaq
(0.2)
(16)
7,218
On domestic front, Indian shares snapped a three-day losing streak as PSU banks
FTSE
0.5
35
7,282
bounced back from recent heavy losses and IT stocks surged on the back of a
Nikkei
(1.2)
(259)
21,712
weaker rupee. The Sensex ended on an upside front of 0.4% at 33,845 while the
Hang Seng
(0.9)
(297)
31,135
Nifty ended at 10,397 with an upside of 0.4%.
Shanghai Com
1.7
53
3,252
News Analysis
Advances / Declines
BSE
NSE
Wipro to set up Rs 2.2 billion manufacturing unit in Telangana
Advances
1,119
673
Detailed analysis on Pg2
Declines
1,636
1,097
Investor’s Ready Reckoner
Unchanged
135
78
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Volumes (` Cr)
Refer Pg5 onwards
BSE
3,465
NSE
28,622
Top Picks
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Net Inflows (` Cr)
Net
Mtd
Ytd
Blue Star
Capital Goods
Buy
726
867
19.4
FII
(728)
(6,150)
6,833
Dewan Housing Finance
Financials
Buy
557
712
27.7
Century Plyboards
Forest Products
Buy
498
651
30.7
*MFs
(139)
5,352
14,375
Navkar Corporation
Other
Buy
166
265
59.5
KEI Industries
Capital Goods
Buy
367
436
18.9
Top Gainers
Price (`)
Chg (%)
More Top Picks on Pg4
Ltts
1,366
7.8
Key Upcoming Events
Gruh
545
7.5
Previous
Consensus
Date
Region
Event Description
Idbi
70
6.1
Reading
Expectations
Jubilant
987
6.0
Feb22
Germany GDP nsa (YoY)
2.30
2.30
Feb22
US
Initial Jobless claims
230.00
230.00
Fsl
48
5.7
Feb23
UK
GDP (YoY)
1.50
1.50
Feb23
Euro Zone Euro-Zone CPI (YoY)
1.30
1.30
Top Losers
Price (`)
Chg (%)
Feb26
US
New home sales
625.00
646.50
More Events on Pg7
Sunpharma
525
(6.2)
Astramicro
90
(5.9)
Religare
57
(5.0)
Vakrangee
211
(5.0)
Hdil
49
(4.7)
As on February 21 2018
Market Outlook
February 22, 2018
News Analysis
Wipro to set up Rs 2.2 billion manufacturing unit in Telangana
Wipro has decided to invest Rs 2.2 billion for setting up a manufacturing unit in
the state. The proposed unit will manufacture toilet soaps and other personal care
products. The project will come up on a 40-acre land in Maheshwaram mandal
of Rangareddy district. According to management, it will create 300 direct jobs
and about 200 indirect ones.
Economic and Political News
EPFO declares 8.55% interest rate for FY18, lower than 8.65% for FY17
FDI inflow increases by only 0.27% to $36bn during Apr-Dec 2017
India to get over 65% of Abu Dhabi's crude barrels in Mangalore storage
Corporate News
Wipro to set up Rs 2.2 billion manufacturing unit in Telangana
Balrampur Chini Mills approves buyback of shares for up to Rs 990mn
Sun Pharma recalls over 17,500 bottles of nasal spray solution from US
Amrapali seeks SC nod to rope in other builders to complete realty projects
Market Outlook
February 22, 2018
Top Picks
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
25,742
2,153
2,441
13.4
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
6,965
726
867
19.4
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
17,482
557
712
27.7
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
8,068
111
160
44.1
Increasing share of CASA will help in NIM
improvement.
High order book execution in EPC segment, rising B2C
KEI Industries
2,873
367
436
18.9
sales and higher exports to boost the revenues and
profitability
Expected to benefit from the lower capex requirement
Music Broadcast
2,120
372
475
27.8
and 15 year long radio broadcast licensing.
Massive capacity expansion along with rail advantage
Navkar Corporation
2,501
166
265
59.5
at ICD as well CFS augur well for the company
Strong brands and distribution network would boost
Siyaram Silk Mills
3,092
660
851
29.0
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
2,685
450
508
12.9
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
2,65,220
8,780
10,619
20.9
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
2,139
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
6,976
314
400
27.4
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
2,978
93
128
37.5
two years on the back of strong distribution network &
addition of new products in portfolio.
We expect financialisation of savings and increasing
Aditya Birla Capital
36204
165
230
39.0
penetration in Insurance & Mutual fund would ensure
steady growth.
Third largest brand play in luggage segment Increased
product offerings and improving distribution network is
Safari Industries
1230
531
650
22.4
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
3081
421
510
21.1
margin due price hike in container glass segment,
turnaround in consumer business.
Source: Company, Angel Research
Market Outlook
February 22, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,739
281
360
28.1
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
2,527
1,693
2,178
28.6
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
214
155
247
59.2
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
6,294
125
160
27.9
Thus we believe, PCL is in the right place to capture
ongoing government spending on affordable housing
and infrastructure projects.
Source: Company, Angel Research
Market Outlook
February 22, 2018
Key Upcoming Events
Global economic events release calendar
Bloomberg Data
Date
Time Country
Event Description
Unit
Period
Last Reported
Estimated
Feb 22, 2018
12:30 PMGermany
GDP nsa (YoY)
% Change
4Q F
2.30
2.30
7:00 PMUS
Initial Jobless claims
Thousands
Feb 17
230.00
230.00
Feb 23, 2018
3:00 PMUK
GDP (YoY)
% Change
4Q P
1.50
1.50
3:30 PMEuro Zone
Euro-Zone CPI (YoY)
%
Jan F
1.30
1.30
Feb 26, 2018
8:30 PMUS
New home sales
Thousands
Jan
625.00
646.50
Feb 27, 2018
8:30 PMUS
Consumer Confidence
S.A./ 1985=100
Feb
125.40
126.00
Feb 28, 2018
2:25 PMGermany
Unemployment change (000's)
Thousands
Feb
(24.00)
6:30 AMChina
PMI Manufacturing
Value
Feb
51.30
7:00 PMUS
GDP Qoq (Annualised)
% Change
4Q S
2.60
2.60
Mar 01, 2018
3:00 PMUK
PMI Manufacturing
Value
Feb
55.30
Mar 07, 2018
3:30 PMEuro Zone
Euro-Zone GDP s.a. (QoQ)
% Change
4Q F
0.60
Mar 08, 2018
China
Exports YoY%
% Change
Feb
11.10
3:00 PMUK
Industrial Production (YoY)
% Change
Jan
-
Mar 09, 2018
6:15 PMEuro Zone
ECB announces interest rates
%
Mar 8
-
7:00 AMChina
Consumer Price Index (YoY)
% Change
Feb
1.50
7:00 PMUS
Change in Nonfarm payrolls
Thousands
Feb
200.00
200.00
7:00 PMUS
Unnemployment rate
%
Feb
4.10
4.10
Mar 12, 2018
5:30 PMIndia
Industrial Production YoY
% Change
Jan
7.10
Mar 13, 2018
6:00 PMUS
Consumer price index (mom)
% Change
Feb
0.50
Mar 14, 2018
12:00 PMIndia
Monthly Wholesale Prices YoY%
% Change
Feb
2.84
US
Producer Price Index (mom)
% Change
Feb
0.70
Mar 15, 2018
India
Imports YoY%
% Change
Feb
26.10
0-Jan-00US
Housing Starts
Thousands
Feb
1,326.00
Mar 16, 2018
0-Jan-00US
Building permits
Thousands
Feb
1,396.00
Source: Bloomberg, Angel Research
Market Outlook
February 22, 2018
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
10.0
9.0
8.4
9.1
9.0
8.0
8.0
7.9
7.0
7.6
7.5
8.0
7.3
7.2
7.0
6.0
4.8
7.0
6.3
5.0
4.4
4.1
6.1
6.1
5.7
3.5
3.2
6.0
4.0
2.9
3.0
2.0
5.0
2.0
1.2
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
4.9
52.0
5.0
3.9
50.0
3.7
3.6
4.0
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
February 22, 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
February 22, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
86,052
6.0
18.7
30.1
Russia
Micex
2,320
0.5
8.9
9.1
India
Nifty
10,397
(3.9)
1.0
18.4
China
Shanghai Composite
3,199
(5.4)
(4.3)
1.1
South Africa
Top 40
51,727
(4.5)
(4.8)
13.7
Mexico
Mexbol
48,536
(2.3)
1.7
1.9
Indonesia
LQ45
1,118
1.1
10.1
24.6
Malaysia
KLCI
1,858
1.6
7.8
8.6
Thailand
SET 50
1,174
(1.0)
7.8
19.6
USA
Dow Jones
24,798
(4.9)
5.7
19.4
UK
FTSE
7,282
(5.6)
(1.5)
0.1
Japan
Nikkei
21,971
(7.7)
(0.3)
14.2
Germany
DAX
12,470
(7.4)
(4.5)
3.9
France
CAC
5,302
(4.3)
(0.7)
9.4
Source: Bloomberg, Angel Research p68in4
Market Outlook
February 22, 2018
Research Team Tel: 022 - 39357800
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