Market Outlook
March 22, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open positive tracking global indices and SGX Nifty.
BSE Sensex
0.4
139
33,136
U.S. stocks saw considerable volatility in afternoon trading before ending the session
Nifty
0.3
31
10,155
modestly lower. The Dow Jones closes down to 0.2% to close at 24,682. The
Mid Cap
0.2
36
16,032
NASDAQ dropped down by 0.3% to close at 7,345.
Small Cap
0.3
52
17,244
U.K. stocks fell as investors braced for a 25 bps Fed rate hike under new Federal
Bankex
0.2
62
27,256
Reserve Chairman Jerome Powell and the latest data showed earnings growth is still
failing to outpace inflation. The FTSE 100 was down by 0.3% to end at 7,039.
Global Indices
Chg (%)
(Pts)
(Close)
On domestic front, Indian shares closed higher for a second day, although overall
Dow Jones
(0.2)
(45)
24,682
gains remained muted ahead of a 25 bps Fed rate hike expected under new Federal
Nasdaq
(0.3)
(19)
7,345
Reserve Chairman Jerome Powell. The BSE Sensex ended up by 0.4% at 33,136.
FTSE
(0.3)
(22)
7,039
News Analysis
Nikkei
0.4
83
21,464
Sun Pharma gets approval for psoriasis drug Ilumya, its first biologic drug
Hang Seng
(0.7)
(206)
31,208
Shanghai Com
(0.7)
(23)
3,258
Detailed analysis on Pg2
Investor’s Ready Reckoner
Advances / Declines
BSE
NSE
Key Domestic & Global Indicators
Advances
1,296
868
Stock Watch: Latest investment recommendations on 150+ stocks
Declines
1,432
904
Refer Pg5 onwards
Unchanged
146
89
Top Picks
CMP
Target
Upside
Volumes (` Cr)
Company
Sector
Rating
(`)
(`)
(%)
BSE
3,277
Blue Star
Capital Goods Accumulate
768
867
13.0
Dewan Housing Finance
Financials
Buy
520
720
38.4
NSE
28,331
Century Plyboards
Forest Product
Buy
321
400
24.5
Navkar Corporation
Others
Buy
156
265
70.4
Net Inflows (` Cr)
Net
Mtd
Ytd
KEI Industries
Capital Goods
Buy
367
436
18.7
FII
494
10,156
10,649
More Top Picks on Pg4
*MFs
887
3,111
28,315
Key Upcoming Events
Previous
Consensus
Date
Region
Event Description
Top Gainers
Price (`)
Chg (%)
Reading
Expectations
Mar 22
US
FOMC rate decision
1.50
1.75
IBVENTUREPP
72
20.0
Mar 22
Germany PMI Services
55.30
55.00
BALRAMCHIN
94
8.9
Mar 22
US
New home sales
593.00
623.00
RCOM
25
8.9
Mar 22
Germany PMI Manufacturing
60.60
59.80
Mar 22
UK
BOE Announces rates
0.50
0.50
RADICO
343
7.1
More Events on Pg7
BEML
1,100
4.9
Top Losers
Price (`)
Chg (%)
HCC
29
-5.4
WELCORP
140
-5.2
UBL
953
-5.0
PCJEWELLER
345
-4.6
IIFL
700
-3.4
As on March 21, 2018
Market Outlook
March 22, 2018
News Analysis
Sun Pharma gets approval for psoriasis drug Ilumya, its first biologic
drug
Sun Pharmaceutical Industries announced US Food and Drug Administration
approval for psoriasis drug Ilumya, its first biologic drug in the market. The market
for psoriasis drugs in US is over $ 6 billion and the approval allows the drug-
maker to expand its portfolio in dermatology space. Biologic drugs are made from
living cells. The drug will be manufactured by Samsung BioLogics.
Currently, Janssen Biotech, Eli Lilly, Novartis and Valeant Pharmaceuticals market
psoriasis drugs in the US and Sun Pharma will be the fifth company to enter into
the category. The company is ranked fourth in dermatology prescription volume in
the US and its existing portfolio comprises of several other branded products to
treat acne and actinic keratosis.
Economic and Political News
CBDT invites suggestions from general public for new Direct Tax Law
Armed forces demanded Rs 1.60trn, but granted only Rs 834.34bn in
budget
US anti-dumping duty hike on Vietnam shrimps to hurt Indian exports
Corporate News
No violation in Rs 72.66-bn bid for Binani under IBC, says UltraTech
Sun Pharma gets approval for psoriasis drug Ilumya, its first biologic drug
Zensar to acquire insurance solutions firm Cynosure for $33 million
Coal India allotted 11 mines that will increase annual output to 225 million
tonnes.
Market Outlook
March 22, 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
25,228
2,110
2,441
15.7
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
7,368
768
867
13.0
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
16,317
520
720
38.4
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
1,86,088
290
416
43.6
NPA would reduce provision cost, which would help to
report better ROE.
High order book execution in EPC segment, rising B2C
KEI Industries
2,878
367
436
18.7
sales and higher exports to boost the revenues and
profitability
Expected to benefit from the lower capex requirement
Music Broadcast Limited
2,169
380
475
25.0
and 15 year long radio broadcast licensing.
Massive capacity expansion along with rail advantage
Navkar Corporation
2,341
156
265
70.4
at ICD as well CFS augur well for the company
Strong brands and distribution network would boost
Siyaram Silk Mills
2,950
629
851
35.2
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
3,235
542
603
11.2
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
2,68,161
8,877
10,619
19.6
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
1,984
368
655
77.8
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
7,141
321
400
24.5
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
2,845
89
128
43.9
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
1,205
541
650
20.1
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
2,816
390
510
30.9
margin due price hike in container glass segment,
turnaround in consumer business.
We expect financialisation of savings and increasing
Aditya Birla Capital
33728
146
218
49.5
penetration in Insurance & Mutual fund would ensure
steady growth.
Source: Company, Angel Research
Market Outlook
March 22, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,849
289
360
24.4
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
2,379
1,594
2,178
36.6
demand growth in plastic division. On the bottom-line
front, we estimate ~10% CAGR to `162cr owing to
improvement in volumes.
The prism has diversified exposure in the different
segment such as Cement, Tile & ready mix concrete.
Prism Cement
5,854
116
160
37.6
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
1,639
2,067
2,500
20.9
motors, transformers etc. It derives 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
4,101
334
395
18.1
~`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 22, 2018
Key Upcoming Events
Global economic events release calendar
Bloomberg Data
Date
Time Country
Event Description
Unit
Period
Last Reported
Estimated
Mar 22, 2018
11:30 PMUS
FOMC rate decision
%
Mar 21
1.50
1.75
2:00 PMGermany
PMI Services
Value
Mar P
55.30
55.00
7:30 PMUS
New home sales
Thousands
Feb
593.00
623.00
2:00 PMGermany
PMI Manufacturing
Value
Mar P
60.60
59.80
Mar 23, 2018
5:30 PMUK
BOE Announces rates
% Ratio
Mar 22
0.50
0.50
Mar 27, 2018
2:30 PMEuro Zone
Euro-Zone Consumer Confidence
Value
Mar F
0.10
7:30 PMUS
Consumer Confidence
S.A./ 1985=100
Mar
130.80
131.00
Mar 28, 2018
6:00 PMUS
GDP Qoq (Annualised)
% Change
4Q T
2.50
2.60
Mar 29, 2018
1:25 PMGermany
Unemployment change (000's)
Thousands
Mar
(22.00)
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
6:00 PMUS
Change in Nonfarm payrolls
Thousands
Mar
313.00
Apr 06, 2018
2:30 PMIndia
RBI Cash Reserve ratio
%
Apr 5
4.00
6:00 PMUS
Unnemployment rate
%
Mar
4.10
Apr 10, 2018
US
Producer Price Index (mom)
% Change
Mar
(0.30)
Apr 11, 2018
6:00 PMUS
Consumer price index (mom)
% Change
Mar
0.20
2:00 PMUK
Industrial Production (YoY)
% Change
Feb
1.60
7:00 AMChina
Consumer Price Index (YoY)
% Change
Mar
2.90
Apr 12, 2018
India
Imports YoY%
% Change
Mar
10.41
India
Exports YoY%
% Change
Mar
4.48
5:30 PMIndia
Industrial Production YoY
% Change
Feb
7.50
Source: Bloomberg, Angel Research
Market Outlook
March 22, 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 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
March 22, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
84,977
0.2
16.5
31.3
Russia
Micex
2,309
1.9
7.3
12.8
India
Nifty
10,155
(2.8)
(1.7)
10.9
China
Shanghai Composite
3,281
2.4
(1.0)
0.7
South Africa
Top 40
51,615
(1.0)
1.3
13.9
Mexico
Mexbol
47,522
(2.8)
(1.2)
(2.2)
Indonesia
LQ45
1,038
(7.1)
0.7
16.1
Malaysia
KLCI
1,866
0.5
6.1
8.4
Thailand
SET 50
1,183
1.0
5.8
21.3
USA
Dow Jones
24,682
(2.1)
0.1
19.5
UK
FTSE
7,039
(2.9)
(6.6)
(4.1)
Japan
Nikkei
21,381
(1.6)
(6.1)
8.9
Germany
DAX
12,309
(0.6)
(7.5)
3.4
France
CAC
5,240
(0.3)
(3.3)
4.4
Source: Bloomberg, Angel Research p68in4
