Market Outlook
March 23, 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)
(130)
33,006
U.S. stocks showed a substantial move to the downside during trading, with the
Nifty
(0.4)
(41)
10,115
major averages adding to the modest losses posted in the previous session. The
Mid Cap
(0.8)
(121)
15,911
Dow Jones closes down to 2.9% to close at 23,958. The NASDAQ dropped down by
Small Cap
(1.0)
(180)
17,064
2.4% to close at 7,167.
Bankex
(0.7)
(180)
27,076
U.K. stocks were modestly lower as investors scrutinized the Fed's projections for
future inflation and economic outlook and waited for the Bank of England rate
Global Indices
Chg (%)
(Pts)
(Close)
decision. The FTSE 100 was down by 1.2% to end at 6,953.
Dow Jones
(2.9)
(724)
23,958
On domestic front, Indian shares opened slightly higher as investors took a 25bps
Nasdaq
(2.4)
(179)
7,167
Fed rate in their strike and awaited U.S. President Donald Trump's decision on
FTSE
(1.2)
(86)
6,953
tariffs. The BSE Sensex ended down by 0.4% at 33,006.
Nikkei
(3.5)
(764)
20,828
News Analysis
Hang Seng
(3.1)
(956)
30,115
Infosys invests $1.5mn in Waterline Data Science through Innovation Fund
Shanghai Com
(2.7)
(88)
3,175
Detailed analysis on Pg2
Advances / Declines
BSE
NSE
Investor’s Ready Reckoner
Advances
684
425
Key Domestic & Global Indicators
Declines
2,063
1,391
Stock Watch: Latest investment recommendations on 150+ stocks
Unchanged
129
57
Refer Pg5 onwards
Top Picks
Volumes (` Cr)
CMP
Target
Upside
Company
Sector
Rating
BSE
3,509
(`)
(`)
(%)
Blue Star
Capital Goods Accumulate
761
867
14.0
NSE
27,454
Dewan Housing Finance
Financials
Buy
518
720
39.1
Century Plyboards
Forest Product
Buy
322
400
24.2
Net Inflows (` Cr)
Net
Mtd
Ytd
Navkar Corporation
Others
Buy
152
265
74.9
FII
(71)
10,086
10,578
KEI Industries
Capital Goods
Buy
369
436
18.1
*MFs
887
3,111
28,315
More Top Picks on Pg4
Key Upcoming Events
Top Gainers
Price (`)
Chg (%)
Previous
Consensus
Date
Region
Event Description
Reading
Expectations
IBVENTUREPP
86
20.0
Mar 23
UK
BOE Announces rates
0.50
0.50
NATIONALUM
69
6.3
Mar 27
Euro Zone Euro-Zone Consumer Confidence
0.10
HATHWAY
35
4.2
Mar 27
US
Consumer Confidence
130.80
131.00
OIL
341
3.2
Mar 28
US
GDP Qoq (Annualised)
2.50
2.60
Mar 29
Germany
Unemployment change (000's)
(22.00)
JUBLFOOD
2,272
3.0
More Events on Pg7
Top Losers
Price (`)
Chg (%)
HCC
24
-17.3
JPASSOCIAT
18
-7.2
BALRAMCHIN
87
-6.9
WELCORP
131
-6.7
MMTC
58
-6.5
As on March 22, 2018
Market Outlook
March 23, 2018
News Analysis
Infosys invests $1.5mn in Waterline Data Science through Innovation
Fund
India's second largest software services firm Infosys has made a follow-on
investment of $1.5 million (about Rs 97.7 million) in Waterline Data Science, a
provider of data discovery and data governance software. Infosys had made an
initial investment of $4 million in the company in January 2016. The investment
has been made through the Infosys Innovation Fund, it said in a regulatory filing.
The investment is expected to be completed by April 6, 2018, subject to necessary
approvals. Waterline Data Science provides a data inventory and cataloguing
solution that helps business analysts and data scientists with data discovery and
data governance.
Economic and Political News
Domestic natural gas prices all set to rise to the highest level in 2 years
AAP government presents Rs 530-bn 'green' budget for FY19 in Delhi
Assembly
India's steel exports to remain robust as China pares production capacity
Corporate News
Vedanta to invest Rs 12.4bn on Jharsuguda unit to raise aluminium capacity
Infosys invests $1.5mn in Waterline Data Science through Innovation Fund
Hero MotoCorp hikes stake in Colombian JV to 68%
Indian Oil considers investing $3.5bn from April to expand capacity
Market Outlook
March 23, 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
25,289
2,115
2,441
15.4
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
7,300
761
867
14.0
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
16,238
518
720
39.1
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
1,82,215
284
416
46.7
NPA would reduce provision cost, which would help to
report better ROE.
High order book execution in EPC segment, rising B2C
KEI Industries
2,894
369
436
18.1
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
24.9
and 15 year long radio broadcast licensing.
Massive capacity expansion along with rail advantage
Navkar Corporation
2,281
152
265
74.9
at ICD as well CFS augur well for the company
Strong brands and distribution network would boost
Siyaram Silk Mills
2,930
625
851
36.1
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
3,127
524
603
15.0
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
2,62,779
8,699
10,619
22.1
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
1,958
364
655
80.2
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
7,155
322
400
24.2
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
2,800
88
128
46.2
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
1,179
530
650
22.7
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
2,764
382
510
33.4
margin due price hike in container glass segment,
turnaround in consumer business.
We expect financialisation of savings and increasing
Aditya Birla Capital
33728
147
218
49.5
penetration in Insurance & Mutual fund would ensure
steady growth.
Source: Company, Angel Research
Market Outlook
March 23, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,686
277
360
29.9
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
5,741
114
160
40.3
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
1,620
2,044
2,500
22.3
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
4,053
331
395
19.5
~`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 23, 2018
Key Upcoming Events
Global economic events release calendar
Bloomberg Data
Date
Time Country
Event Description
Unit
Period
Last Reported
Estimated
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
Apr 13, 2018
12:00 PMIndia
Monthly Wholesale Prices YoY%
% Change
Mar
2.48
Apr 16, 2018
6:45 PMUS
Industrial Production
%
Mar
1.06
Apr 17, 2018
0-Jan-00US
Housing Starts
Thousands
Mar
1,236.00
China
Exports YoY%
% Change
Mar
44.50
Source: Bloomberg, Angel Research
Market Outlook
March 23, 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 23, 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 23, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
84,768
(1.2)
17.0
28.0
Russia
Micex
2,286
1.4
6.6
10.9
India
Nifty
10,115
(2.5)
(2.6)
10.8
China
Shanghai Composite
3,263
(0.7)
(2.8)
(2.0)
South Africa
Top 40
50,517
(2.3)
(1.0)
11.0
Mexico
Mexbol
47,361
(3.2)
(2.6)
(2.3)
Indonesia
LQ45
1,027
(10.2)
(3.7)
11.9
Malaysia
KLCI
1,877
1.1
7.1
9.0
Thailand
SET 50
1,182
0.6
5.3
21.0
USA
Dow Jones
23,958
(4.0)
(3.4)
16.0
UK
FTSE
6,953
(4.1)
(7.8)
(5.2)
Japan
Nikkei
21,592
(2.5)
(4.9)
10.1
Germany
DAX
12,100
(3.1)
(8.4)
0.5
France
CAC
5,167
(2.3)
(4.0)
2.4
Source: Bloomberg, Angel Research p68in4
