Market Outlook
March 26, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open flat tracking global indices and SGX Nifty.
BSE Sensex
(1.2)
(409)
32,596
U.S. stocks saw considerable volatility during the trading session before ending the
Nifty
(1.2)
(116)
9,998
day sharply lower. The Dow tumbled to a nearly four-month closing low, while the
Mid Cap
(1.4)
(216)
15,694
Nasdaq and the S&P 500 fell to their lowest closing levels in well over a month. The
Small Cap
(1.5)
(262)
16,801
Dow Jones closes down to 1.8% to close at 23,533. The NASDAQ dropped down by
2.4% to close at 6,992.
Bankex
(2.1)
(562)
26,512
U.K. stocks extended losses from the previous session as increased fears of a global
Global Indices
Chg (%)
(Pts)
(Close)
trade war dented investor sentiment and spurred demand for safe-haven assets. The
FTSE 100 was down by 0.8% to end at 6,895.
Dow Jones
(1.8)
(424)
23,533
Nasdaq
(2.4)
(174)
6,992
On domestic front, Indian shares fell for a second consecutive session to join a
FTSE
(0.8)
(56)
6,895
global sell-off as increased fears of a global trade war dented investor sentiment
and spurred demand for safe-haven assets. The BSE Sensex ended down by 1.2% at
Nikkei
(4.5)
(974)
20,617
32,596.
Hang Seng
(2.5)
(761)
30,309
Shanghai Com
(3.4)
(110)
3,152
News Analysis
NHAI awards Rs 13.95 billion contract for widening highways in Karnataka
Advances / Declines
BSE
NSE
Detailed analysis on Pg2
Advances
558
343
Investor’s Ready Reckoner
Declines
2,149
1,480
Unchanged
155
54
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Volumes (` Cr)
Refer Pg5 onwards
BSE
3,509
Top Picks
NSE
32,450
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Blue Star
Capital Goods Accumulate
743
867
14.0
Net Inflows (` Cr)
Net
Mtd
Ytd
Dewan Housing Finance
Financials
Buy
491
720
31.8
FII
(71)
10,086
10,578
Century Plyboards
Forest Product
Buy
305
400
23.7
*MFs
887
3,111
28,315
Navkar Corporation
Others
Buy
152
265
74.9
KEI Industries
Capital Goods
Buy
363
436
16.5
More Top Picks on Pg4
Top Gainers
Price (`)
Chg (%)
Key Upcoming Events
IBVENTUREPP
93
7.4
Previous
Consensus
HCC
25
5.0
Date
Region
Event Description
Reading
Expectations
VIDEOIND
13
4.9
Mar 27
US
GDP Qoq (Annualised)
2.50
2.60
Mar 27
Euro Zone Euro-Zone Consumer Confidence
0.10
DISHTV
69
4.3
Mar 28
US
Consumer Confidence
130.80
131.00
ASTRAL
866
3.1
Mar 29
Germany Unemployment change (000's)
(22.00)
Mar 29
UK
GDP (YoY)
1.40
1.40
Top Losers
Price (`)
Chg (%)
More Events on Pg7
UNIONBANK
86
-8.3
SYNDIBANK
53
-7.4
FORTIS
143
-7.2
SAIL
68
-6.6
JAICORPLTD
128
-6.5
As on March 23, 2018
Market Outlook
March 26, 2018
News Analysis
NHAI awards Rs 13.95 billion contract for widening highways in
Karnataka
NHAI has awarded two projects worth Rs
13.95
billion
in Karnataka to Ashoka Concessions and Dilip Buildcon for widening of stretches
of NH 4A. Besides, two-laning of about
52 km of the highway on
Karnataka/Goa border has been awarded to Dilip Buildcon on engineering,
procurement and construction (EPC) mode at a cost of Rs 5.03 billion. The projects
involve construction of two major and six minor bridges and five railway over
bridges (ROBs), for free movement of traffic in major cross roads and reduce
conflicts. Two bypasses have also been proposed for the stretch.
"Keeping in view the safety of road users, all major intersections have been
provided with 21 vehicular underpasses/vehicular overpasses/ light vehicular
underpasses etc.” The concession period of the projects is 17.5 years, including
construction period of 2.5 years.
Economic and Political News
Odisha Budget outgo up 13% at Rs 1.2 trillion; growth pegged at 8-8.5% in
FY19
NHAI awards Rs 13.95 billion contract for widening highways in Karnataka
Government likely to relax restrictions for foreigners to visit forbidden areas
Corporate News
GSK backs out of $20bn bidding race for Pfizer's consumer health-care unit
Lighthouse Fund closes $200-mn fundraising round, total AUM at $500mn
BSNL to invest about Rs 43bn for network expansion in 2018-19
Embassy group to invest Rs 13.5bn to develop four new hotels in Bengaluru
Market Outlook
March 26, 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
25,125
2,086.5
2,441
14.5
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
7,172
743
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
15,420
491
720
31.8
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
1,76,000
274
416
34.1
NPA would reduce provision cost, which would help to
report better ROE.
High order book execution in EPC segment, rising B2C
KEI Industries
2,854
363
436
16.51
sales and higher exports to boost the revenues and
profitability
Expected to benefit from the lower capex requirement
Music Broadcast Limited
2,180
380
475
24.9
and 15 year long radio broadcast licensing.
Massive capacity expansion along with rail advantage
Navkar Corporation
2,302
152
265
74.9
at ICD as well CFS augur well for the company
Strong brands and distribution network would boost
Siyaram Silk Mills
2,910
623
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
TV Today Network
3,017
496
603
17.7
the 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
2,60,000
8,590
10,619
19.1
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
1,866
346
655
47.2
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
6,212
306
400
23.7
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
2,636
83
128
35.2
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
1,172
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
HSIL Ltd
2,715
378
510
25.8
operating margin due price hike in container glass
segment, turnaround in consumer business.
We expect financialisation of savings and increasing
Aditya Birla Capital
32,364
147
218
32.6
penetration in Insurance & Mutual fund would ensure
steady growth.
Source: Company, Angel Research
Market Outlook
March 26, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,789
284
360
21.1
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
2,317
1,549
2,178
28.9
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
5,458
108
160
32.5
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
1,657
2,072
2,500
17.1
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
3,913
325
395
17.7
~`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 26, 2018
Key Upcoming Events
Global economic events release calendar
Bloomberg Data
Date
Time Country
Event Description
Unit
Period
Last Reported
Estimated
Mar 27, 2018
6:00 PMUS
GDP Qoq (Annualised)
% Change
4Q T
2.50
2.60
2:30 PMEuro Zone
Euro-Zone Consumer Confidence
Value
Mar F
0.10
Mar 28, 2018
7:30 PMUS
Consumer Confidence
S.A./ 1985=100
Mar
130.80
131.00
Mar 29, 2018
1:25 PMGermany
Unemployment change (000's)
Thousands
Mar
(22.00)
2:00 PMUK
GDP (YoY)
% Change
4Q F
1.40
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
Apr 10, 2018
6:00 PMUS
Consumer price index (mom)
% Change
Mar
0.20
Apr 11, 2018
US
Producer Price Index (mom)
% Change
Mar
(0.30)
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
China
Exports YoY%
% Change
Mar
44.50
Apr 16, 2018
12:00 PMIndia
Monthly Wholesale Prices YoY%
% Change
Mar
2.48
Apr 17, 2018
2:00 PMUK
Jobless claims change
% Change
Mar
9.20
6:00 PMUS
Housing Starts
Thousands
Mar
1,236.00
6:00 PMUS
Building permits
Thousands
Mar
1,298.00
Source: Bloomberg, Angel Research
Market Outlook
March 26, 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 26, 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 26, 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
