Market Outlook
August 30, 2017
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open flat tracking global indices and SGX Nifty.
BSE Sensex
(1.1)
(362)
31,388
U.S. equity markets regained their footing to close higher on Tuesday as investors
Nifty
(1.2)
(117)
9,796
shook off the tension between the U.S. and North Korea. The Dow Jones industrial
Mid Cap
(0.8)
(130)
15,278
average erased earlier losses to end 56.9 points higher at 21,865, with United
Small Cap
(1.0)
(162)
15,656
Technologies and Boeing contributing the most to the gains. The index fell as much
Bankex
(1.1)
(291)
27,261
as 134.8 points earlier in the session.
The European markets ended Tuesday's session firmly in negative territory after
Global Indices
Chg (%)
(Pts)
(Close)
North Korea launched a ballistic missile over Japan. Japanese Prime Minister Shinzo
Abe described the missile launch as "an unprecedented, serious and grave threat" to
Dow Jones
0.3
57
21,865
Asia's second-largest economy, adding that he and U.S. President Donald Trump
Nasdaq
0.3
19
6,302
are in complete agreement to hike pressure on North Korea.
FTSE
(0.9)
(64)
7,337
Indian shares fell sharply on Tuesday, tracking weakness in Asia and Europe, after
Nikkei
0.6
111
19,474
North Korea launched a ballistic missile over Japan, reigniting geopolitical worries.
Hang Seng
0.6
168
27,933
Shanghai Com
0.1
4
3,369
News Analysis
HCL Infosystems to raise `500cr via rights issue
Advances / Declines
BSE
NSE
Advances
801
479
Detailed analysis is on Pg2
Declines
1,790
1,215
Investor’s Ready Reckoner
Unchanged
128
54
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Volumes (` Cr)
Refer Pg7 onwards
BSE
3,696
NSE
23,705
Top Picks
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
#Net Inflows (` Cr)
Net
Mtd
Ytd
Blue Star
Capital Goods
Accumulate
752
760
1.1
FII
96 (11,869)
46,528
Dewan Housing FinanceFinancials
Accumulate
493
520
5.5
Mahindra Lifespace
Real Estate
Buy
435
522
20.0
MFs
1,566 14,506
65,452
Navkar Corporation
Others
Buy
190
265
39.5
KEI Industries
Capital Goods
Accumulate
245
258
5.2
Top Gainers
Price (`)
Chg (%)
More Top Picks on Pg5
Bajajhldng
126
4.4
Key Upcoming Events
Rblbank
21
4.1
Previous
Consensus
Date
Region
Event Description
Reading
Expectations
Ghcl
8
3.3
Aug 30, 2017 Euro Zone Euro-Zone Consumer Confidence
(1.50)
(1.50)
Relinfra
14
3.0
Aug 30, 2017 US
Initial Jobless claims
234.00
236.50
Kec
9
2.9
Aug 31, 2017 US
GDP Qoq (Annualised)
2.60
2.70
Aug 31, 2017 Germany Unemployment change (000's)
(8.00)
(6.00)
Top Losers
Price (`)
Chg (%)
More Events on Pg7
Jpassociat
(2)
(9.6)
Indiacem
(9)
(5.1)
Fsl
(2)
(4.9)
Jetairways
(27)
(4.8)
J&Kbank
(4)
(4.7)
#as on 29th Aug, 2017
Market Outlook
August 30, 2017
News Analysis
HCL Infosystems to raise `500cr via rights issue
The information technology (IT) services and distribution services arm of the HCL
Enterprise- HCL Infosystems- said the company's board has approved a plan to
raise up to ` 500cr from its existing shareholders.
HCL Infosystems' Board had, in an August 29 meeting, considered and approved
the recommendations of its capital raising committee to go for a rights issue of
shares to existing shareholders of the company as a mode of raising equity capital
aggregating up to `500cr.
As on June-end in 2017, promoters and promoters' group held 58% shares at HCL
Info. The company, which reported a net loss of `55.1cr on a revenue of `684.2cr
in Q1, recently announced that it would distribute Apple products, including
iPhone, in the Indian market. To meet this purpose, HCL Info had, in December
2016, signed a non-disclosure agreement with Apple India.
HCL Infosystems is looking to expand its footprint in India after working with some
of the leading brands of the country, including Lenovo, Motorola and Nokia,
among others
Economic and Political News
7th Pay Commission: `4,500cr burden on Odisha govt
Jute industry fears `200cr loss on new pricing formula
Odisha seafood park gets `466cr investment proposals
GST: `92,283cr collected in July, compliance at 64.42%, says Jaitley
Corporate News
TVS Logistics eyes $1-billion revenue in 3 years
IOC to invest `32,000cr to ramp up petrochemicals capacity by FY21
HCL Infosystems to raise `500cr via rights issue
MRF Tyres plans to invest around `1000cr a year till 2020-21
Market Outlook
August 30, 2017
Top Picks
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
Strong growth in domestic business due to its leadership
in acute therapeutic segment. Alkem expects to launch
Alkem Laboratories
20,947
1,752
2,161
23.3
more products in USA, which bodes for its international
business.
We expect the company would report strong profitability
11.1
Asian Granito
1,300
432
480
owing to better product mix, higher B2C sales and
amalgamation synergy.
Favorable outlook for the AC industry to augur well for
1.1
Cooling products business which is out pacing the
Blue Star
7,198
752
760
market growth. EMPPAC division's profitability to improve
once operating environment turns around.
With a focus on the low and medium income (LMI)
5.5
consumer segment, the company has increased its
Dewan Housing Finance
15,453
493
520
presence in tier-II & III cities where the growth
opportunity is immense.
Loan growth is likely to pick up after a sluggish FY17.
Karur Vysya Bank
7,355
139
160
15.1
Lower credit cost will help in strong bottom-line growth.
Increasing share of CASA will help in NIM improvement.
High order book execution in EPC segment, rising B2C
KEI Industries
1,909
245
258
5.2
sales and higher exports to boost the revenues and
profitability
Speedier execution and speedier sales, strong revenue
Mahindra Lifespace
2,234
435
522
20.0
visibility in short-to-long run, attractive valuations
Expected to benefit from the lower capex requirement
Music Broadcast
2,123
373
434
16.4
and 15 year long radio broadcast licensing.
Massive capacity expansion along with rail advantage at
Navkar Corporation
2,698
190
265
39.5
ICD as well CFS augurs well for the company
Strong brands and distribution network would boost
Siyaram Silk Mills
1,943
2,080
2,500
20.2
growth going ahead. Stock currently trades at an
inexpensive valuation.
Market leadership in Hindi news genre and no.
2
41.0
viewership ranking in English news genre, exit from the
TV Today Network
1,437
244
344
radio business, and anticipated growth in ad spends by
corporates to benefit the stock.
After GST, the company is expected to see higher
volumes along with improving product mix. The Gujarat
Maruti Suzuki
2,27,341
7,526
8,544
13.5
plant will also enable higher operating leverage which
will be margin accretive.
Source: Company, Angel Research
Market Outlook
August 30, 2017
Key Upcoming Events
Global economic events release calendar
Bloomberg Data
Date
Time
Country
Event Description
Unit
Period
Last Reported
Estimated
Aug 30, 2017
2:30 PMEuro Zone
Euro-Zone Consumer Confidence
Value
Aug F
(1.50)
(1.50)
6:00 PMUS
Initial Jobless claims
Thousands
Aug 26
234.00
236.50
Aug 31, 2017
6:00 PMUS
GDP Qoq (Annualised)
% Change
2Q S
2.60
2.70
1:25 PMGermany
Unemployment change (000's)
Thousands
Aug
(8.00)
(6.00)
6:00 PMUS
Change in Nonfarm payrolls
Thousands
Aug
209.00
180.00
Sep 01, 2017
6:30 AMChina
PMI Manufacturing
Value
Aug
51.40
51.30
1:25 PMGermany
PMI Manufacturing
Value
Aug F
59.40
59.40
6:00 PMUS
Unnemployment rate
%
Aug
4.30
4.30
2:00 PMUK
PMI Manufacturing
Value
Aug
55.10
55.00
Sep 05, 2017
1:25 PMGermany
PMI Services
Value
Aug F
53.40
2:30 PMEuro Zone
Euro-Zone GDP s.a. (QoQ)
% Change
2Q F
0.60
Sep 07, 2017
5:15 PMEuro Zone
ECB announces interest rates
%
Sep 7
-
Sep 08, 2017
India
Imports YoY%
% Change
Aug
15.40
India
Exports YoY%
% Change
Aug
3.94
2:00 PMUK
Industrial Production (YoY)
% Change
Jul
0.30
China
Exports YoY%
% Change
Aug
7.20
Sep 09, 2017
2:00 PMUK
CPI (YoY)
% Change
Aug
2.60
Sep 12, 2017
7:00 AMChina
Consumer Price Index (YoY)
% Change
Aug
1.40
5:30 PMIndia
Industrial Production YoY
% Change
Jul
(0.10)
Sep 13, 2017
2:00 PMUK
Jobless claims change
% Change
Aug
(4.20)
US
Producer Price Index (mom)
% Change
Aug
(0.20)
Sep 14, 2017
7:30 AMChina
Industrial Production (YoY)
% Change
Aug
6.40
Source: Bloomberg, Angel Research
Market Outlook
August 30, 2017
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
5.7
5.7
10.0
6.0
9.1
8.8
4.9
4.9
9.0
5.0
7.9
8.0
7.9
7.6
7.5
3.8
8.0
7.3
7.2
4.0
7.0
3.0
2.8
2.8
7.0
2.6
6.1
6.1
3.0
1.9
6.0
2.0
5.0
1.0
4.0
-
3.0
(0.1)
(1.0)
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
(%)
54.0
6.0
5.1
52.0
5.0
4.3
4.2
3.9
50.0
3.6
3.7
4.0
3.4
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
20.0
5.00
10.0
4.50
0 .0
4.00
(10.0)
3.50
(20.0)
(30.0)
3.00
Source: Bloomberg, Angel Research
Source: RBI, Angel Research
Market Outlook
August 30, 2017
Global watch
Exhibit 1: Latest quarterly GDP Growth (%, yoy) across select developing and developed countries
(%)
8.0
6.9
7.0
5.6
6.0
5.3
5.0
1.0
5.0
4.0
3.3
2.9
3.0
2.1
0.5
1.7
1.8
2.0
1.3
1.0
-
(1.0)
(0.4)
Source: Bloomberg, Angel Research
Exhibit 2: 2016 GDP Growth projection by IMF (%, yoy) across select developing and developed countries
(%)
7.2
6.6
7.0
6.0
5.1
5.0
4.5
4.0
3.0
3.0
2.3
2.0
1.4
1.6
2.0
1.4
1.2
0.2
0.8
1.0
-
Source: IMF, Angel Research
Exhibit 3: One year forward P-E ratio across select developing and developed countries
(x)
25.0
20.0
15.0
10.0
5.0
-
Source: IMF, Angel Research
Market Outlook
August 30, 2017
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
71,330
8.8
11.4
23.0
Russia
Micex
1,989
2.2
2.4
0.1
India
Nifty
9,796
(0.5)
4.2
14.9
China
Shanghai Composite
3,365
3.4
7.9
8.2
South Africa
Top 40
49,883
3.1
5.3
7.1
Mexico
Mexbol
51,314
0.0
4.0
7.7
Indonesia
LQ45
983
0.8
4.1
6.3
Malaysia
KLCI
1,761
(0.3)
(0.6)
4.1
Thailand
SET 50
1,035
0.5
1.8
2.9
USA
Dow Jones
21,865
0.1
3.5
17.9
UK
FTSE
7,337
(1.4)
(2.5)
8.2
Japan
Nikkei
19,363
(3.6)
(1.6)
16.7
Germany
DAX
11,946
(0.7)
(4.0)
15.1
France
CAC
5,032
(2.1)
(4.3)
11.9
Source: Bloomberg, Angel Research
