Market Outlook
January 16, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open flat tracking global indices and SGX Nifty.
BSE Sensex
0.7
251
34,844
US stocks showing a strong move to the upside in last trading session, stocks
Nifty
0.6
60
10,742
remained firmly positive throughout the afternoon. With the upward move, the major
Mid Cap
(0.0)
(8)
18,129
averages once again climbed to new record closing highs. The Dow Jones jumped
Small Cap
0.3
54
20,047
to 0.9% to close at 25,803 and the Nasdaq Composite edged up to 0.7%, to 7,261.
Bankex
1.3
365
29,462
U.K. shares were lackluster after construction and support services firm Carillion;
they have filed for compulsory liquidation with immediate effect. The FTSE 100 was
Global Indices
Chg (%)
(Pts)
(Close)
down by 0.1% to close at 7,769.
Dow Jones
0.9
228
25,803
Nasdaq
0.7
49
7,261
On domestic front, Indian shares rose sharply to close at fresh record highs, with
firm cues from global markets and strong industrial output data boosting sentiment.
FTSE
(0.1)
(9)
7,769
The Sensex ended on an upside front of 0.7% at 34,844 while the Nifty ended at
Nikkei
0.5
129
23,844
10,742 with an upside of 0.6%.
Hang Seng
0.9
267
31,605
Shanghai Com
0.2
6
3,417
News Analysis
Mahindra Logistics Limited - Booking profit with upside of 23%
Advances / Declines
BSE
NSE
Detailed analysis on Pg2
Advances
1,592
905
Investor’s Ready Reckoner
Declines
1,408
898
Unchanged
138
50
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Refer Pg5 onwards
Volumes (` Cr)
BSE
5,272
Top Picks
NSE
34,014
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Blue Star
Capital Goods Accumulate
777
867
11.5
Net Inflows (` Cr)
Net
Mtd
Ytd
Dewan Housing Finance
Financials
Buy
617
712
15.4
FII
(29)
1,610
1,610
Asian Granito
Other
Accumulate
602
651
8.1
Navkar Corporation
Other
Buy
209
265
27.1
*MFs
278
1,735
1,735
KEI Industries
Capital Goods Accumulate
410
436
6.2
More Top Picks on Pg4
Top Gainers
Price (`)
Chg (%)
Hathway
46
14.8
Key Upcoming Events
Previous
Consensus
Gnfc
541
12.0
Date
Region
Event Description
Reading
Expectations
Mahlife
538
9.7
Jan16
India
Monthly Wholesale Prices YoY%
3.58
4.00
Welcorp
185
9.1
Jan17
Euro Zone Euro-Zone CPI (YoY)
1.40
1.40
Jan17
US
Housing Starts
1,297.00
1,275.00
Pcjeweller
585
6.5
Jan18
US
Industrial Production
0.20
0.40
Jan18
US
Initial Jobless claims
261.00
250.00
Top Losers
Price (`)
Chg (%)
More Events on Pg7
Sintex
25
(5.1)
Idfcbank
64
(5.0)
Persistent
747
(4.6)
Fconsumer
70
(4.1)
Aiaeng
1,573
(3.8)
As on January 15, 2018
Market Outlook
January 16, 2018
News Analysis
Mahindra Logistics Limited - Booking profit with upside of 23%
We had recommended SUBSCRIBE rating on Mahindra Logistics Limited - IPO
Price Band 425-429. It generated 23% return since listing. Considering, Higher
valuation of the company we recommend to book profit at the Current price.
Economic and Political News
Wholesale price index inflation softens to three-month low of 3.58%
Job market squeeze: Education loan defaults rise 30% in Uttar Pradesh
Government plans to build ring roads worth Rs 362bn in 28 major cities
Hike in coal prices likely to impact secondary steel makers
Corporate News
Lupin forays into OTC segment; eyes Rs 3bn turnover in 5 years
UK's Carillion collapses after rescue talks with banks fail, govt steps in
Larsen & Toubro's construction arm bags Rs 13.1-bn worth orders
TCS expands five-year deal with Marks and Spencer to boost digital business
Debt-laden Air India to be split into four entities ahead of sale
Market Outlook
January 16, 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
Alkem Laboratories
27,498
2,300
2,441
6.1
to launch more products in USA, which bodes for its
international business.
We expect the company would report strong
Asian Granito
1,812
602
651
8.1
profitability owing to better product mix, higher B2C
sales and amalgamation synergy.
Favorable outlook for the AC industry to augur well for
Cooling products business which is out pacing the
Blue Star
7,457
777
867
11.5
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
19,350
617
712
15.4
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
Karur Vysya Bank
9,118
126
160
26.6
growth. Increasing share of CASA will help in NIM
improvement.
High order book execution in EPC segment, rising B2C
KEI Industries
3,216
410
436
6.2
sales and higher exports to boost the revenues and
profitability
Expected to benefit from the lower capex requirement
Music Broadcast
2,385
418
475
13.6
and 15 year long radio broadcast licensing.
Massive capacity expansion along with rail advantage
Navkar Corporation
3,138
209
265
27.1
at ICD as well CFS augur well for the company
Strong brands and distribution network would boost
Siyaram Silk Mills
3,630
774
851
9.9
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
2,740
459
500
8.9
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
Maruti Suzuki
2,82,640
9,356
10,619
13.5
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
2,461
457
655
43.3
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
7,962
358
400
11.6
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
3,282
103
128
24.8
two years on the back of strong distribution network &
addition of new products in portfolio.
We expect sales/PAT to grow at 13%/16% over next
two years on the back of strong healthy demand in
Ruchira Papers
473
211
244
15.7
writing & printing paper and Kraft paper. Further,
China had banned making paper from waste pulp
which would benefit Indian paper companies.
We expect financialisation of savings and increasing
Aditya Birla Capital
10,978
184
230
25.0
penetration in Insurance & Mutual fund would ensure
steady growth.
Source: Company, Angel Research
Market Outlook
January 16, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
4,023
302
360
19.0
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
2,912
1,952
2,178
11.6
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
313
226
247
9.3
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
7,027
140
160
14.3
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
January 16, 2018
Key Upcoming Events
Result Calendar
Date
Company
January 17, 2018
Hindustan Unilever, Zee Electronic, Infratel
January 18, 2018
UltraTech Cement, Infotech Enterprises, D B Corp, Hind. Zinc
Source: Bloomberg, Angel Research
Global economic events release calendar
Bloomberg Data
Date
Time
Country
Event Description
Unit
Period
Last Reported
Estimated
Jan 16, 2018
12:00 PMIndia
Monthly Wholesale Prices YoY%
% Change
Dec
3.58
4.00
Jan 17, 2018
3:30 PMEuro Zone Euro-Zone CPI (YoY)
%
Dec F
1.40
1.40
7:00 PMUS
Housing Starts
Thousands
Dec
1,297.00
1,275.00
Jan 18, 2018
7:45 PMUS
Industrial Production
%
Dec
0.20
0.40
7:00 PMUS
Initial Jobless claims
Thousands
Jan 13
261.00
250.00
7:00 PMUS
Building permits
Thousands
Dec
1,303.00
1,290.00
12:30 PMChina
Industrial Production (YoY)
% Change
Dec
6.10
6.10
12:30 PMChina
Real GDP (YoY)
% Change
4Q
6.80
6.70
Jan 23, 2018
8:30 PMEuro Zone Euro-Zone Consumer Confidence
Value
Jan A
0.50
Jan 24, 2018
2:00 PMGermany PMI Services
Value
Jan P
55.80
2:00 PMGermany PMI Manufacturing
Value
Jan P
63.30
8:30 PMUS
Existing home sales
Million
Dec
5.81
5.65
3:00 PMUK
Jobless claims change
% Change
Dec
5.90
Jan 25, 2018
8:30 PMUS
New home sales
Thousands
Dec
733.00
667.50
3:00 PMUK
GDP (YoY)
% Change
4Q A
1.70
Source: Bloomberg, Angel Research
Market Outlook
January 16, 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
January 16, 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
January 16, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
79,752
9.5
4.9
29.3
Russia
Micex
2,262
5.3
7.6
3.0
India
Nifty
10,742
5.4
5.6
28.2
China
Shanghai Composite
3,410
3.8
1.4
8.4
South Africa
Top 40
53,432
3.3
4.0
16.9
Mexico
Mexbol
49,387
3.5
(1.2)
6.9
Indonesia
LQ45
1,084
6.9
10.4
25.5
Malaysia
KLCI
1,826
5.6
3.9
10.0
Thailand
SET 50
1,188
7.9
9.9
20.6
USA
Dow Jones
25,803
5.8
12.8
29.8
UK
FTSE
7,769
4.2
2.8
7.6
Japan
Nikkei
23,715
4.0
14.6
21.9
Germany
DAX
13,201
0.6
1.8
14.2
France
CAC
5,510
2.3
2.8
13.8
Source: Bloomberg, Angel Research p68in4
Market Outlook
January 16, 2018
Research Team Tel: 022 - 39357800
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