Market Outlook
February 19, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open flat tracking global indices and SGX Nifty.
BSE Sensex
(0.8)
(287)
34,011
US stocks moved mostly higher in morning trading session but turned mixed over the
Nifty
(0.9)
(93)
10,452
course of the session. The major averages eventually ended the day on opposite
Mid Cap
(1.2)
(201)
16,602
sides of the unchanged line. The Dow Jones ended up 0.1% to close at 25,219 and
Small Cap
(1.2)
(222)
18,036
the Nasdaq Composite edged down to 0.2%, to 7,239.
Bankex
(1.2)
(336)
28,396
U.K. shares extended gains from the previous session, with energy and mining
stocks climbing, as oil and base metals prices surged on dollar weakness after the
Global Indices
Chg (%)
(Pts)
(Close)
release of mixed economic reports in the U.S. The FTSE 100 was up by 0.8% to close
Dow Jones
0.1
19
25,219
at 7,295.
Nasdaq
(0.2)
(17)
7,239
On domestic front, Indian shares fell sharply as financials succumbed to selling
FTSE
0.8
60
7,295
pressure on worries over the Rs 11,300cr fraud case at Punjab National Bank and
Nikkei
1.2
255
21,720
weak trade data stirred concerns about the economic outlook. The Sensex ended on
Hang Seng
2.0
600
31,115
a downside front of 0.8% at 34,011 while the Nifty ended at 10,452 with a
Shanghai Com
0.4
14
3,199
downside of 0.9%.
News Analysis
Advances / Declines
BSE
NSE
PNB Housing Finance to raise $400 million through issue of masala bonds
Advances
684
353
Declines
2,150
1,431
Detailed analysis on Pg2
Unchanged
106
47
Investor’s Ready Reckoner
Key Domestic & Global Indicators
Volumes (` Cr)
Stock Watch: Latest investment recommendations on 150+ stocks
BSE
4,116
Refer Pg5 onwards
NSE
29,800
Top Picks
CMP
Target
Upside
Net Inflows (` Cr)
Net
Mtd
Ytd
Company
Sector
Rating
(`)
(`)
(%)
FII
(135)
(6,579)
6,404
Blue Star
Capital Goods
Buy
728
867
19.1
Dewan Housing Finance
Financials
Buy
541
712
31.5
*MFs
(139)
5,352
14,375
Century Plyboards
Forest Products
Buy
320
400
25.1
Navkar Corporation
Other
Buy
172
265
54.5
Top Gainers
Price (`)
Chg (%)
KEI Industries
Capital Goods Accumulate
385
436
13.2
Pcjeweller
380
6.6
More Top Picks on Pg4
Vakrangee
245
5.0
Key Upcoming Events
Bbtc
1,520
4.9
Previous
Consensus
Date
Region
Event Description
Religare
60
4.4
Reading
Expectations
Feb20
Germany PMI Services
57.30
56.80
Cub
175
4.0
Feb21
Euro Zone Euro-Zone Consumer Confidence
1.30
1.10
Feb21
Germany PMI Manufacturing
61.10
60.50
Top Losers
Price (`)
Chg (%)
Feb21
US
Initial Jobless claims
230.00
Welcorp
159
(5.8)
Feb21
US
Existing home sales
5.57
5.62
More Events on Pg7
Apollohosp
1,138
(5.8)
Suntv
924
(5.4)
Jindalstel
252
(5.2)
Maxindia
99
(5.1)
As on February 16 2018
Market Outlook
February 19, 2018
News Analysis
PNB Housing Finance to raise $400 million through issue of masala
bonds
PNB Housing Finance (PNB HFL) is planning to raise $400 million through its
maiden issue of masala bond. The money will be utilised to finance retail
buyers/developers of affordable housing as well as developers of green buildings.
IFC proposes to invest up to $150 million in PNB HFL by subscribing to the
company's 5-year Masala Bonds. PNB HFL will allocate another $400mn from
other resources of funds to create a pool of up to
$800 million for
affordable/green housing segments, said IFC.
PNB HFL is the fifth largest HFC (by loan assets) and second largest HFC (by
deposits) in India with asset under management (AUM) of $9 billion as of
December 2017. PNB HFL, a registered HFC with NHB, is a listed entity currently,
with PNB holding 32.96 per cent stake in the company while 37.3 per cent is held
by Quality Investment Holdings (QIH) and the rest by public shareholders.
Economic and Political News
India invites ministers of over 50 countries for informal WTO meet in March
Airports Authority of India to invest Rs 150bn on terminals in FY19
PM Modi gives weaker road builders a path to sell more bonds in FY18
Make in India: S Korea's Hyosung to invest Rs 30bn in Maharashtra spandex
project
Corporate News
Reliance Industries to acquire 65% stake in IFC for Rs 11.05bn
Reliance Jio offers Rs 2,200 cashback on smartphones purchase from 22
firms
Infosys to divest entire $2.5-mn investment from US-based on Mobile
Systems
India Inc sees M&A deals worth $15bn in Jan as domestic deals gain pace
Zoomcar raises $40mn from Mahindra; to add 500 E20s to its fleet
Market Outlook
February 19, 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 to launch
Alkem Laboratories
25,879
2,164
2,441
12.8
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
6,985
728
867
19.1
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
16,978
541
712
31.5
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 growth.
Karur Vysya Bank
8,049
111
160
44.4
Increasing share of CASA will help in NIM
improvement.
High order book execution in EPC segment, rising B2C
KEI Industries
3,018
385
436
13.2
sales and higher exports to boost the revenues and
profitability
Expected to benefit from the lower capex requirement
Music Broadcast
2,044
358
475
32.6
and 15 year long radio broadcast licensing.
Massive capacity expansion along with rail advantage
Navkar Corporation
2,581
172
265
54.5
at ICD as well CFS augur well for the company
Strong brands and distribution network would boost
Siyaram Silk Mills
3,082
658
851
29.4
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
2,777
466
560
20.3
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 Gujarat
Maruti Suzuki
2,67,039
8,840
10,619
20.1
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
2,162
402
655
63.1
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
7,104
320
400
25.1
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
3,197
100
128
28.1
two years on the back of strong distribution network &
addition of new products in portfolio.
We expect financialisation of savings and increasing
Aditya Birla Capital
36931
165
230
39.3
penetration in Insurance & Mutual fund would ensure
steady growth.
We expect HSIL to report PAT CAGR of ~15% over
FY2017-20E owing to better improvement in operating
HSIL
2,862
428
510
19.2
margin due price hike in container glass segment,
turnaround in consumer business.
Source: Company, Angel Research
Market Outlook
February 19, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,760
283
360
27.4
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
2,617
1,754
2,178
24.2
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
223
161
247
53.0
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
6,191
123
160
30.1
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
February 19, 2018
Key Upcoming Events
Global economic events release calendar
Bl oomberg Data
D ate
Time
C ountry
Event Description
Unit
Period
L ast Reporte d
E stimate d
Feb 20, 2018
2:00 PM Germany
PMI Services
Value
Feb P
57.30
56.80
Feb 21, 2018
8:30 PM Euro Zone
Euro-Zone Consumer Confidence
Value
Feb A
1.30
1.10
2:00 PM Germany
PMI Manufacturing
Value
Feb P
61.10
60.50
7:00 PM US
Initial Jobless claims
Thousands
Feb 17
230.00
8:30 PM US
Existing home sales
Million
Jan
5.57
5.62
Feb 22, 2018
3:00 PM UK
Joble ss claims change
% Change
Jan
8.60
3:00 PM UK
GDP (YoY)
% Change
4Q P
1.50
1.50
Feb 23, 2018
12: 30 PM Germany
GDP nsa (YoY)
% Change
4Q F
2.30
2.30
3:30 PM Euro Zone
Euro-Zone CPI (YoY)
%
Jan F
1.30
1.30
Feb 26, 2018
8:30 PM US
New home sales
Thousands
Jan
625.00
643.00
Feb 27, 2018
8:30 PM US
Consumer Confidence
S.A./ 1985=100
Feb
125.40
125.00
Feb 28, 2018
2:25 PM Germany
Unempl oyment change (000's)
Thousands
Feb
(24.00)
6:30 AM China
PMI Manufacturing
Value
Feb
51.30
7:00 PM US
GDP Qoq (Annualise d)
% Change
4Q S
2.60
2.60
Mar 01, 2018
3:00 PM UK
PMI Manufacturing
Value
Feb
55.30
Mar 07, 2018
China
Exports YoY%
% Change
Feb
11.10
Mar 08, 2018
3:30 PM Euro Zone
Euro-Zone GDP s.a. (QoQ)
% Change
4Q F
0.60
6:15 PM Euro Zone
ECB announces interest rates
%
Mar 8
-
Mar 09, 2018
3:00 PM UK
Industrial Production (YoY)
% Change
Jan
-
7:00 AM China
Consumer Price Index (YoY)
% Change
Feb
1.50
7:00 PM US
Change in N onfarm payrolls
Thousands
Feb
200.00
200.00
7:00 PM US
Unnemployment rate
%
Feb
4.10
4.10
Mar 12, 2018
5:30 PM India
Industrial Production YoY
% Change
Jan
7.10
Mar 13, 2018
6:00 PM US
Consumer price index (mom)
% Change
Feb
0.50
Source: Bloomberg, Angel Research
Market Outlook
February 19, 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
February 19, 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
February 19, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
C ountry
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
84,291
6.2
16.4
31.7
Russia
Micex
2,265
0.1
6.9
6.1
India
Nifty
10,546
(2.7)
3.3
18.7
China
Shanghai Composite
3,199
(6.2)
(6.0)
(0.5)
South Africa
Top 40
52,565
(3.3)
(1.4)
15.1
Mexico
Mexbol
48,808
(1.2)
1.6
3.5
Indonesia
LQ45
1,109
1.4
10.8
25.6
Malaysia
KLCI
1,838
0.9
5.5
8.8
Thailand
SET 50
1,169
(1.5)
8.1
17.6
USA
Dow Jones
25,200
(2.3)
7.5
22.2
UK
FTSE
7,235
(6.7)
(2.4)
(0.9)
Japan
Nikkei
21,465
(9.5)
(6.1)
12.9
Germany
DAX
12,346
(6.0)
(4.5)
5.4
France
CAC
5,223
(4.2)
(0.7)
7.5
Source: Bloomberg, Angel Research p68in4
