Market Outlook
March 20, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open negative tracking global indices and SGX Nifty.
BSE Sensex
(0.8)
(253)
32,923
U.S. stocks moved sharply lower with the major averages adding to the losses
Nifty
(1.0)
(101)
10,094
posted last week. The Dow Jones tumbled to 1.3% to close at 24,611. The NASDAQ
Mid Cap
(1.6)
(256)
15,963
dropped down by 1.8% to close at 7,344.
Small Cap
(2.0)
(348)
17,228
U.K. stocks fell sharply as investors looked ahead to Wednesday's meeting of the
Bankex
(1.1)
(301)
27,309
U.S. Federal Reserve as well as the Bank of England policy meeting on Thursday for
directional cues. The FTSE 100 was down by 1.7% to end at 7,043.
Global Indices
Chg (%)
(Pts)
(Close)
On domestic front, Indian shares fell for a fourth consecutive session and the rupee
Dow Jones
(1.3)
(336)
24,611
weakened against the dollar after data from the Reserve Bank of India (RBI) showed
Nasdaq
(1.8)
(138)
7,344
India's October-December current account deficit widened sharply from a year
FTSE
(1.7)
(121)
7,043
earlier, driven by higher imports. The BSE Sensex ended down by 0.8% at 32,923.
Nikkei
(1.0)
(212)
21,269
News Analysis
Hang Seng
(1.0)
(325)
31,189
IOCL to commission Rs 30bn polypropylene facility in six months
Shanghai Com
(0.4)
(12)
3,267
Detailed analysis on Pg2
Advances / Declines
BSE
NSE
Investor’s Ready Reckoner
Advances
529
285
Key Domestic & Global Indicators
Declines
2,273
1,546
Stock Watch: Latest investment recommendations on 150+ stocks
Unchanged
132
52
Refer Pg5 onwards
Top Picks
Volumes (` Cr)
CMP
Target
Upside
Company
Sector
Rating
BSE
3,232
(`)
(`)
(%)
Blue Star
Capital Goods
Accumulate
781
867
11.0
NSE
27,705
Dewan Housing FinanceFinancials
Buy
497
720
44.9
Century Plyboards
Forest Product
Buy
325
400
23.1
Net Inflows (` Cr)
Net
Mtd
Ytd
Navkar Corporation
Others
Buy
154
265
71.7
FII
1,051
9,149
9,642
KEI Industries
Capital Goods
Buy
363
436
20.3
*MFs
(1,076)
2,087
27,291
More Top Picks on Pg4
Key Upcoming Events
Top Gainers
Price (`)
Chg (%)
Previous
Consensus
Date
Region
Event Description
Reading
Expectations
VAKRANGEE
260
5.0
Mar 20
Euro Zone Euro-Zone Consumer Confidence
0.10
0.10
NLCINDIA
95
3.3
Mar 20
UK
Jobless claims change
(7.20)
GET&D
397
3.2
Mar 21
UK
CPI (YoY)
3.00
2.80
Mar 21
US
Existing home sales
5.38
5.43
BOMDYEING
268
2.5
Mar 21
US
FOMC rate decision
1.50
1.75
WABCOINDIA
7,475
2.1
More Events on Pg7
Top Losers
Price (`)
Chg (%)
TATASTEELPP
139
-10.0
INTELLECT
169
-8.3
FCONSUMER
54
-7.9
CENTRALBK
77
-7.5
IDBI
73
-7.4
As on March 19, 2018
Market Outlook
March 20, 2018
News Analysis
IOCL to commission Rs 30bn polypropylene facility in six months
Indian Oil Corporation Ltd (IOCL) aims to commission the polypropylene facility
coming up near its Paradip oil refinery within the next six months. "The new
polypropylene unit in Paradip, which will be commissioned in around next six
months, can catalyse a host of downstream industries in the (eastern) region
besides opening of new markets in Myanmar and Bangladesh, in consistency with
the Government's look east policy".
The unit is estimated to cost Rs 31.5 billion. The plant would make use of
Spheripol Technology from Basell, Italy, and will be capable of producing different
grades of polypropylene. However, it will commence with the production of homo
grade initially. The major facilities envisaged under the project are cooker LPG
treater unit, warehouse for polypropylene storage and other associated facilities
such as flare and cooling tower.
Economic and Political News
Relief for telecom sector as DoT increases cap for spectrum payments
CBEC to verify GST transitional credit claims of 50,000 taxpayers
Unrealistic to expect GST to settle down in less than 10 years
Corporate News
UltraTech to pay Rs 73bn for 98% stake in Binani Cement, NCLT nod
awaited
IOCL to commission Rs 30bn polypropylene facility in six months
MG Motor India to invest Rs 50bn over 5-6 yrs, launch new car every year
Market Outlook
March 20, 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
25,362
2,121
2,441
15.1
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
7,498
781
867
11.0
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
15,586
497
720
44.9
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
1,89,558
295
416
41.0
NPA would reduce provision cost, which would help to
report better ROE.
High order book execution in EPC segment, rising B2C
KEI Industries
2,841
363
436
20.3
sales and higher exports to boost the revenues and
profitability
Expected to benefit from the lower capex requirement
Music Broadcast Limited
2,085
366
475
30.0
and 15 year long radio broadcast licensing.
Massive capacity expansion along with rail advantage
Navkar Corporation
2,323
154
265
71.7
at ICD as well CFS augur well for the company
Strong brands and distribution network would boost
Siyaram Silk Mills
2,974
635
851
34.1
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
2,772
465
552
18.8
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
2,65,155
8,778
10,619
21.0
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
2,025
376
655
74.2
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
7,218
325
400
23.1
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
2,751
86
128
48.8
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
1,162
522
650
24.5
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
2,872
397
510
28.4
margin due price hike in container glass segment,
turnaround in consumer business.
We expect financialisation of savings and increasing
Aditya Birla Capital
33728
146
218
49.5
penetration in Insurance & Mutual fund would ensure
steady growth.
Source: Company, Angel Research
Market Outlook
March 20, 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
2,404
1,611
2,178
35.2
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
196
142
247
74.3
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
5,655
112
160
42.4
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
1,624
2,048
2,500
22.1
motors, transformers etc. It derives demand from
several industries which are expected to register 10%+
CAGR in demand in the coming years.
RPL to report healthy top-line CAGR of ~13% over
FY17-20E on the back of healthy demand in printing &
Ruchira Papers Ltd.
372
166
244
47.1
writing paper segments. On the bottom-line front, we
estimate ~16% CAGR over FY17-20E owing to strong
improvement in operating performance.
Greenply Industries Ltd (GIL) manufactures plywood &
allied products and medium density fibreboards
(MDF). GIL to report net revenue CAGR of ~14% to
Greenply Industries
4,047
330
395
19.7
~`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 20, 2018
Key Upcoming Events
Global economic events release calendar
Bloomberg Data
Date
Time Country
Event Description
Unit
Period
Last Reported
Estimated
Mar 20, 2018
8:30 PMEuro Zone
Euro-Zone Consumer Confidence
Value
Mar A
0.10
0.10
3:00 PMUK
Jobless claims change
% Change
Feb
(7.20)
Mar 21, 2018
3:00 PMUK
CPI (YoY)
% Change
Feb
3.00
2.80
7:30 PMUS
Existing home sales
Million
Feb
5.38
5.43
11:30 PMUS
FOMC rate decision
%
Mar 21
1.50
1.75
Mar 22, 2018
6:00 PMUS
Initial Jobless claims
Thousands
Mar 17
226.00
2:00 PMGermany
PMI Services
Value
Mar P
55.30
55.20
2:00 PMGermany
PMI Manufacturing
Value
Mar P
60.60
59.80
5:30 PMUK
BOE Announces rates
% Ratio
Mar 22
0.50
0.50
Mar 23, 2018
7:30 PMUS
New home sales
Thousands
Feb
593.00
620.00
Mar 27, 2018
7:30 PMUS
Consumer Confidence
S.A./ 1985=100
Mar
130.80
Mar 28, 2018
6:00 PMUS
GDP Qoq (Annualised)
% Change
4Q T
2.50
Mar 29, 2018
1:25 PMGermany
Unemployment change (000's)
Thousands
Mar
(22.00)
6:30 AMChina
PMI Manufacturing
Value
Mar
50.30
Mar 31, 2018
2:00 PMUK
GDP (YoY)
% Change
4Q F
1.40
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
US
Producer Price Index (mom)
% Change
Mar
(0.30)
Apr 11, 2018
6:00 PMUS
Consumer price index (mom)
% Change
Mar
0.20
7:00 AMChina
Consumer Price Index (YoY)
% Change
Mar
2.90
Source: Bloomberg, Angel Research
Market Outlook
March 20, 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 20, 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 20, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
83,913
(0.4)
15.3
29.7
Russia
Micex
2,282
1.4
5.6
12.0
India
Nifty
10,094
(3.9)
(1.0)
11.1
China
Shanghai Composite
3,279
4.4
(0.4)
1.7
South Africa
Top 40
51,435
(2.2)
(0.1)
13.0
Mexico
Mexbol
47,478
(1.9)
(1.7)
(1.2)
Indonesia
LQ45
1,036
(7.5)
(0.7)
14.2
Malaysia
KLCI
1,848
0.7
6.8
7.6
Thailand
SET 50
1,185
2.1
6.6
21.2
USA
Dow Jones
24,611
(1.1)
0.1
17.7
UK
FTSE
7,043
(2.7)
(5.4)
(4.5)
Japan
Nikkei
21,481
0.1
(6.1)
9.6
Germany
DAX
12,217
(1.0)
(6.5)
1.4
France
CAC
5,223
0.0
(2.5)
3.8
Source: Bloomberg, Angel Research p68in4
