Market Outlook
March 28, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open flat tracking global indices and SGX Nifty.
BSE Sensex
0.3
108
33,174
U.S. stocks showed a substantial move to the downside. The major averages pulled
Nifty
0.5
54
10,184
back firmly into negative territory, with the tech-heavy Nasdaq largely offsetting the
Mid Cap
1.1
168
16,048
rally seen in the previous session. The Dow Jones closes down to 1.4% to close at
Small Cap
1.4
230
17,153
23,858. The NASDAQ ended down by 2.9% to close at 7,009.
Bankex
0.9
253
27,375
U.K. stocks rallied amid improved risk appetite after the Dow Jones Industrial
Average posted its third-biggest point gain ever overnight on hopes that a trade war
Global Indices
Chg (%)
(Pts)
(Close)
between the U.S. and China is avoidable. The FTSE 100 was up by 1.6% to end at
7,000.
Dow Jones
(1.4)
(345)
23,858
Nasdaq
(2.9)
(212)
7,009
On domestic front, Indian shares rose for a second day running amid improved risk
FTSE
1.6
111
7,000
appetite after the Dow Jones Industrial Average posted its third-biggest point gain
ever overnight on hopes that a trade war between the U.S. and China is avoidable.
Nikkei
(1.8)
(378)
20,940
The BSE Sensex ended up by 0.3% at 33,174.
Hang Seng
(1.0)
(297)
30,494
Shanghai Com
(0.5)
(16)
3,151
News Analysis
L&T construction bags Rs 43.53bn orders in transmission & distribution biz
Advances / Declines
BSE
NSE
Detailed analysis on Pg2
Advances
1,866
1,317
Investor’s Ready Reckoner
Declines
813
477
Unchanged
151
61
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Volumes (` Cr)
Refer Pg5 onwards
BSE
5,408
Top Picks
NSE
33,457
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Blue Star
Capital Goods Accumulate
764
867
13.5
Net Inflows (` Cr)
Net
Mtd
Ytd
Dewan Housing Finance
Financials
Buy
522
720
38.0
FII
(510)
12,278
12,772
Century Plyboards
Forest Product
Buy
328
400
22.1
*MFs
2,250
4,958
30,162
Navkar Corporation
Others
Buy
151
265
75.5
KEI Industries
Capital Goods Accumulate
380
436
14.9
More Top Picks on Pg4
Top Gainers
Price (`)
Chg (%)
Key Upcoming Events
SOBHA
513
8.5
Previous
Consensus
PNBHOUSING
1,280
7.7
Date
Region
Event Description
Reading
Expectations
NIITLTD
96
6.9
Mar 28
US
Initial Jobless claims
229.00
230.00
Mar 29
US
GDP Qoq (Annualised)
2.50
2.70
JMFINANCIL
132
6.8
Mar 29
Germany Unemployment change (000's)
(22.00)
(15.00)
GICHSGFIN
382
6.8
Mar 29
Germany PMI Manufacturing
58.40
58.40
Mar 31
UK
GDP (YoY)
1.40
1.40
Top Losers
Price (`)
Chg (%)
More Events on Pg7
KWALITY
75
-8.2
VAKRANGEE
233
-5.0
CUMMINSIND
703
-4.5
OIL
218
-4.3
FORTIS
142
-3.6
As on March 27, 2018
Market Outlook
March 28, 2018
News Analysis
L&T construction bags Rs 43.53bn orders in transmission & distribution
biz
Engineering major Larsen & Toubro (L&T) has bagged contracts worth Rs 43.53
billion in its power transmission and distribution business in both domestic and
international
markets.
L&T Construction
has
bagged an order
from Sonelgaz group for the turnkey construction of a 220/60 kV Air Insulated
Substation in Draa Errich in Algeria.
A contract has been awarded by the Egyptian Electricity Transmission Company for
the turnkey construction of 220kV overhead transmission lines to interconnect the
substations of North Hurghada and El Qusair to the 220 kV grid. In the Middle
East, L&T won a contract from the Oman Electricity Transmission Company
SAOC for works related to adding third and fourth transformers at the Airport
Heights Grid Station.
Economic and Political News
RBI resumes dialogue with stakeholders to decide on next bi-monthly policy
GST collection falls to Rs 851.74bn in February; only 69% file returns
Sebi exempts government from open offers for three PSBs post capital
infusion
Corporate News
Fortis Healthcare to demerge its hospital division into Manipal Hospitals
Capital First to raise Rs 15-bn via bonds to fund business growth
Sahara Power to build 200 mw power plant in Odisha; scraps 1320 mw
plan
Sebi slaps Rs 10mn fine on Prayag Infotech for not providing information
Market Outlook
March 28, 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
25,228
2,110
2,441
15.7
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
Blue Star
7,335
764
867
13.5
the 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
16,365
522
720
38.0
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
ICICI Bank
1,82,440
284
416
46.5
of NPA would reduce provision cost, which would
help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
2,974
380
436
14.9
B2C sales and higher exports to boost the revenues
and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
2,206
387
475
22.9
requirement and
15 year long radio broadcast
licensing.
Massive capacity expansion along with rail
Navkar Corporation
2,273
151
265
75.5
advantage at ICD as well CFS augur well for the
company
Strong brands and distribution network would boost
Siyaram Silk Mills
2,881
615
851
38.5
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
2,998
503
603
20.0
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
2,67,451
8,854
10,619
19.9
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
2,056
382
655
71.5
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
7,277
328
400
22.1
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
LT Foods
2,731
85
128
49.9
next 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
Safari Industries
1,186
533
650
22.0
distribution network is 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
2,730
378
510
35.0
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
149
230
54.3
penetration in Insurance & Mutual fund would
ensure steady growth.
Source: Company, Angel Research
Market Outlook
March 28, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,723
280
360
28.6
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
2,280
1,528
2,178
42.6
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
5,690
113
160
41.5
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
1,658
2,091
2,500
19.5
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
3,854
314
395
25.7
~`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 28, 2018
Key Upcoming Events
Global economic events release calendar
Bloomberg Data
Date
Time Country
Event Description
Unit
Period
Last Reported
Estimated
Mar 28, 2018
6:00 PMUS
Initial Jobless claims
Thousands
Mar 24
229.00
230.00
Mar 29, 2018
6:00 PMUS
GDP Qoq (Annualised)
% Change
4Q T
2.50
2.70
1:25 PMGermany
Unemployment change (000's)
Thousands
Mar
(22.00)
(15.00)
1:25 PMGermany
PMI Manufacturing
Value
Mar F
58.40
58.40
Mar 31, 2018
2:00 PMUK
GDP (YoY)
% Change
4Q F
1.40
1.40
Apr 03, 2018
6:30 AMChina
PMI Manufacturing
Value
Mar
50.30
50.70
2:00 PMUK
PMI Manufacturing
Value
Mar
55.20
54.80
Apr 05, 2018
1:25 PMGermany
PMI Services
Value
Mar F
54.20
54.20
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
185.00
6:00 PMUS
Unnemployment rate
%
Mar
4.10
4.00
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
2:00 PMUK
Industrial Production (YoY)
% Change
Feb
1.60
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
6:45 PMUS
Industrial Production
%
Mar
0.95
Source: Bloomberg, Angel Research
Market Outlook
March 28, 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 28, 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 28, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
83,808
(4.0)
15.3
29.2
Russia
Micex
2,286
1.4
7.1
11.4
India
Nifty
10,184
(1.9)
(2.5)
12.1
China
Shanghai Composite
3,167
(5.4)
(4.1)
(3.1)
South Africa
Top 40
49,418
(3.6)
(5.1)
10.6
Mexico
Mexbol
46,794
(4.4)
(3.5)
(5.1)
Indonesia
LQ45
1,016
(7.8)
(4.4)
12.7
Malaysia
KLCI
1,862
0.1
6.6
6.7
Thailand
SET 50
1,188
1.4
5.3
20.2
USA
Dow Jones
23,858
(5.7)
(3.7)
15.2
UK
FTSE
7,000
(3.4)
(7.8)
(5.1)
Japan
Nikkei
21,317
(1.9)
(6.8)
9.2
Germany
DAX
11,971
(4.1)
(8.4)
(1.5)
France
CAC
5,116
(3.8)
(4.6)
(0.1)
Source: Bloomberg, Angel Research p68in4
Market Outlook
March 28, 2018
Research Team Tel: 022 - 39357800
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