Market Outlook
February 4, 2016
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are expected to open in green tracking the SGX Nifty and its asian
BSE Sensex
(1.3)
(316)
24,223
peers.
Nifty
(1.3)
(94)
7,362
US markets ended in green since the volatility on Wall Street came as traders
Mid Cap
(1.3)
(134)
10,161
digested the release of a mixed batch of U.S. economic data as well as a sharp
Small Cap
(2.3)
(243)
10,522
jump by the price of crude oil.
Bankex
(1.6)
(277)
16,788
The European markets ended Wednesday's session in negative, extending its losses
from the previous two days. The weak performance of the Asian markets had a
Global Indices
Chg (%)
(Pts)
(Close)
negative impact on sentiment. Continued volatility in crude oil prices and some
Dow Jones
1.1
183
16,337
disappointing corporate earnings news also weighed on the market sentiments.
Nasdaq
(0.3)
(13)
4,504
Indian shares joined another global sell-off on Wednesday as investors are worried
FTSE
(1.4)
(85)
5,837
over slowing global growth. Global sentiment remained bearish despite further signs
of improvement in China's services sector and oil prices nudging higher in European
Nikkei
(3.2)
(559)
17,191
deals after fresh comments from Russia on possible coordination of efforts to
Hang Seng
(2.3)
(455)
18,992
stabilize oil markets.
Shanghai Com
(0.4)
(10)
2,739
News & Result Analysis
Advances / Declines
BSE
NSE
Bank credit grows 11.4% to over `70.80 lakh cr
Govt to infuse about `5,000cr in PSU banks this quarter
Advances
545
211
Result Review: Mangalam Cements
Declines
2,140
1,359
Detailed analysis on Pg2
Unchanged
88
32
Investor’s Ready Reckoner
Volumes (` Cr)
Key Domestic & Global Indicators
BSE
2,709
Stock Watch: Latest investment recommendations on 150+ stocks
Refer P5 onwards
NSE
16,256
Top Picks
Net Inflows (` Cr)
Net
Mtd
Ytd
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
FII
405
405
(10,400)
Amara Raja Batteries Auto & Auto Ancillary
Buy
863
1,040
20.6
MFs
586
6,703
75,953
HCL Tech
IT
Buy
853
1,038
21.7
Larsen & Toubro
Construction
Buy
1,107
1,310
18.3
Top Gainers
Price (`)
Chg (%)
LIC Housing Finance Financials
Buy
443
592
33.5
Bajfinance
6,381
9.5
Navkar Corporation Others
Buy
197
265
34.4
Religare
301
3.8
More Top Picks on Pg4
Bajajfinsv
1,881
3.4
Key Upcoming Events
Apollohosp
1,481
3.2
Previous
Consensus
Date
Region
Event Description
Reading
Expectations
Unitdspr
2,529
3.1
Feb 04
UK
BOE Announces rates
0.50
0.50
Feb 05
US
Change in Nonfarm payrolls (thousands)
292
190
Top Losers
Price (`)
Chg (%)
Feb 10
India
Exports YoY% (% Change)
(14.70)
--
Crompgreav
131
(21.7)
Feb 10
India
Imports YoY% (% Change)
(3.90)
--
6.(
Dishtv
77
(13.1)
Suzlon
15
(12.4)
Jindalstel
55
(7.8)
Unitech
5
(7.7)
As on February 03, 2016
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Market Outlook
February 4, 2016
Bank credit grows 11.4% to over `70.80 lakh cr
Credit in banking system has seen an improvement and has continued to remain
in the double in the last few fortnights in a row.
Reserve Bank of India data show credit in the system grew by
11.4% to
`70,80,827 crore at the end of 22nd January as compared to `63,63,923 crore a
year ago.
Though bankers are still not certain if it signals a turnaround in the economy as
credit demand from corporate continues to remain subdued. Till now, retail has
been the main driver for credit growth. In the same period, deposits also inched up
by 11%.
Govt to infuse about `5,000cr in PSU banks this quarter
Government will infuse about `5,000cr capital in the public sector banks in the
current fiscal to strengthen balance sheet.
Funds would be infused after Parliament approves third Supplementary Demand
for Grants in the upcoming Budget session.
Last year, the government announced a revamp plan 'Indradhanush' to infuse
`70,000cr in state-owned banks over four years, while they will have to raise a
further `1.1 lakh cr from the markets to meet their capital requirements in line with
global risk norms Basel III.
As per the blueprint, PSU banks will get `25,000cr this fiscal and also in the next
fiscal. Besides, `10,000 cr each would be infused in 2017-18 and 2018-19.
Of the `25,000 crore earmarked for 2015-16, the government has pumped in
about `20,088 crore in 13 public sector banks so far.
Result Review
Mangalam Cement (CMP: `185/ TP: - /Upside: -)
Mangalam Cement reported a better than expected numbers for the quarters.
Though broader numbers remained weak with sales remaining flat yoy at `212.4
and growing 6.2% qoq. EBITDA stood at `10.2 cr compared to `9.5 cr yoy and a
meagre `0.7 cr in 2QFY16. However, on the bottom-line front the company
continued to disappoint with Net Loss at `0.2 cr vs Loss of `2.4 cr yoy. On qoq
basis the results can be taken in a positive note as in the company had reported a
loss of `15.5 cr. We have a NEUTRAL rating on the stock.
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Market Outlook
February 4, 2016
Economic and Political News
Indian household inflation expectation remains above 10%: RBI
Govt invites Congress for constructive debate ahead of Budget Session
Maharashtra govt bans sale of liquor in plastic bottles
Corporate News
Colgate-Palmolive opens its first toothbrush production unit of India in Sri City
Auto Expo: Ashok Leyland unveils 4 new vehicles
Blue Star to power its entire AC range with IoT
Quarterly Bloomberg Brokers Consensus Estimate
Bajaj Auto Ltd - February 4, 2016
Particulars (` cr)
3QFY16E
3QFY15
y-o-y (%)
2QFY16
q-o-q (%)
Net sales
5,543
5,520
0.4
5,980
(7.3)
EBITDA
1,118
1,131
(1.1)
1,317
(15.1)
EBITDA margin (%)
20.2
20.5
22.0
Net profit
839
861
(2.6)
933
(10.1)
Tata Steel Ltd - February 4, 2016
Particulars (` cr)
3QFY16E
3QFY15
y-o-y (%)
2QFY16
q-o-q (%)
Net sales
28,338
33,323
(15.0)
29,068
(2.5)
EBITDA
1,481
3,077
(51.9)
1,830
(19.1)
EBITDA margin (%)
5.2
9.2
6.3
Net profit
(838)
157
(633.8)
1,528
(154.8)
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Market Outlook
February 4, 2016
Top Picks ★★★★★
Large Cap
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
To outpace battery industry growth due to better technological
Amara Raja Batteries
14,733
863
1,040
20.6
products leading to market share gains in both the automotive
OEM and replacement segments.
Earnings to grow strongly given the MHCV cyclical upturn.
Ashok Leyland
24,731
87
111
27.7
Focus on exports and LCV's provides additional growth
avenue.
The stock is trading at attractive valuations and is factoring all
HCL Tech
1,20,180
853
1,038
21.7
the bad news.
Strong visibility for a robust 20% earnings trajectory, coupled
HDFC Bank
2,63,674
1,044
1,262
20.9
with high quality of earnings on account of high quality retail
business and strategic focus on highly rated corporates.
Back on the growth trend, expect a long term growth of 14%
Infosys
2,66,021
1,158
1,347
16.3
to be a US$20bn in FY2020.
Well positioned to benefit from such expected gradual
recovery in the overall domestic capex cycle, given its presence
Larsen & Toubro
1,03,127
1,107
1,310
18.3
across various infrastructure segments, its execution
capabilities, and its strong balance sheet.
LICHF continues to grow its retail loan book at a healthy pace
with improvement in asset quality. We expect the company to
LIC Housing Finance
22,372
443
592
33.5
post a healthy loan book which is likely to reflect in a strong
earnings growth.
Source: Company, Angel Research
Mid Cap
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
Favourable outlook for the AC industry to augur well for
Cooling products business which is out pacing the market
Blue Star
3,156
351
439
25.1
growth. EMPPAC division's profitability to improve once
operating environment turns around.
Change in business focus towards high-margin chronic &
Garware Wall Ropes
749
342
473
38.2
lifestyle segments and increasing penetration in Europe and
US
Economic recovery to have favourable impact on advertising &
circulation revenue growth. Further, the acquisition of a radio
Jagran Prakashan
5,043
154
189
22.5
business (Radio City) would also boost the company's revenue
growth.
Massive capacity expansion along with rail advantage at ICD
Navkar Corporation
2,812
197
265
34.4
as well CFS augurs well for the company
Earnings boost on back of stable material prices and
Radico Khaitan
1,495
112
156
38.9
favourable pricing environment. Valuation discount to peers
provides additional comfort
Strong brands and distribution network would boost growth
Siyaram Silk Mills
982
1,048
1,354
29.2
going ahead. Stock currently trades at an inexpensive
valuation.
Structural shift in the Lighting industry towards LED lighting will
Surya Roshni
601
137
201
46.7
drive growth.
Source: Company, Angel Research
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Market Outlook
February 4, 2016
Macro watch
Exhibit 1: Quarterly GDP trends
Exhibit 2: IIP trends
(%)
(%)
9.0
8.4
12.0
9.9
7.5
7.5
10.0
8.0
7.4
7.0
7.0
6.7
6.7
6.6
8.0
6.3
7.0
6.4
6.0
4.8
4.3
4.2
3.8
6.0
2.8
3.0
4.0
2.5
2.5
5.0
4.7
5.0
2.0
(3.2)
-
4.0
(2.0)
3.0
(4.0)
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
5.4
5.4
5.6
6.0
5.2
5.4
5.3
54.0
4.9
5.0
5.0
5.0
4.4
3.7
3.7
52.0
4.0
3.0
50.0
2.0
48.0
1.0
46.0
-
44.0
Source: MOSPI, Angel Research
Source: Market, Angel Research; Note: Level above 50 indicates expansion
Exhibit 5: Exports and imports growth trends
Exhibit 6: Key policy rates
(%)
Exports yoy growth
Imports yoy growth
(%)
Repo rate
Reverse Repo rate
CRR
0.0
8.00
(5.0)
7.50
7.00
(10.0)
6.50
(15.0)
6.00
5.50
(20.0)
5.00
(25.0)
4.50
4.00
(30.0)
3.50
(35.0)
3.00
Source: Bloomberg, Angel Research
Source: RBI, Angel Research
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Market Outlook
February 4, 2016
Global watch
Exhibit 1: Latest quarterly GDP Growth (%, yoy) across select developing and developed countries
(%)
8.0
6.8
6.0
5.3
4.7
4.7
4.0
2.9
1.9
1.8
1.8
1.3
1.6
2.0
1.0
-
(2.0)
(4.0)
(4.1)
(4.5)
(6.0)
Source: Bloomberg, Angel Research
Exhibit 2: 2015 GDP Growth projection by IMF (%, yoy) across select developing and developed countries
(%)
8.0
7.3
6.8
6.0
4.7
4.7
4.0
2.5
2.5
2.6
1.4
1.5
2.0
1.2
0.6
-
(2.0)
(3.0)
(4.0)
(3.8)
(6.0)
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
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Market Outlook
February 4, 2016
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
39,589
(16.1)
(19.4)
(21.6)
Russia
Micex
1,746
(6.4)
(5.9)
3.4
India
Nifty
7,362
(5.8)
(11.3)
(13.9)
China
Shanghai Composite
2,739
(19.4)
(12.9)
(9.3)
South Africa
Top 40
43,447
(7.4)
(12.8)
(3.4)
Mexico
Mexbol
43,258
(6.1)
(7.9)
(2.2)
Indonesia
LQ45
797
1.7
(0.1)
(14.4)
Malaysia
KLCI
1,633
(3.5)
(3.2)
(9.4)
Thailand
SET 50
817
(7.3)
(16.0)
(23.8)
USA
Dow Jones
16,337
(11.2)
(8.4)
(10.2)
UK
FTSE
5,837
(4.2)
(8.2)
(15.0)
Japan
Nikkei
17,191
(9.7)
(9.1)
(1.6)
Germany
DAX
9,435
(10.1)
(7.1)
(10.0)
France
CAC
4,227
(11.8)
(11.7)
(10.8)
Source: Bloomberg, Angel Research
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Market Outlook
February 4, 2016
Research Team Tel: 022 - 39357800
E-mail: [email protected]
Website: www.angelbroking.com
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