Market Outlook
April 06, 2018
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are likely to open flat tracking global indices and SGX Nifty.
BSE Sensex
1.7
578
33,597
U.S. stocks saw some further upside during trading. The major averages fluctuated
Nifty
1.9
197
10,325
in afternoon trading but managed to end the day firmly in positive territory. The Dow
Mid Cap
1.9
305
16,490
Jones jumped up by 1.0% to close at 24,505. The NASDAQ ended up by 0.5% to
Small Cap
1.9
325
17,775
close at 7,077.
Bankex
2.8
749
27,694
U.K. stocks rallied on Thursday, mirroring firm cues from Wall Street and Asia, as
trade-war worries abated somewhat and investors turned their focus to the U.S. jobs
Global Indices
Chg (%)
(Pts)
(Close)
report due Friday for clues to job growth and future moves by the Federal Reserve.
The FTSE 100 was up by 2.4% to end at 7,200.
Dow Jones
1.0
241
24,505
Nasdaq
0.5
34
7,077
On domestic front, Indian shares rose sharply as trade-war worries eased and the
FTSE
2.4
165
7,200
Reserve Bank of India kept its key interest rates unchanged for the fourth straight
meeting, as widely expected, saying it is committed to achieving the medium-term
Nikkei
0.1
28
21,673
target for headline inflation of 4%. The BSE Sensex ended up by 1.7% at 33,597.
Hang Seng
1.2
354
29,872
Shanghai Com
(0.2)
(6)
3,131
News Analysis
GDP growth projected to strengthen to 7.4% in FY19; 7.3-7.6% in H2
Advances / Declines
BSE
NSE
Detailed analysis on Pg2
Advances
2,087
1,528
Investor’s Ready Reckoner
Declines
641
290
Unchanged
126
49
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Volumes (` Cr)
Refer Pg5 onwards
BSE
3,336
Top Picks
NSE
30,418
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Blue Star
Capital Goods Accumulate
797
867
8.8
Net Inflows (` Cr)
Net
Mtd
Ytd
Dewan Housing Finance
Financials
Buy
540
720
33.3
FII
292
(183)
13,424
Century Plyboards
Forest Product
Buy
349
400
14.5
*MFs
42
749
35,209
Navkar Corporation
Others
Buy
173
265
52.9
KEI Industries
Capital Goods Accumulate
415
470
13.2
More Top Picks on Pg4
Top Gainers
Price (`)
Chg (%)
Key Upcoming Events
IBVENTUREPP
110
20.0
Previous
Consensus
VIPIND
372
17.2
Date
Region
Event Description
ReadingExpectations
ADANIENT
148
12.0
Apr 06, 2018 US
Producer Price Index (mom)
(0.30)
Apr 06, 2018 US
Change in Nonfarm payrolls
313.00
185.00
FLFL
430
9.5
Apr 10, 2018 US
Unemployment rate
4.10
4.00
CANBK
284
8.3
Apr 11, 2018 US
Consumer price index (mom)
0.20
-
Apr 11, 2018 UK
Industrial Production (YoY)
1.60
3.10
Top Losers
Price (`)
Chg (%)
More Events on Pg7
STAR
653
-5.6
VAKRANGEE
180
-5.0
KWALITY
57
-3.3
BALRAMCHIN
76
-3.2
FRETAIL
532
-2.6
As on April 05, 2018
Market Outlook
April 06, 2018
News Analysis
GDP growth projected to strengthen to 7.4% in FY19; 7.3-7.6% in H2
The Reserve Bank expects India's economic growth rate to strengthen to 7.4 per
cent in the current fiscal, from 6.6 per cent in 2017-18, on account of revival in
investment activity. The growth will accelerate from 7.3-7.4 per cent in first half of
2018-19 to 7.3-7.6 per cent in the second of half of the current fiscal, said the first
bi-monthly monetary policy statement for 2018-19. "On the whole, GDP growth is
projected to strengthen from 6.6 per cent in 2017-18 to 7.4 per cent in 2018-19
in the range of 7.3-7.4 per cent in H1 and 7.3-7.6 per cent in H2 with risks evenly
balanced."
“There are now clearer signs of revival in investment activity as reflected in the
sustained expansion in capital goods production and still rising imports, albeit at a
slower pace than in January". Secondly, global demand has been improving,
which should encourage exports and boost fresh investment.
Economic and Political News
Domestic air travel demand up 23% in Feb, twice more than global average
RBI says to keep liquidity in 'moderate surplus mode' in April-September
GDP growth projected to strengthen to 7.4% in FY19; 7.3-7.6% in H2
Corporate News
SFIO receives complaint against L&T of alleged financial irregularities
Delhi HC asks Fortis to respond to Daiichi's plea on hospital assets
Special Rs 26-bn package to boost export of leather products, footwear
CBI books Vadodara firm for cheating banks of Rs 26bn; raids premises
Market Outlook
April 06, 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
22,203
1,857
2,441
31.4
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
7,653
797
867
8.8
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
16,947
540
720
33.3
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
1,78,629
278
416
49.7
of NPA would reduce provision cost, which would
help to report better ROE.
High order book execution in EPC segment, rising
KEI Industries
3,254
415
470
13.2
B2C sales and higher exports to boost the revenues
and profitability
Expected to benefit from the lower capex
Music Broadcast Limited
2,225
390
475
21.8
requirement and 15 year long radio broadcast
licensing.
Massive capacity expansion along with rail
Navkar Corporation
2,609
173
265
52.9
advantage at ICD as well CFS augur well for the
company
Strong brands and distribution network would boost
Siyaram Silk Mills
3,005
641
851
32.7
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
3,001
503
603
19.9
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
2,75,737
9,128
10,619
16.3
Gujarat plant will also enable higher operating
leverage which will be margin accretive.
We expect loan book to grow at 24.3% over next
GIC Housing
2,094
389
655
68.4
two 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
7,759
349
400
14.5
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
3,059
96
128
33.8
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
1,325
595
650
9.2
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
2,856
395
510
29.1
operating margin due price hike in container glass
segment, turnaround in consumer business.
We expect financialisation of savings and increasing
Aditya Birla Capital
3,425
156
230
47.4
penetration in Insurance & Mutual fund would
ensure steady growth.
Source: Company, Angel Research
Market Outlook
April 06, 2018
Fundamental Call
Market Cap
CMP
Target
Upside
Company
Rationale
(` Cr)
(`)
(`)
(%)
CCL is likely to maintain the strong growth trajectory
CCL Products
3,858
290
360
24.1
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
2,418
1,621
2,178
34.4
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
5,789
115
160
39.1
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
1,683
2,123
2,500
17.8
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
3,936
321
395
23.1
~`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
April 06, 2018
Key Upcoming Events
Global economic events release calendar
Bloomberg Data
Date
Time Country
Event Description
Unit
Period
Last Reported
Estimated
Apr 06, 2018
US
Producer Price Index (mom)
% Change
Mar
(0.30)
6:00 PMUS
Change in Nonfarm payrolls
Thousands
Mar
313.00
185.00
Apr 10, 2018
6:00 PMUS
Unnemployment rate
%
Mar
4.10
4.00
Apr 11, 2018
6:00 PMUS
Consumer price index (mom)
% Change
Mar
0.20
-
2:00 PMUK
Industrial Production (YoY)
% Change
Feb
1.60
3.10
7:00 AMChina
Consumer Price Index (YoY)
% Change
Mar
2.90
2.60
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
11.80
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
6:00 PMUS
Housing Starts
Thousands
Mar
1,236.00
1,260.00
6:45 PMUS
Industrial Production
%
Mar
0.95
0.70
6:00 PMUS
Building permits
Thousands
Mar
1,321.00
1,320.00
7:30 AMChina
Industrial Production (YoY)
% Change
Mar
6.20
6.50
7:30 AMChina
Real GDP (YoY)
% Change
1Q
6.80
6.80
Apr 18, 2018
2:00 PMUK
CPI (YoY)
% Change
Mar
2.70
2:30 PMEuro Zone
Euro-Zone CPI (YoY)
%
Mar F
1.40
Apr 20, 2018
7:30 PMEuro Zone
Euro-Zone Consumer Confidence
Value
Apr A
0.10
Apr 23, 2018
1:00 PMGermany
PMI Manufacturing
Value
Apr P
58.20
7:30 PMUS
Existing home sales
Million
Mar
5.54
Apr 24, 2018
7:30 PMUS
New home sales
Thousands
Mar
618.00
5:15 PMEuro Zone
ECB announces interest rates
%
Apr 26
-
Source: Bloomberg, Angel Research
Market Outlook
April 06, 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
April 06, 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
April 06, 2018
Exhibit 4: Relative performance of indices across globe
Returns (%)
Country
Name of index
Closing price
1M
3M
1YR
Brazil
Bovespa
85,210
(0.9)
11.5
31.8
Russia
Micex
4,460
1.4
7.1
11.4
India
Nifty
10,325
(1.3)
(2.0)
12.6
China
Shanghai Composite
3,131
(3.9)
(4.4)
(4.2)
South Africa
Top 40
49,097
(3.8)
(7.1)
8.7
Mexico
Mexbol
47,952
0.7
(2.8)
(1.8)
Indonesia
LQ45
1,008
(6.6)
(5.6)
9.4
Malaysia
KLCI
1,836
(0.7)
3.0
4.7
Thailand
SET 50
1,147
(3.0)
(1.7)
14.7
USA
Dow Jones
24,505
(1.5)
(1.3)
18.7
UK
FTSE
7,200
1.8
(6.1)
(1.8)
Japan
Nikkei
21,645
2.9
(5.0)
12.6
Germany
DAX
12,305
3.3
(5.2)
0.2
France
CAC
5,277
2.7
(1.0)
2.8
Source: Bloomberg, Angel Research p68in4
