Market Outlook

April 25, 2016

Market Cues

Domestic Indices

Chg (%)

(Pts)

(Close)

BSE Sensex

(0.2)

(42)

25,838

Indian markets are expected to open in the red tracking the SGX Nifty and weak

Nifty

(0.2)

(13)

7,899

Asian cues.

Mid Cap

0.1

11,019

US markets ended on a mixed note with the Dow and S&P rising half a percent while

Small Cap

0.0

11,079

the tech heavy Nasdaq declining half a percent. Traders continued to react to the

latest earnings with the broader markets trading lackluster.

Bankex

0.4

19,035

European stocks continued its decline for the second day after a three day rally

earlier in the week ahead of the ECB meet. Auto stocks took a beating after investors

Global Indices

Chg (%)

(Pts)

(Close)

feared that the emission scandal could spread to more car makers.

Dow Jones

0.1

18,004

Indian markets ended the week with marginal losses, reflecting the weak global cues

Nasdaq

(0.8)

(40)

4,906

as the ECB's April policy meeting offered no surprises and a slew of disappointing

FTSE

(1.1)

(71)

6,310

earnings from U.S. blue-chip companies pushed investors into a defensive mode

Nikkei

1.2

209

17,572

after recent gains on the back of a rally in commodity prices.

Hang Seng

(0.7)

(155)

21,467

News & Result Analysis

Shanghai Com

0.2

2,959

 Result Review - Reliance Industries, HDFC Bank

Detailed analysis on Pg2

Advances / Declines

BSE

NSE

Investor’s Ready Reckoner

Advances

1,234

747

Declines

1,333

777

Key Domestic & Global Indicators

Unchanged

158

Stock Watch: Latest investment recommendations on 150+ stocks

Refer Pg6 onwards

Volumes (` Cr)

Top Picks

BSE

2,607

CMP

Target

Upside

Company

Sector

Rating

(`)

(%)

NSE

15,666

Amara Raja

Auto & Auto Ancillary

Buy

927

1,040

12.2

HCL Tech

Buy

845

1,038

22.8

Net Inflows (` Cr)

Net

Mtd

Ytd

LIC Housing

Financials

Buy

461

592

28.4

FII

943

2,225

Bharat Electronics

Capital Goods

Buy

1,169

1,414

20.9

MFs

292

(306)

Navkar Corporation Others

Buy

188

265

41.2

More Top Picks on Pg4

Top Gainers

Price (`)

Chg (%)

Key Upcoming Events

J&K Bank

17.1

Consensus

Date

Region

Event Description

RCom

5.5

Reading

Expectations

Apr 25 US

New Home sales(thousand)

512

525

Bhushan Steel

5.5

Apr 26 US

Consumer Confidence

96.2

95.8

IFCI

5.2

Apr 27 US

FOMC Rate Decision

0.50

Corp Bank

4.5

Apr 27 UK

GDP (YoY)

2.10

2.00

6.(6.(

Top Losers

Price (`)

Chg (%)

Cyient

454

(5.8)

Gateway Distriparks

297

(4.7)

Crompton Greaves

(3.3)

Alok Ind.

(2.9)

JK Lakshmi Cement

349

(2.7)

As on April 22, 2016

www.angelbroking.com

Market Outlook

April 25, 2016

Reliance Industries (CMP - 1039, TP - 1150, Rating - Accumulate)

Reliance Industries Ltd’s reported consolidated net profit of `7,398 crore in

4QFY2016, an increase of 16% yoy as margins in the refining and petrochemical

businesses increased. Revenues for the quarter, however, were down 8.9% to

`64,569 crore led by the decline in oil prices. Benchmark crude oil prices declined

about 41% yoy to average $30.4 per barrel in 4Q.

Gross refining margin (GRM) at $10.8 a barrel was marginally higher than

estimates, down sequentially in line with the decline in the benchmark Singapore

GRMs. Strong gasoline and naphtha cracks, robust demand growth and

favourable crude markets helped boost refining margins. Petchem margins

improved sharply to 14% as against 10.6% in 4QFY2015, due to strong product

deltas and low absolute product prices. Petrochemicals EBIT jumped 35% yoy due

to strength in polymer deltas, favourable naphtha cracking economics, rebound in

MEG and PX deltas and higher volumes in the polyester chain.

Overall, Reliance provided a strong set of numbers. The launch of RJio services

remains a key trigger for the stock and we retain our Accumulate rating on the

stock with a target price of `1,150.

HDFC Bank (CMP - 1,092, TP - 1,262, Rating - Buy)

HDFC bank continued its trend of delivering consistent earnings performance

quarter after quarter and registered a net interest income growth of 24.0% yoy for

4QFY2016 which was in line with our expectations. The bank’s loan book grew by

27.1% yoy. and non-interest income for the bank grew at a pace of 11.8% yoy.

While operating expenses grew by 18.9% yoy, pre provision profits were up by

21.5% yoy. On the asset quality front, the bank continued its steady performance

in spite of the challenging macro environment with the Gross and net NPA levels

declining for the bank to 0.94% and 0.28% from 0.97% and 0.29% qoq

respectively. Overall, the bank reported earnings growth of 20.2% yoy. In light of

current macro environment, the current earnings trajectory of 20%+ yoy is strong

which in our view, justifies a premium valuation multiple. We maintain our Buy

rating on the stock with a target of `1,262.

Economic and Political News

 Govt to invite bids for developing 8 waterways in a month

 DGCA considers easing of import norms for aircraft

 Government considering proposal to liquidate some loss-making PSUs

Corporate News

 Cairn India cuts capex by a third to $100mn for FY2017

 ONGC to drill 17 exploratory wells for shale gas

 Reliance buys Iranian oil after 6-year hiatus

www.angelbroking.com

Market Outlook

April 25, 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

15,829

927

1,040

12.2

products leading to market share gains in both the automotive

OEM and replacement segments.

Uptick in defense capex by government when coupled with

Bharat Electronics

28,066

1,169

1,414

20.9

BELs strong market positioning, indicate that good times are

ahead for BEL.

The stock is trading at attractive valuations and is factoring all

HCL Tech

1,19,170

845

1,038

22.8

the bad news.

Strong visibility for a robust 20% earnings trajectory, coupled

HDFC Bank

2,76,154

1,092

1,262

15.6

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

2,79,725

1,214

1,347

11.0

to be a US$20bn in FY2020.

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

23,262

461

592

28.4

post a healthy loan book which is likely to reflect in a strong

earnings growth.

Huge bid pipeline of re-development works at Delhi and other

NBCC

12,043

1,004

1,089

8.5

State Governments and opportunity from Smart City, positions

NBCC to report strong growth, going forward.

Source: Company, Angel Research

Mid Cap

Market Cap

CMP

Target

Upside

Company

Rationale

(` Cr)

(`)

(%)

Favorable outlook for the AC industry to augur well for

Cooling products business which is out pacing the market

Blue Star

3,854

428

458

6.9

growth. EMPPAC division's profitability to improve once

operating environment turns around.

With a focus on the low and medium income (LMI) consumer

Dewan Housing

6,001

206

270

31.3

segment, the company has increased its presence in tier-II &

III cities where the growth opportunity is immense.

Commencement of new projects, downtrend in the interest

IL&FS Transport

2,633

16.2

rate cycle, to lead to stock re-rating

Economic recovery to have favourable impact on advertising

& circulation revenue growth. Further, the acquisition of a

Jagran Prakashan

5,544

170

189

11.4

radio business (Radio City) would also boost the company's

revenue growth.

Speedier execution and speedier sales, strong revenue visibilty

Mahindra Lifespace

1,819

443

554

25.0

in short-to-long run, attractive valuations

Massive capacity expansion along with rail advantage at ICD

Navkar Corporation

2,676

188

265

41.2

as well CFS augurs well for the company

Earnings boost on back of stable material prices and

Radico Khaitan

1,228

156

69.0

favourable pricing environment. Valuation discount to peers

provides additional comfort

Strong brands and distribution network would boost growth

Siyaram Silk Mills

1,023

1,092

1,354

24.0

going ahead. Stock currently trades at an inexpensive

valuation.

Source: Company, Angel Research

www.angelbroking.com

Market Outlook

April 25, 2016

Macro watch

Exhibit 1: Quarterly GDP trends

Exhibit 2: IIP trends

(%)

9.0

12.0

8.3

9.9

7.8

7.7

10.0

8.0

7.5

7.6

7.3

8.0

6.3

6.7

6.6

6.7

7.0

6.4

6.0

4.2

4.3

3.7

5.8

3.0

4.0

2.5

6.0

2.0

5.0

4.5

4.0

(2.0)

(1.2)

(1.5)

(4.0)

3.0

(3.4)

(6.0)

Source: CSO, Angel Research

Source: MOSPI, Angel Research

Exhibit 3: Monthly CPI inflation trends

Exhibit 4: Manufacturing and services PMI

Mfg. PMI

Services PMI

(%)

56.0

5.6

5.7

6.0

5.4

5.3

5.0

54.0

4.9

4.8

5.0

4.4

3.7

52.0

4.0

50.0

3.0

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)

7.00

(10.0)

6.00

(15.0)

(20.0)

5.00

(25.0)

4.00

(30.0)

3.00

(35.0)

Source: Bloomberg, Angel Research

Source: RBI, Angel Research

www.angelbroking.com

Market Outlook

April 25, 2016

Exhibit 4: Relative performance of indices across globe

Returns (%)

Country

Name of index

Closing price

1YR

Brazil

Bovespa

52,908

3.4

39.5

(2.0)

Russia

Micex

1,967

4.6

17.3

India

Nifty

7,899

5.3

4.8

(9.3)

China

Shanghai Composite

2,959

(2.0)

1.2

(29.7)

South Africa

Top 40

46,505

(2.7)

11.8

(3.1)

Mexico

Mexbol

45,613

0.3

11.8

0.4

Indonesia

LQ45

853

0.9

10.9

(10.1)

Malaysia

KLCI

1,718

(0.4)

5.4

(7.0)

Thailand

SET 50

898

1.3

16.4

(12.3)

USA

Dow Jones

18,004

2.4

13.4

(0.4)

FTSE

6,310

2.0

9.3

(11.2)

Japan

Nikkei

17,572

3.4

9.7

(11.7)

Germany

DAX

10,373

4.3

8.3

(13.8)

France

CAC

4,570

3.2

8.6

(9.4)

Source: Bloomberg, Angel Research

www.angelbroking.com

Market Outlook

April 25, 2016

Research Team Tel: 022 - 39357800

E-mail: [email protected]

Website: www.angelbroking.com

DISCLAIMER

Angel Broking Private Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited,

Bombay Stock Exchange Limited and Metropolitan Stock Exchange of India Limited. It is also registered as a Depository Participant with

CDSL and Portfolio Manager with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Private Limited is

a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number

INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing

/dealing in securities Market. Angel or its associates including its relatives/analyst do not hold any financial interest/beneficial

ownership of more than 1% in the company covered by Analyst. Angel or its associates/analyst has not received any compensation /

managed or co-managed public offering of securities of the company covered by Analyst during the past twelve months. Angel/analyst

has not served as an officer, director or employee of company covered by Analyst and has not been engaged in market making activity

of the company covered by Analyst.

This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment

decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should

make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the

companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine

the merits and risks of such an investment.

Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and

trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's

fundamentals.

The information in this document has been printed on the basis of publicly available information, internal data and other reliable

sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this

document is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way

responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.

Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannot

testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.

While Angel Broking Pvt. Limited endeavors to update on a reasonable basis the information discussed in this material, there may be

regulatory, compliance, or other reasons that prevent us from doing so.

This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,

redistributed or passed on, directly or indirectly.

Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from

or in connection with the use of this information.

Note: Please refer to the important ‘Stock Holding Disclosure' report on the Angel website (Research Section). Also, please refer to the

latest update on respective stocks for the disclosure status in respect of those stocks. Angel Broking Pvt. Limited and its affiliates may

have investment positions in the stocks recommended in this report.