Market Outlook
February 26, 2016
Market Cues
Domestic Indices
Chg (%)
(Pts)
(Close)
Indian markets are expected to open positively tracking the SGX Nifty and its Asian
BSE Sensex
(0.5)
(113)
22,976
peers.
Nifty
(0.7)
(48)
6,971
U.S. markets closed higher for the second consecutive session as oil prices
Mid Cap
(1.1)
(110)
9,544
rebounded from early losses.
Small Cap
(0.9)
(88)
9,598
Bankex
(1.7)
(261)
15,415
European markets rose by about 2% as solid results from Seadrill and British Bank
Lloyds lifted the overall sentiments.
Global Indices
Chg (%)
(Pts)
(Close)
Indian markets declined for the third consecutive session led by decline in banking
stocks as investors maintained cautious stance ahead of the upcoming Union
Dow Jones
1.3
212
16,697
Budget.
Nasdaq
0.9
40
4,582
FTSE
2.5
146
6,013
News & Result Analysis
Nikkei
1.4
225
16,140
LCV demand revival gains momentum
Detailed analysis on Pg2
Hang Seng
(1.6)
(304)
18,889
Shanghai Com
(6.4)
(188)
2,741
Investor’s Ready Reckoner
Key Domestic & Global Indicators
Advances / Declines
BSE
NSE
Stock Watch: Latest investment recommendations on 150+ stocks
Advances
879
523
Refer Pg4 onwards
Declines
1,599
994
Top Picks
Unchanged
158
76
CMP
Target
Upside
Company
Sector
Rating
(`)
(`)
(%)
Volumes (` Cr)
Amara Raja Batteries Auto & Auto Ancillary
Buy
864
1,040
20.4
HCL Tech
IT
Buy
809
1,038
28.3
BSE
2,319
LIC Housing Finance Financials
Buy
392
592
51.0
NSE
18,481
Bharat Electronics
Capital Goods
Buy
1,067
1,414
32.5
Navkar Corporation Others
Buy
158
265
67.7
Net Inflows (` Cr)
Net
Mtd
Ytd
More Top Picks on Pg3
FII
811
(4,113)
(18,282)
MFs
210
3,300
78,895
Key Upcoming Events
Previous
Consensus
Date
Region
Event Description
Reading
Expectations
Top Gainers
Price (`)
Chg (%)
Feb 26 US
GDP QoQ (Annualised) (%)
0.7
0.4
Eidparry
170
5.0
Feb 26 Euro Zone
Consumer confidence
(8.8)
Pfc
157
4.1
Mar 1 Euro Zone
Germany PMI Manufacturing
50.2
Mar 1 China
PMI Manufacturing
49.4
49.4
Gdl
222
3.9
6.(
Concor
1,167
3.0
Ongc
216
2.9
Top Losers
Price (`)
Chg (%)
Crompgreav
125
(7.4)
Castrolind
377
(7.4)
Jindalstel
54
(6.9)
Kscl
341
(6.9)
Powergrid
132
(5.7)
As on February 25, 2016
Market Outlook
February 26, 2016
LCV demand revival gains momentum
Light commercial vehicles (LCV) are finally coming out of the woods as January
marked growth for the fourth consecutive month after consistently reporting
declines for three years in a row. Buoyed by new launches, replacement demand,
high discounts and steady fuel prices LCV buyers are steadily coming back to
showrooms. As per the SIAM data, domestic sales of LCVs, which are defined as
vehicles having weight not more than 7.5 tonne, grew at an average of 5% in the
last four months as against a fall of 7.4% during the previous six months of April-
September 2015.
Fresh on the back of new launches Mahindra & Mahindra, the LCV market leader,
was the biggest gainer of the demand revival. In January 2016, the Mumbai-
based company reported a jump of 10% in sales for load-carrying mini trucks. This
was followed by a 9% increase in sales by Tata Motors, the country's largest
commercial vehicle maker, during the same month. While M&M launched Supro
Van and Supro Maxitruck in October Tata Motors launched the Ace Mega a 2.1
tonne mini truck in August.
LCVs as a segment has been witnessing a slow but steady buildup on volumes
market especially in the northern part of India. This growth has come after many
months and is a result of the economic recovery, improving viability owing to
decline in diesel prices and the replacement demand. Further, the entry of truck
aggregators most of whom are start-ups like Grofers, The Porter, Turant Delivery
and also a Mahindra-backed venture SmartShift will likely power fresh demand for
light trucks as existing assets get utilised more effectively.
We believe the LCV demand is likely to gather momentum and expect a double
digit growth for the segment in FY2017. Demand pick up in LCV is positive for
M&M and Tata Motors.
Economic and Political News
Centre offers Rs 1.9k crore for solar energy till January-end in FY16
Govt mulling separate set up for defence acquisition: Manohar Parrikar
RBI sets rupee reference rate at 68.5990 against US dollar
Corporate News
Coal India to increase coal production to 1,000 mn tonnes in 4 years
IDBI Bank prices share offering to LIC at Rs 53.44 a share
Mahindra Finance may launch mutual fund biz by April
Market Outlook
February 26, 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
14,758
864
1,040
20.4
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
24,475
86
111
29.1
Focus on exports and LCV's provides additional growth
avenue.
Uptick in defense capex by government when coupled with
Bharat Electronics
25,606
1,067
1,414
32.5
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
1,14,115
809
1,038
28.3
the bad news.
Strong visibility for a robust 20% earnings trajectory, coupled
HDFC Bank
2,39,145
947
1,262
33.3
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
2,55,248
1,111
1,347
21.2
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
19,770
392
592
51.0
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
10,373
864
1,089
26.0
State Governments and opportunity from Smart City, positions
NBCC to report strong growth, going forward.
New launches to enable outpace industry growth; margins
TVS Motors
12,713
268
330
23.3
expansion to boost earnings.
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
2,868
319
439
37.7
growth. EMPPAC division's profitability to improve once
operating environment turns around.
Economic recovery to have favourable impact on advertising &
circulation revenue growth. Further, the acquisition of a radio
Jagran Prakashan
4,838
148
189
27.7
business (Radio City) would also boost the company's revenue
growth.
Massive capacity expansion along with rail advantage at ICD
Navkar Corporation
2,253
158
265
67.7
as well CFS augurs well for the company
Earnings boost on back of stable material prices and
Radico Khaitan
1,288
97
156
61.2
favourable pricing environment. Valuation discount to peers
provides additional comfort
Strong brands and distribution network would boost growth
Siyaram Silk Mills
896
956
1,354
41.6
going ahead. Stock currently trades at an inexpensive
valuation.
Source: Company, Angel Research
Market Outlook
February 26, 2016
Research Team Tel: 022 - 39357800
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