www.angelbroking.com Market Outlook October 05, 2015 Market Cues Indian markets are expected to open in positive tracking the SGX Nifty and the Asian cues. The US markets after falling sharply at the open, stocks staged a remarkable turnaround over the course of the trading day on Friday. The major averages bounced well off their lows for the session and into positive territory, with the Dow showing a nearly 460-point swing on the day. The European markets bounced back into the green in late trade on Friday, as U.S. equity markets began to reverse and recover from the lows. The European markets were trading in green early Friday. However, the markets began to pare those gains and dropped into the red after the U.S. jobs report for September came in weaker than expected. The disappointing data has many investors thinking that an interest rate hike by the Federal Reserve later this month is unlikely. The Indian markets posted modest gains on Thursday, with a firm rupee and positive global cues supporting sentiment. Stocks finished off their day's highs as traders locked in some profits at higher levels ahead of the long weekend. The stock markets were closed on Friday on account of Gandhi Jayanti. News Analysis El Nino Takes a Toll on Auto, FMCG Stocks Government exploring options to dilute stake in IDBI Bank Detailed analysis on Pg2 Investor’s Ready Reckoner Key Domestic & Global Indicators Stock Watch: Latest investment recommendations on 150+ stocks Refer Pg4 onwards Top Picks Company Sector Rating CMP (`) Target (`) Upside (%) Axis Bank Financials Buy 496 701 41.5 ICICI Bank Financials Buy 267 370 38.4 Power Grid Power Buy 130 170 30.3 TCS IT Buy 2,640 3,168 20.0 Aurobindo Pharma Pharmaceuticals Accumulate 770 872 13.2 More Top Picks on Pg3 Key Upcoming Events Date Region Event Description Previous Reading Consensus Expectations Oct 07 UK Industrial Production YoY 0.8 --- Oct 08 UK BOE Announces rates 0.50 0.50 Oct 09 India Imports YoY% (9.95) -- India Exports YoY% (20.66) -- Oct 12 India Industrial Production YoY (4.20) -- Oct 13 UK CPI (YoY) -- -- Domestic Indices Chg (%) (Pts) (Close) BSE Sensex 0.3 66 26,221 Nifty 0.0 2 7,951 Mid Cap 0.2 19 10,819 Small Cap 0.2 22 11,043 Bankex (0.4) (73) 19,608 Global Indices Chg (%) (Pts) (Close) Dow Jones 1.2 200 16,472 Nasdaq 1.7 81 4,708 FTSE 0.9 58 6,130 Nikkei 0.0 3 17,725 Hang Seng 3.2 660 21,506 Shanghai Com 0.5 15 3,053 Advances / Declines Bse Nse Advances 1,375 756 Declines 1,325 739 Unchanged 118 69 Volumes (` Cr) BSE 2,937 NSE 17,400 Net Inflows (` Cr) Net Mtd Ytd FII 222 (5,696) 1,18,065 MFs 1,032 7,708 78,356 Top Gainers Price (`) Chg (%) Infratel 397 11.9 Indiacem 82 5.5 Pmcfin 1 5.0 Vakrangee 133 4.3 Frl 126 3.8 Top Losers Price (`) Chg (%) Hcltech 858 (12.7) Jswenergy 89 (4.9) Essaroil 190 (3.8) Gvkpil 7 (3.6) Oberoirlty 264 (3.2) As on October 01, 2015
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Market Outlook October 05, 2015
Market Cues
Indian markets are expected to open in positive tracking the SGX Nifty and the Asian
cues.
The US markets after falling sharply at the open, stocks staged a remarkable
turnaround over the course of the trading day on Friday. The major averages
bounced well off their lows for the session and into positive territory, with the Dow
showing a nearly 460-point swing on the day.
The European markets bounced back into the green in late trade on Friday, as U.S. equity markets began to reverse and recover from the lows. The European markets were trading in green early Friday. However, the markets began to pare those gains and dropped into the red after the U.S. jobs report for September came in weaker than expected. The disappointing data has many investors thinking that an interest rate hike by the Federal Reserve later this month is unlikely.
The Indian markets posted modest gains on Thursday, with a firm rupee and positive global cues supporting sentiment. Stocks finished off their day's highs as traders locked in some profits at higher levels ahead of the long weekend. The stock markets were closed on Friday on account of Gandhi Jayanti.
News Analysis El Nino Takes a Toll on Auto, FMCG Stocks
Government exploring options to dilute stake in IDBI Bank Detailed analysis on Pg2
Investor’s Ready Reckoner
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Shares of automobile manufacturers, consumer-oriented companies, and
agriculture-related firms, whose prospects are partly tied to rural consumers, could
slip as a below-average monsoon this year may hurt their quarterly earnings. India
received 14% below-normal rains between June and September, the lowest since
2009, as the strongest El Nino in almost two decades left vast tracts of land
parched, affecting crops.
Shares of Hero MotoCorp, M&M and HUL could face pressure as rural income
and consumption may get impacted by a sub-par monsoon. The contribution of
rural consumers to sales of these firms is quite significant. Auto firms, especially
twowheeler makers such as Hero MotoCorp and Bajaj Auto, have a lot riding on
the monsoon, as nearly half the two-wheeler sales come from semi-urban and
rural India. A weak monsoon will also directly impact sales of farm equipment,
affecting companies such as M&M, which gets almost a third of its revenue from
tractor sales.
Government exploring options to dilute stake in IDBI Bank
The government is looking to dilute stake in IDBI Bank through strategic sale or
public offering. Various options are being considered, including strategic sale and
offer for sale (OFS), for dilution of the government stake in IDBI Bank, but these
are at a preliminary stage.
IDBI Bank came into existence, with Parliament passing the IDBI Repeal Act in
2003. In terms of provisions of the Repeal Act, IDBI has been functioning as a
bank in addition to its earlier role of a financial institution.
Citing the example of Axis Bank, he had wondered if IDBI Bank can follow that
model. The government indirectly controls 29.19 per cent in Axis Bank through
the administrator of the Specified Undertaking of the Unit Trust of India (SUUTI), the
Life Insurance Corporation and four other public sector general insurance companies.
In the case of IDBI Bank, the government holding stands at 76.5 per cent.
However, IDBI Bank in a regulatory filing to stock exchanges said it has not
received any communication from the government on this.
We are willing to look at all other changes, including bringing down government
equity to 52 per cent (in state-run banks), and therefore giving additional financial
strength and teeth to the banking institutions themselves," he had said. We
currently have a Neutral Rating on the stock.
Economic and Political News Manufacturing PMI Hits 7-month Low on Poor Demand Advance tax from steel, banking sectors falls Indian e-commerce market to grow 36% in 2015-20: study
Corporate News Jet Airways Gets `700 cr in Fresh Investment from Etihad SPV L&T Metro Keen to Raise $180 mn via ECB Route HDFC to Raise `10,000 cr Through NCDs, Warrants
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Market Outlook October 05, 2015
Top Picks ★★★★★ Large Cap
Company Market Cap
(` Cr) CMP
(`) Target
(`)Upside
(%)Rationale
Aurobindo 44,965 770 872 13.2 Robust US sales along with the acquisations, will aid the growth and stable margins.
Axis Bank 1,17,820 496 701 41.5 Healthy pace of branch expansion, backed by distribution network.
ICICI Bank 1,55,268 267 370 38.4 Robust franchise and capital adequacy position will help the bank to outperform the industry average.
Infosys 2,69,489 1,173 1,306 11.3 Back on the growth trend, expect a long term growth of 14% to be a US$20bn in FY2020.
Inox Wind 7,914 357 505 41.6 Government thrust on Renewable sector and strong order book would drive future growth.
LIC HFL 23,371 463 570 23.1 LICHF continues to grow its retail loan book at a healthy pace with improvement in asset quality.
Power Grid 68,246 130 170 30.3 Direct beneficiary of the huge investments lined up in the power transmission sector.
TCS 5,17,045 2,640 3,168 20.0 Growth to pick up from 2HFY2017, attractive given the risk-reward.
Yes Bank 30,499 728 953 30.9 An improving liability franchise, capital adequacy well above Basel III requirements and lowest NPA ratio in the industry.
Sun Pharma 2,14,353 891 950 6.7 FY2017, to be a good year for the company in terms of growth and margins.
Source: Company, Angel Research
Mid Cap
Company Market Cap
(` Cr) CMP
(`) Target
(`)Upside
(%)Rationale
Bajaj Electricals 2,522 250 341 36.4 Visible turnaround in E&P business to drive the earnings.
Garware Wall Ropes 769 351 390 11.0 Higher exports & easing material prices to drive profitability.
MBL Infrastructures 1,016 245 360 46.9 Comfortable balance sheet to support strong growth; this coupled with attractive valuation to lead to rerating.
Minda Industries 805 507 652 28.5 New product introductions and increased sourcing by clients to enable outpace industry growth.
MT Educare 513 129 169 31.3 Strong brand & quality teaching with innovative technologies & higher government educational spending to boost growth.
Radico Khaitan 1,154 87 112 29.1 Earnings boost on back of stable material prices and favourable pricing environment. Valuation discount to peers provides additional comfort.
Surya Roshni 571 130 183 40.6 Structural shift in the Lighting industry towards LED lighting will drive growth.
Tree House 1,329 314 449 43.0 Robust expansion plan for pre-schools to drive growth.
Source: Company, Angel Research; Note: *December year end; #September year end; &October year end; Price as on October 01, 2015
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October 05, 2015
Stock Watch
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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