www.angelbroking.com Market Outlook March 21, 2016 Market Cues Indian market is expected to open on a flat to positive note tracking the SGX Nifty. US indices ended the week on a strong footing wherein Dow Jones surged by 2.3% during the week. Stocks appeared to benefit from the upward momentum seen on the Wall Street since the Federal Reserve's monetary policy announcement on Wednesday. The Fed announcement was widely interpreted as dovish, as the revised forecast for interest rates showed that officials now expect only two rate hikes by the end of this year compared to the four predicted back in December. The European markets got off to a weak start on Friday, but quickly recovered from that early drop. Trading action was choppy for the rest of the session, as the markets settled into a sideways trend. Banking stocks were among the top performers at the end of the trading week. The European Central Bank can reduce its deposit rate further into negative territory, if new shocks emerge to threaten inflation and growth, and the bank can also consider distributing money directly to people as an extreme step said an ECB Executive Board Member and Chief Economist. Indian shares ended firmly in positive as rise in commodity prices, positive global cues and strength in rupee on the back of renewed foreign fund flows boosted investor’s sentiment. News & Result Analysis Interest rate on Public Provident Fund cut to 8.1% from 8.7% 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 (%) Amara Raja Batteries Auto & Auto Ancillary Buy 902 1,040 15.3 HCL Tech IT Buy 824 1,038 26.0 LIC Housing Finance Financials Buy 464 592 27.6 Bharat Electronics Capital Goods Buy 1,103 1,414 28.2 Navkar Corporation Others Buy 166 265 59.7 More Top Picks on Pg3 Key Upcoming Events Date Region Event Description Previous Reading Consensus Expectations Mar 21 US Existing Home Sales (Feb) 5.47M 5.31M Mar 25 US GDP Qoq (Annualized) - % Change 1.00 1.00 Apr 1 China PMI Manufacturing 49.00 --- Apr 5 India RBI Repo Rate 6.75% --- 6.( Domestic Indices Chg (%) (Pts) (Close) BSE Sensex 1.1 275 24,953 Nifty 1.2 92 7,604 Mid Cap 0.7 67 10,300 Small Cap 0.6 63 10,309 Bankex 1.5 259 17,852 Global Indices Chg (%) (Pts) (Close) Dow Jones 0.7 121 17,602 Nasdaq 0.4 21 4,796 FTSE (0.2) (11) 6,190 Nikkei (1.2) (212) 16,725 Hang Seng 0.8 168 20,672 Shanghai Com 1.7 50 2,955 Advances / Declines BSE NSE Advances 1,267 823 Declines 1,352 714 Unchanged 183 79 Volumes (` Cr) BSE 2,755 NSE 18,812 Net Inflows (` Cr) Net Mtd Ytd FII 939 10,657 (31,046) MFs (393) (3,141) 74,087 Top Gainers Price (`) Chg (%) Cox&Kings 190 7.3 Voltas 269 6.9 Prestige 139 6.8 Vedl 92 6.4 Shreecem 12,332 6.0 Top Losers Price (`) Chg (%) Lupin 1,559 (6.9) Rtnpower 11 (4.9) Den 87 (4.8) Ibulhsgfin 612 (3.7) Vakrangee 215 (3.1) As on March 18, 2016
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www.angelbroking.com
Market Outlook March 21, 2016
Market Cues
Indian market is expected to open on a flat to positive note tracking the SGX Nifty.
US indices ended the week on a strong footing wherein Dow Jones surged by 2.3% during the week. Stocks appeared to benefit from the upward momentum seen on the Wall Street since the Federal Reserve's monetary policy announcement on Wednesday. The Fed announcement was widely interpreted as dovish, as the revised forecast for interest rates showed that officials now expect only two rate hikes by the end of this year compared to the four predicted back in December.
The European markets got off to a weak start on Friday, but quickly recovered from that early drop. Trading action was choppy for the rest of the session, as the markets settled into a sideways trend. Banking stocks were among the top performers at the end of the trading week. The European Central Bank can reduce its deposit rate further into negative territory, if new shocks emerge to threaten inflation and growth, and the bank can also consider distributing money directly to people as an extreme step said an ECB Executive Board Member and Chief Economist.
Indian shares ended firmly in positive as rise in commodity prices, positive global cues and strength in rupee on the back of renewed foreign fund flows boosted investor’s sentiment.
News & Result Analysis Interest rate on Public Provident Fund cut to 8.1% from 8.7% 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 (%)
Amara Raja Batteries Auto & Auto Ancillary Buy 902 1,040 15.3
HCL Tech IT Buy 824 1,038 26.0
LIC Housing Finance Financials Buy 464 592 27.6
Bharat Electronics Capital Goods Buy 1,103 1,414 28.2
Navkar Corporation Others Buy 166 265 59.7
More Top Picks on Pg3
Key Upcoming Events Date Region
Event Description
PreviousReading
Consensus Expectations
Mar 21 US Existing Home Sales (Feb) 5.47M 5.31M
Mar 25 US GDP Qoq (Annualized) - % Change 1.00 1.00
Apr 1 China PMI Manufacturing 49.00 ---
Apr 5 India RBI Repo Rate 6.75% ---
6.(
Domestic Indices Chg (%) (Pts) (Close)
BSE Sensex 1.1 275 24,953
Nifty 1.2 92 7,604
Mid Cap 0.7 67 10,300
Small Cap 0.6 63 10,309
Bankex 1.5 259 17,852
Global Indices Chg (%) (Pts) (Close)
Dow Jones 0.7 121 17,602
Nasdaq 0.4 21 4,796
FTSE (0.2) (11) 6,190
Nikkei (1.2) (212) 16,725
Hang Seng 0.8 168 20,672
Shanghai Com 1.7 50 2,955
Advances / Declines BSE NSE
Advances 1,267 823
Declines 1,352 714
Unchanged 183 79
Volumes (` Cr)
BSE 2,755
NSE 18,812
Net Inflows (` Cr) Net Mtd Ytd
FII 939 10,657 (31,046)
MFs (393) (3,141) 74,087
Top Gainers Price (`) Chg (%)
Cox&Kings 190 7.3
Voltas 269 6.9
Prestige 139 6.8
Vedl 92 6.4
Shreecem 12,332 6.0
Top Losers Price (`) Chg (%)
Lupin 1,559 (6.9)
Rtnpower 11 (4.9)
Den 87 (4.8)
Ibulhsgfin 612 (3.7)
Vakrangee 215 (3.1) As on March 18, 2016
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Market Outlook March 21, 2016
Interest rate on Public Provident Fund cut to 8.1% from 8.7%
The government announced a steep cut in interest rates on small savings schemes such as Public Provident Fund (PPF), National Savings Certificate (NSC) and Kisan Vikas Patras - which will fetch up to 90 basis points lower returns during the April-June quarter. The interest rate on PPF scheme will be cut to 8.1% for the period April 1 to June 30, from 8.7%, at present.
The below table summarized the existing as well as the new rates for various deposits and schemes:
National Savings Certificate (5 yrs) 8.5 8.1 (0.4)
Monthly Income Account (5 yrs) 8.4 7.8 (0.6)
Post office deposit (5 yrs) 8.5 7.9 (0.6)
Post office recurring deposit (5 yrs) 8.4 7.4 (1.0)
Post office deposit (1 yrs) 8.4 7.1 (1.3)
A reduction in rates on small savings is also bad news for those with large balance in fixed deposits, especially senior citizens, as banks are now expected to follow government action with similar cuts. However, this is a very positive step for the banks as the deposit rates by the banks will be reduced accordingly which will ensure a reduction in the lending rate. We expect nearly 100bp cut in the bank’s base rate over FY2017 and this could lead to a positive impact for all the rate sensitive sectors. Our top picks include HDFC bank from the banking space and LIC Housing Finance from the Housing Finance space.
Economic and Political News Govt expects no dividend from at least 9 PSU banks
Govt to finish 59% of `6 lakh cr borrowing budgeted for FY17 in first half
Forex reserves jump $2.54 billion to $353.40 billion
Corporate News Tata Steel expects `20,000cr investment in Gopalpur SEZ
Torrent Pharma's Dahej plant gets EIR from USFDA
Aurobindo Pharma gets USFDA nod for osteoporosis drug
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Market Outlook March 21, 2016
Top Picks ★★★★★ Large Cap
Company Market Cap
(` Cr) CMP
(`)Target
(`) Upside
(%) Rationale
Amara Raja Batteries 15,408 902 1,040 15.3 To outpace battery industry growth due to better technological products leading to market share gains in both the automotive OEM and replacement segments.
Ashok Leyland 27,079 95 111 16.7 Earnings to grow strongly given the MHCV cyclical upturn. Focus on exports and LCV's provides additional growth avenue.
Bharat Electronics 26,468 1,103 1,414 28.2 Uptick in defense capex by government when coupled with BELs strong market positioning, indicate that good times are ahead for BEL.
HCL Tech 1,16,194 824 1,038 26.0 The stock is trading at attractive valuations and is factoring all the bad news.
HDFC Bank 2,60,002 1,029 1,262 22.7 Strong visibility for a robust 20% earnings trajectory, coupled with high quality of earnings on account of high quality retail business and strategic focus on highly rated corporates.
Infosys 2,74,275 1,190 1,347 13.2 Back on the growth trend, expect a long term growth of 14% to be a US$20bn in FY2020.
LIC Housing Finance 23,394 464 592 27.6
LICHF continues to grow its retail loan book at a healthy pace with improvement in asset quality. We expect the company to post a healthy loan book which is likely to reflect in a strong earnings growth.
NBCC 11,426 952 1,089 14.4 Huge bid pipeline of re-development works at Delhi and other State Governments and opportunity from Smart City, positions NBCC to report strong growth, going forward.
TVS Motors 13,625 287 330 15.1 New launches to enable outpace industry growth; margins expansion to boost earnings.
Source: Company, Angel Research
Mid Cap
Company Market Cap
(` Cr) CMP
(`) Target
(`)Upside
(%) Rationale
Blue Star 3,276 364 439 20.5
Favourable outlook for the AC industry to augur well for Cooling products business which is out pacing the market growth. EMPPAC division's profitability to improve once operating environment turns around.
IL&FS Transport 2,382 72 93 28.5 Commencement of new projects, downtrend in the interest rate cycle, to lead to stock re-rating
Jagran Prakashan 4,781 146 189 29.2
Economic recovery to have favourable impact on advertising & circulation revenue growth. Further, the acquisition of a radio business (Radio City) would also boost the company's revenue growth.
Mahindra Lifespace 1,760 429 554 29.2 Speedier execution and speedier sales, strong revenue visibilty in short-to-long run, attractive valuations
Navkar Corporation 2,366 166 265 59.7 Massive capacity expansion along with rail advantage at ICD as well CFS augurs well for the company
Radico Khaitan 1,282 96 156 61.8 Earnings boost on back of stable material prices and favourable pricing environment. Valuation discount to peers provides additional comfort
Siyaram Silk Mills 929 992 1,354 36.6 Strong brands and distribution network would boost growth going ahead. Stock currently trades at an inexpensive valuation.
Source: Company, Angel Research
Global economic events release calendar
Date Time Country Event Description Unit Period Bloomberg Data
Last Reported Estimated
Mar 21, 2016 7:30PM US Existing home sales Million Feb 5.47 5.31
Mar 22, 2016 3:00PM UK CPI (YoY) % Change Feb 0.30 0.40
2:00PM Germany PMI Manufacturing Value Mar P 50.50 50.80
2:00PM Germany PMI Services Value Mar P 55.30 55.00
Mar 23, 2016 8:30PM Euro Zone Euro-Zone Consumer Confidence Value Mar A (8.80) (8.30)
7:30PM US New home sales Thousands Feb 494.00 510.00
Mar 24, 2016 6:00PM US Initial Jobless claims Thousands Mar 19 265.00 --
Mar 25, 2016 6:00PM US GDP Qoq (Annualised) % Change 4Q T 1.00 1.00
Mar 29, 2016 7:30PM US Consumer Confidence S.A./ 1985=100 Mar 92.20 --
Mar 31, 2016 1:25PM Germany Unemployment change (000's) Thousands Mar (10.00) --
2:00PM UK GDP (YoY) % Change 4Q F 1.90 --
Apr 1, 2016 2:00PM UK PMI Manufacturing Value Mar 50.80 --
6:30AM China PMI Manufacturing Value Mar 49.00 --
6:00PM US Change in Nonfarm payrolls Thousands Mar 242.00 --
Source: Company, Angel Research; Note: *December year end; #September year end; &October year end; Price as on March 18, 2016
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March 21, 2016
Stock Watch
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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