www.angelbroking.com Market Outlook October 18, 2017 www.angelbroking.com Market Cues Indian markets are likely to open flat tracking global indices and SGX Nifty. After ending the previous session modestly higher, US markets showed a lack of direction over the course of the trading day on Tuesday. Traders largely shrugged off some upbeat economic data, including a report from the Federal Reserve showed that industrial production rose by 0.3 percent in September after sliding by 0.7 percent in August. Despite the choppy trading on the day, the Dow and the S&P 500 reached new record closing highs. While the tech-heavy Nasdaq edged down by a less than a tenth of a percent to 6,624, the Dow edged up 0.2 percent to 22,997 and the S&P 500 inched up 0.1 percent to 2,559. The UK markets finished lower on Tuesday after investors received inflation data that could harden the case for the Bank of England to raise British borrowing costs. The FTSE 100 index fell 0.1% to close at 7,516, after darting between small gains and losses through the day. In India, Nifty ended little changed on Tuesday after hitting a third consecutive high earlier in the day, as investors remained on the sidelines ahead of a long Diwali weekend amid anticipation of a correction in overbought counters. BSE Sensex closed lower by 24 points to 32,609, while the Nifty 50 edged up 4 points to close at a new peak, 10,234. News Analysis Wipro – 2QFY18 result update Bajaj Auto – 2QFY18 result update Detailed analysis on Pg2 Investor’s Ready Reckoner Key Domestic & Global Indicators Stock Watch: Latest investment recommendations on 150+ stocks Refer Pg5 onwards Top Picks Company Sector Rating CMP (`) Target (`) Upside (%) Blue Star Capital Goods Accumulate 798 867 8.7 Dewan Housing Finance Financials Accumulate 592 630 6.4 Asian Granito Other Buy 489 570 16.6 Navkar Corporation Other Buy 194 265 37.0 KEI Industries Capital Goods Buy 326 380 16.6 More Top Picks on Pg4 Key Upcoming Events Date Region Event Description Previous Reading Consensus Expectations Oct 18 UK CPI (YoY) 3.00 3.00 Oct 18 US Building permits 1,272.00 1,245.00 Oct 18 China Industrial Production (YoY) 6.00 6.50 Oct 19 UK Jobless claims change (2.80) Oct 19 US Initial Jobless claims 243.00 240.00 More Events on Pg7 Domestic Indices Chg (%) (Pts) (Close) BSE Sensex (0.1) (24) 32,609 Nifty 0.0 4 10,234 Mid Cap 0.4 64 16,115 Small Cap 0.5 90 17,066 Bankex (0.2) (67) 27,682 Global Indices Chg (%) (Pts) (Close) Dow Jones 0.2 40 22,997 Nasdaq (0.0) (0) 6,624 FTSE (0.1) (11) 7,516 Nikkei 0.4 81 21,336 Hang Seng 0.0 5 28,697 Shanghai Com (0.2) (6) 3,372 Advances / Declines BSE NSE Advances 1,368 844 Declines 1,339 840 Unchanged 123 90 Volumes (` Cr) BSE 3,136 NSE 28,043 Net Inflows (` Cr) Net Mtd Ytd FII (1,555) (4,408) 32,122 MFs 9 5,182 91,525 Top Gainers Price (`) Chg (%) Idea 90 8.4 Vakrangee 538 7.3 Dbl 799 7.3 Bbtc 1,648 6.7 Sreinfra 116 6.1 Top Losers Price (`) Chg (%) Religare 48 (5.0) Welspunind 61 (3.8) Zeel 495 (3.7) Dcbbank 184 (3.2) Trent 314 (2.8) As on October, 17 2017
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www.angelbroking.com
Market Outlook October 18, 2017
www.angelbroking.com
Market Cues
Indian markets are likely to open flat tracking global indices and SGX Nifty.
After ending the previous session modestly higher, US markets showed a lack of direction over the course of the trading day on Tuesday. Traders largely shrugged off some upbeat economic data, including a report from the Federal Reserve showed that industrial production rose by 0.3 percent in September after sliding by 0.7 percent in August. Despite the choppy trading on the day, the Dow and the S&P 500 reached new record closing highs. While the tech-heavy Nasdaq edged down by a less than a tenth of a percent to 6,624, the Dow edged up 0.2 percent to 22,997 and the S&P 500 inched up 0.1 percent to 2,559.
The UK markets finished lower on Tuesday after investors received inflation data that could harden the case for the Bank of England to raise British borrowing costs. The FTSE 100 index fell 0.1% to close at 7,516, after darting between small gains and losses through the day.
In India, Nifty ended little changed on Tuesday after hitting a third consecutive high earlier in the day, as investors remained on the sidelines ahead of a long Diwali weekend amid anticipation of a correction in overbought counters. BSE Sensex closed lower by 24 points to 32,609, while the Nifty 50 edged up 4 points to close at a new peak, 10,234.
News Analysis
Wipro – 2QFY18 result update
Bajaj Auto – 2QFY18 result update
Detailed analysis on Pg2
Investor’s Ready Reckoner
Key Domestic & Global Indicators
Stock Watch: Latest investment recommendations on 150+ stocks
Refer Pg5 onwards
Top Picks Company Sector Rating
CMP (`)
Target (`)
Upside (%)
Blue Star Capital Goods Accumulate 798 867 8.7
Dewan Housing Finance Financials Accumulate 592 630 6.4
Asian Granito Other Buy 489 570 16.6
Navkar Corporation Other Buy 194 265 37.0
KEI Industries Capital Goods Buy 326 380 16.6 More Top Picks on Pg4
Key Upcoming Events Date Region Event Description
Previous Reading
Consensus Expectations
Oct 18 UK CPI (YoY) 3.00 3.00
Oct 18 US Building permits 1,272.00 1,245.00
Oct 18 China Industrial Production (YoY) 6.00 6.50
Oct 19 UK Jobless claims change (2.80)
Oct 19 US Initial Jobless claims 243.00 240.00More Events on Pg7
Domestic Indices Chg (%) (Pts) (Close)
BSE Sensex (0.1) (24) 32,609
Nifty 0.0 4 10,234
Mid Cap 0.4 64 16,115
Small Cap 0.5 90 17,066
Bankex (0.2) (67) 27,682
Global Indices Chg (%) (Pts) (Close)
Dow Jones 0.2 40 22,997
Nasdaq (0.0) (0) 6,624
FTSE (0.1) (11) 7,516
Nikkei 0.4 81 21,336
Hang Seng 0.0 5 28,697
Shanghai Com (0.2) (6) 3,372
Advances / Declines BSE NSE
Advances 1,368 844
Declines 1,339 840
Unchanged 123 90
Volumes (` Cr)
BSE 3,136
NSE 28,043
Net Inflows (` Cr) Net Mtd Ytd
FII (1,555) (4,408) 32,122
MFs 9 5,182 91,525
Top Gainers Price (`) Chg (%)
Idea 90 8.4
Vakrangee 538 7.3
Dbl 799 7.3
Bbtc 1,648 6.7
Sreinfra 116 6.1
Top Losers Price (`) Chg (%)
Religare 48 (5.0)
Welspunind 61 (3.8)
Zeel 495 (3.7)
Dcbbank 184 (3.2)
Trent 314 (2.8) As on October, 17 2017
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Market Outlook October 18, 2017
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News Analysis
Wipro – 2QFY18 result update
Wipro announced its 2QFY2018 results today. The company posted a 2.2% sequential growth in USD revenues to US$2,015mn. In rupee terms, revenues came in at `13,681cr, up 0.4% qoq. EBIT margin is expected to show an expansion of ~71bp qoq to end the period at 15.9% on account of strong growth. Consequently, PAT came in at `2,084cr, a rise of 0.1% qoq. We maintain our neutral rating on the stock.
Y/E Sales OPM PAT EPS ROE P/E P/BV EV/EBITDA EV/Sales
Bajaj Auto’s reported revenue growth of 8.7% to `6,580cr, PAT declined by 1% yoy to `1,112cr. EBITDA was flat at Rs 1,298cr as margins declined by 168bps yoy to 19.7%. On sequential basis however the numbers have shown improvement with revenue/PAT growth of 20.9% and 20.3% respectively. EBITDA margins also grew by 250bps on sequential basis.
Company has indicted the new export markets now contribute 16% of the total volumes vs. 10%/6% in FY17/FY16 respectively. Company has hinted that the Nigeria, Bangladesh and Philippines are likely to be supportive of future growth with healthy order book for Oct-17. In the domestic segment, company has indicated of strong outlook for 3Ws.
Overall we believe that this is a decent result, especially after the weak set of results in the last quarter when top line/bottom line declined marginally and margins had dropped on yoy and qoq basis. This quarter has also shown recovery in the domestic and export volumes and blended realization are up 4.8% yoy. Company has indicated that it will be allocating the 3W exports capacity for domestic 3W volumes. We believe that Bajaj Auto is on recovery path and going ahead, there is a room for improvement. We maintain accumulate rating.
Economic and Political News WPI India rejects WTO push for new global e-commerce rules
Martin Sorrell says he remains bullish on India
Cooling inflation and rebound in exports and industrial production suggest a favorable shift in India’s economic climate
Corporate News
Axis Bank Q2 net jumps 36% to Rs 432 cr but bad loans rise
Many one-offs dent Axis Bank's Q2 show
Flipkart talking with Kishore Biyani to buy 8-10% stake in Future Lifestyle Fashions
Strong growth in domestic business due to its leade`hip in acute therapeutic segment. Alkem expects to launch more products in USA, which bodes for its international business.
Asian Granito 1,471 489 570 16.6 We expect the company would report strong profitability owing to better product mix, higher B2C sales and amalgamation synergy.
Blue Star 7,638 798 867 8.7
Favorable 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.
Dewan Housing Finance 18,557 592 630 6.4
With a focus on the low and medium income (LMI) consumer segment, the company has increased its presence in tier-II & III cities where the growth opportunity is immense.
Karur Vysya Bank 7,717 128 180 41.0
Loan growth is likely to pick up after a sluggish FY17. Lower credit cost will help in strong bottom-line growth. Increasing share of CASA will help in NIM improvement.
KEI Industries 2,536 326 380 16.6 High order book execution in EPC segment, rising B2C sales and higher exports to boost the revenues and profitability
Music Broadcast 2,204 386 434 12.4 Expected to benefit from the lower capex requirement and 15 year long radio broadcast licensing.
Navkar Corporation 2,759 194 265 37.0 Massive capacity expansion along with rail advantage at ICD as well CFS augur well for the company
Siyaram Silk Mills 2,506 2,674 2,856 6.8 Strong brands and distribution network would boost growth going ahead. Stock currently trades at an inexpensive valuation.
TV Today Network 2,105 353 435 23.3
Market leaderhip in Hindi news genre and no. 2 viewe`hip ranking in English news genre, exit from the radio business, and anticipated growth in ad spends by corporates to benefit the stock.
Maruti Suzuki 2,37,119 7,850 8,658 10.3
After GST, the company is expected to see higher volumes along with improving product mix. The Gujarat plant will also enable higher operating leverage which will be margin accretive.
GIC Housing
2,734 508 655 29.0 We expect loan book to grow at 24.3% over next two year; change in borrowing mix will help in NIM improvement..
Source: Company, Angel Research
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Market Outlook October 18, 2017
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Key Upcoming Events
Result Calendar
Date Company
October 18, 2017 Ultra Tech cement
October 23, 2017 Hindustan Zinc
Source: Bloomberg, Angel Research
Global economic events release calendar
Date Time Country Event Description Unit Period Bloomberg Data
Source: Company, Angel Research; Note: *December year end; #September year end; &October year end; Price as on October 17, 2017
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Stock WatchOctober 18, 2017
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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