www.angelbroking.com Market Outlook August 30, 2016 Market Cues Indian markets are likely to open flat with positive bias tracking SGX Nifty. US stock markets climbed on Monday in the wake of comments by top Fed officials that bolstered expectations for an interest rate hike by U.S. central bank this year. Advance in U.S. stock markets was led by financials, which stand to gain the most in an environment of higher interest rates. S&P 500 financial index .SPSY ended 1% higher; Wells Fargo gained 2.2% and JPMorgan rose more than 1%. Advances helped Wall Street snap a 3-day losing streak. Report from U.S. Commerce Dept. showed consumer spending, which a/c’s for over 2/3 of U.S. economic activity, rose for 4 th month in July. That reinforced bets of rate rise soon, even as other data showed U.S. inflation remained subdued. European stocks on Monday finished in negative territory, kicking off week lower as rising expectations the U.S. Fed will lift interest rates later this year poked the air out of a recent rally. Stoxx Europe 600 index SXXP, lost 0.2%, pulling back after 1.1% climb last week. London markets were closed on account of a holiday. After 2-day correction amid consolidation, Indian indices gained strength in last hour of trade on Monday with Nifty closing above 8,600 on short covering despite weak global cues. Reliance Industries, ICICI Bank and Tata Motors contributed more than 80% to index gains. Hopes of further monetary easing by Bank of Japan also aided sentiment. News Analysis MEP Infra gets NHAI toll collection contract in Jharkhand 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 (%) Amara Raja Auto/Auto Ancillary Buy 920 1,076 16.9 HCL Tech IT Buy 757 1,000 32.2 HDFC Bank Financials Accumulate 1,238 1,350 9.0 Bharat Electronics Capital Goods Buy 1,215 1,414 16.4 Equitas Holdings Financials Buy 177 235 32.5 Navkar Corporation Others Buy 201 265 32.0 More Top Picks on Pg4 Key Upcoming Events Date Region Event Description Previous Reading Consensus Expectations Aug 30 US Consumer Confidence (97.3) 97.0 Aug 30 Euro Zone Euro-Zone Consumer Confidence (8.5) (8.5) Aug 31 US Initial Jobless claims 261.0 265.0 Sep 01 Germany PMI Manufacturing 53.60 Sep 01 UK PMI Manufacturing 48.20 6.( Domestic Indices Chg (%) (Pts) (Close) BSE Sensex 0.4 120 27,903 Nifty 0.4 35 8,607 Mid Cap 0.5 64 13,064 Small Cap 0.1 12 12,499 Bankex 0.2 53 22,059 Global Indices Chg (%) (Pts) (Close) Dow Jones 0.6 108 18,503 Nasdaq 0.3 13 5,232 FTSE 0.3 21 6,838 Nikkei 2.3 377 16,737 Hang Seng (0.4) (88) 22,821 Shanghai Com (0.0) (0) 3,070 Advances / Declines BSE NSE Advances 1,228 711 Declines 1,482 889 Unchanged 196 80 Volumes (` Cr) BSE 2,921 NSE 16,276 Net Inflows (` Cr) Net Mtd Ytd FII (305) 7,613 38,495 MFs 60 812 9,600 Top Gainers Price (`) Chg (%) Deltacorp 157 8.2 Balkrisind 833 6.6 Centralbk 107 6.5 Jktyre 130 6.1 Laxmimach 4,094 6.1 Top Losers Price (`) Chg (%) Hexaware 198 (5.0) Gvkpil 6 (4.4) Gati 143 (3.4) Gruh 334 (3.4) Persistent 610 (3.3) As on August 29, 2016
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Market Outlook August 30, 2016
Market Cues
Indian markets are likely to open flat with positive bias tracking SGX Nifty.
US stock markets climbed on Monday in the wake of comments by top Fed officials that bolstered expectations for an interest rate hike by U.S. central bank this year. Advance in U.S. stock markets was led by financials, which stand to gain the most in an environment of higher interest rates. S&P 500 financial index .SPSY ended 1% higher; Wells Fargo gained 2.2% and JPMorgan rose more than 1%. Advances helped Wall Street snap a 3-day losing streak. Report from U.S. Commerce Dept. showed consumer spending, which a/c’s for over 2/3 of U.S. economic activity, rose for 4th month in July. That reinforced bets of rate rise soon, even as other data showed U.S. inflation remained subdued.
European stocks on Monday finished in negative territory, kicking off week lower as rising expectations the U.S. Fed will lift interest rates later this year poked the air out of a recent rally. Stoxx Europe 600 index SXXP, lost 0.2%, pulling back after 1.1% climb last week. London markets were closed on account of a holiday.
After 2-day correction amid consolidation, Indian indices gained strength in last hour of trade on Monday with Nifty closing above 8,600 on short covering despite weak global cues. Reliance Industries, ICICI Bank and Tata Motors contributed more than 80% to index gains. Hopes of further monetary easing by Bank of Japan also aided sentiment.
News Analysis MEP Infra gets NHAI toll collection contract in Jharkhand 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 (%)
Amara Raja Auto/Auto Ancillary Buy 920 1,076 16.9
HCL Tech IT Buy 757 1,000 32.2
HDFC Bank Financials Accumulate 1,238 1,350 9.0
Bharat Electronics Capital Goods Buy 1,215 1,414 16.4
Equitas Holdings Financials Buy 177 235 32.5
Navkar Corporation Others Buy 201 265 32.0
More Top Picks on Pg4
Key Upcoming Events Date Region
Event Description
PreviousReading
Consensus Expectations
Aug 30 US Consumer Confidence (97.3) 97.0
Aug 30 Euro Zone Euro-Zone Consumer Confidence (8.5) (8.5)
Aug 31 US Initial Jobless claims 261.0 265.0
Sep 01 Germany PMI Manufacturing 53.60
Sep 01 UK PMI Manufacturing 48.206.(
Domestic Indices Chg (%) (Pts) (Close)
BSE Sensex 0.4 120 27,903
Nifty 0.4 35 8,607
Mid Cap 0.5 64 13,064
Small Cap 0.1 12 12,499
Bankex 0.2 53 22,059
Global Indices Chg (%) (Pts) (Close)
Dow Jones 0.6 108 18,503
Nasdaq 0.3 13 5,232
FTSE 0.3 21 6,838
Nikkei 2.3 377 16,737
Hang Seng (0.4) (88) 22,821
Shanghai Com (0.0) (0) 3,070
Advances / Declines BSE NSE
Advances 1,228 711
Declines 1,482 889
Unchanged 196 80
Volumes (` Cr)
BSE 2,921
NSE 16,276
Net Inflows (` Cr) Net Mtd Ytd
FII (305) 7,613 38,495
MFs 60 812 9,600
Top Gainers Price (`) Chg (%)
Deltacorp 157 8.2
Balkrisind 833 6.6
Centralbk 107 6.5
Jktyre 130 6.1
Laxmimach 4,094 6.1
Top Losers Price (`) Chg (%)
Hexaware 198 (5.0)
Gvkpil 6 (4.4)
Gati 143 (3.4)
Gruh 334 (3.4)
Persistent 610 (3.3) As on August 29, 2016
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Market Outlook August 30, 2016
News Analysis
MEP Infra gets NHAI toll collection contract in Jharkhand
MEP Infrastructure Developers Ltd (MEP) has won its 3rd short term toll collection project in Jharkhand for 1-year. MEP has bagged this project with an annual remittance of `87.30cr, payable on weekly basis over the tenure of the project. MEP has received the letter of acceptance for toll collection rights at Sau Kala toll plaza on the Aurangabad-Barachatti section of NH-2 in Jharkhand. Operations would commence from September 14, 2016.
This is the 3rd project of MEP in Jharkhand and now has total of 10 short term toll projects awarded by NHAI with Authority remittance of `659.61cr/ year.
MEP is an operate-maintain-transfer (OMT) player in the road infrastructure sector having forayed into engineering, procurement and construction space with 6 hybrid annuity projects in Maharashtra and Gujarat.
Quarterly highlights - Standalone Particulars (` cr) Stake (%) Lane kms State Bid cost (` cr) NPV (` cr)
Aravali-Kante 74 157 Maharashtra 592 556
Nagpur-Package I 74 134 Maharashtra 531 463
Nagpur-Package II 74 112 Maharashtra 639 587
Kante-Wakad 74 204 Maharashtra 826 805
Talaja-Mahuva 60 182 Gujarat 643 624
Mahuva-Kagavadar 60 40 Gujarat 605 585
Source: Company, Angel Research
MEP currently has 18 operational projects, 14 toll collection projects (25 toll plazas) in 8 states, 3 OMT projects- covering 1,361.32 lane kms and 9 toll plazas- and 1 build-operate-transfer project- covering 42 lane km and 5 toll plazas.
Consol. Debt of MEP at FY16-end stands at `2,907cr (reflecting D/E ratio of 28.7x). With Order book of `3,837cr, post the 6 Hybrid project order wins, we expect more pressure to be seen on MEP’s balance sheet. Till the time the company pursues the Infrastructure Investment Trust (InvIT), we expect the MEP stock to remain under pressure, owing to cash flow mismatches.
We continue to maintain our Neutral rating on the stock.
Economic and Political News New process to check, finance central schemes from FY18
Centre revises quantity of red sanders wood exports by Andhra
Jaitley seeks funding for NIIF from US, UK
RBI balance sheet expands 12.25% in FY16
Corporate News
Monsanto approaches Delhi HC against CCI decision
Zee Entertainment in talks to sell its sports bouquet
Airtel cuts data price by 33% as Jio trial offer hurts data growth
Shree Renuka Sugars to exit Brazil partially to reduce debt
Amara Raja Batteries 15,718 920 1,076 16.9To outpace battery industry growth due to better technological products leading to market share gains in both the automotive OEM and replacement segments.
Bharat Electronics 29,158 1,215 1,414 16.4Uptick in defense capex by government, coupled with BELs strong market positioning, indicate good times ahead for BEL.
HCL Tech 1,06,731 757 1,000 32.2 Stock is trading at attractive valuations & factors all bad news.
HDFC Bank 3,13,518 1,238 1,350 9.0Strong 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 2,34,805 1,022 1,370 34.0Back on the growth trend, expect a long term growth of 14% to be a US$20bn in FY2020.
Voltas 12,923 391 407 4.2Strong market positioning within the domestic AC markets to continue, EMP business set to revive
Source: Company, Angel Research
Mid Cap Company
Market Cap(` Cr)
CMP (`)
Target(`)
Upside (%)
Rationale
Bajaj Electricals 2,629 260 277 6.5 Among the top 4 players in the consumer durables segment. Improved profitability backed by turn around in E&P segment. Strong order book lends earnings visibility.
Blue Star 4,719 495 527 6.5
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.
Equitas Holdings 5,950 177 235 32.5Strong loan growth backed by diversified loan portfolio and adequate CAR. ROE & ROA likely to remain decent as risk of dilution remains low. Attractive valuations considering growth.
Goodyear India 1,261 547 631 15.4Expectations of above average monsoon augurs well for Goodyear India as it derives ~50% of its turnover from farm tyre segment.
IL&FS Transport 2,339 71 93 30.8 Commencement of new projects, downtrend in the interest rate cycle, to lead to stock re-rating
Jagran Prakashan 6,202 190 205 8.1 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 1,763 430 522 21.5Speedier execution and speedier sales, strong revenue visibility in short-to-long run, attractive valuations
Navkar Corporation 2,864 201 265 32.0 Massive capacity expansion along with rail advantage at ICD as well CFS augurs well for the company
Radico Khaitan 1,284 97 125 29.5Earnings boost on back of stable material prices and favourable pricing environment. Valuation discount to peers provides additional comfort
Siyaram Silk Mills 1,209 1,290 1,347 4.5 Strong brands and distribution network would boost growth going ahead. Stock currently trades at an inexpensive valuation.
TV Today Network 1,790 300 363 21.0Market leadership in Hindi news genre and no. 2 viewership ranking in English news genre, exit from the radio business, and anticipated growth in ad spends by corporates to benefit the stock.
Source: Company, Angel Research
Date Company
Sep 1, 2016 BPCL
Sep 5, 2016 Petronet LNG
Sep 7, 2016 BHEL
Sep 8, 2016 SAIL
Result Calendar
Source: Bloomberg, Angel Research
Global economic events release calendar
Date Time Country Event Description Unit Period Bloomberg Data
Last Reported Estimated
Aug 30, 2016 2:30PM Euro Zone Euro-Zone Consumer Confidence Value Aug F (8.50) (8.50)
7:30PM US Consumer Confidence S.A./ 1985=100 Aug 97.30 97.00
Aug 31, 2016 6:00PM US Initial Jobless claims Thousands Aug 27 261.00 265.00