www.angelbroking.com Market Outlook December 1, 2017 www.angelbroking.com Market Cues Indian markets are likely to open flat tracking global indices and SGX Nifty. The US stocks moved mostly higher during trading on Thursday following the mixed performance seen in the previous session. With the upward move on the day, the Dow and the S&P 500 reached new record closing highs. The major averages finished the day firmly in positive territory but off their highs of the session. The Dow surged up 1.4% to 24,272, the Nasdaq climbed 0.7% to 6,874 and the S&P 500 advanced 0.8% to 2,648. The UK shares fell for a second consecutive session on Thursday as the pound continued to surge amid further signs of progress on the EU's key Brexit issues, including the Irish border. The benchmark FTSE 100 was down 0.9 percent at 7,327 by close of the day. BSE Sensex and NSE Nifty closed over 1% lower on Thursday after India’s fiscal deficit at the end of October hit 96.1% of the budget estimate for the fiscal year ending in March 2018. It was their biggest single-day fall in two months as investors also cut down on their bets ahead of the September quarter GDP data. The 30- share Sensex shut the shop down over 450 points, or 1.35%, at 33,149, while the 50-share NSE Nifty index settled with loss of nearly 135 points, or 1.30 %, at 10,226. News Analysis 2Q GDP indicates growth rebounding in the economy Endurance Technologies – CMP 1265 Target Price 1,285, Book profit 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 Buy 739 867 17.3 Dewan Housing Finance Financials Buy 617 712 15.5 Asian Granito Other Accumulate 509 570 12.0 Navkar Corporation Other Buy 188 265 41.3 KEI Industries Capital Goods Accumulate 397 425 7.1 More Top Picks on Pg4 Key Upcoming Events Date Region Event Description Previous Reading Consensus Expectations Nov30 Germany PMI Services 54.90 Nov30 Germany PMI Manufacturing 62.50 62.50 Nov30 UK PMI Manufacturing 56.30 56.50 Dec01 Euro Zone Euro-Zone GDP s.a. (QoQ) 0.60 Dec01 India RBI Reverse Repo rate 5.75 5.75 More Events on Pg7 Domestic Indices Chg (%) (Pts) (Close) BSE Sensex (1.3) (453) 33,149 Nifty (1.3) (135) 10,227 Mid Cap (0.5) (93) 16,917 Small Cap 0.1 18 18,229 Bankex (1.9) (549) 28,631 Global Indices Chg (%) (Pts) (Close) Dow Jones 1.4 332 24,272 Nasdaq 0.7 50 6,874 FTSE (0.9) (67) 7,327 Nikkei 0.6 128 22,725 Hang Seng (1.5) (446) 29,177 Shanghai Com (0.6) (21) 3,317 Advances / Declines BSE NSE Advances 1,211 696 Declines 1,494 1,032 Unchanged 141 68 Volumes (` Cr) BSE 4,369 NSE 49,597 Net Inflows (` Cr) Net Mtd Ytd FII 784 20,405 58,858 MFs 300 10,669 106,079 Top Gainers Price (`) Chg (%) Rtnpower 9 10.0 Mcleodruss 235 7.1 Den 99 7.0 Sobha 623 5.5 Bomdyeing 221 4.7 Top Losers Price (`) Chg (%) Sreinfra 102 (6.2) Suzlon 14 (3.8) Adanitrans 183 (3.7) Apollotyre 251 (3.1) Gppl 143 (3.1) As on November, 30 2017
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Market Outlook December 1, 2017
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Market Cues
Indian markets are likely to open flat tracking global indices and SGX Nifty.
The US stocks moved mostly higher during trading on Thursday following the mixed performance seen in the previous session. With the upward move on the day, the Dow and the S&P 500 reached new record closing highs. The major averages finished the day firmly in positive territory but off their highs of the session. The Dow surged up 1.4% to 24,272, the Nasdaq climbed 0.7% to 6,874 and the S&P 500 advanced 0.8% to 2,648.
The UK shares fell for a second consecutive session on Thursday as the pound continued to surge amid further signs of progress on the EU's key Brexit issues, including the Irish border. The benchmark FTSE 100 was down 0.9 percent at 7,327 by close of the day.
BSE Sensex and NSE Nifty closed over 1% lower on Thursday after India’s fiscal deficit at the end of October hit 96.1% of the budget estimate for the fiscal year ending in March 2018. It was their biggest single-day fall in two months as investors also cut down on their bets ahead of the September quarter GDP data. The 30-share Sensex shut the shop down over 450 points, or 1.35%, at 33,149, while the 50-share NSE Nifty index settled with loss of nearly 135 points, or 1.30 %, at 10,226.
News Analysis
2Q GDP indicates growth rebounding in the economy
Endurance Technologies – CMP 1265 Target Price 1,285, Book profit
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 Buy 739 867 17.3
Dewan Housing Finance Financials Buy 617 712 15.5
Asian Granito Other Accumulate 509 570 12.0
Navkar Corporation Other Buy 188 265 41.3
KEI Industries Capital Goods Accumulate 397 425 7.1 More Top Picks on Pg4
Key Upcoming Events Date Region Event Description
Previous Reading
Consensus Expectations
Nov30 Germany PMI Services 54.90 Nov30 Germany PMI Manufacturing 62.50 62.50 Nov30 UK PMI Manufacturing 56.30 56.50 Dec01 Euro Zone Euro-Zone GDP s.a. (QoQ) 0.60 Dec01 India RBI Reverse Repo rate 5.75 5.75 More Events on Pg7
Domestic Indices Chg (%) (Pts) (Close)
BSE Sensex (1.3) (453) 33,149
Nifty (1.3) (135) 10,227
Mid Cap (0.5) (93) 16,917
Small Cap 0.1 18 18,229
Bankex (1.9) (549) 28,631
Global Indices Chg (%) (Pts) (Close)
Dow Jones 1.4 332 24,272
Nasdaq 0.7 50 6,874
FTSE (0.9) (67) 7,327
Nikkei 0.6 128 22,725
Hang Seng (1.5) (446) 29,177
Shanghai Com (0.6) (21) 3,317
Advances / Declines BSE NSE
Advances 1,211 696
Declines 1,494 1,032
Unchanged 141 68
Volumes (` Cr)
BSE 4,369
NSE 49,597
Net Inflows (` Cr) Net Mtd Ytd
FII 784 20,405 58,858
MFs 300 10,669 106,079
Top Gainers Price (`) Chg (%)
Rtnpower 9 10.0
Mcleodruss 235 7.1
Den 99 7.0
Sobha 623 5.5
Bomdyeing 221 4.7
Top Losers Price (`) Chg (%)
Sreinfra 102 (6.2)
Suzlon 14 (3.8)
Adanitrans 183 (3.7)
Apollotyre 251 (3.1)
Gppl 143 (3.1) As on November, 30 2017
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Market Outlook December 1, 2017
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News Analysis
2Q GDP indicates growth rebounding in the economy
India’s 2QFY18 GDP growth at 6.3% (vs. consensus 6.4% ) has shown a that economy is coming back to the growth path. In 1QFY18, GDP growth was 5.7% so at 6.3%, we believe that the economy has clearly shown its trajectory which is the most important thing at the moment. The recovery is also reflected in GVA numbers which grew by 6.1% in the 2QFY18 vs. 5.6% in 1QFY18. The rebound is seen in the electricity, manufacturing, construction and mining sectors whereas services sector is yet to recover.
The numbers clearly indicate that economy is slowly coming out of the impact of the demonetization and GST. With the lower base of third and fourth quarter and with ongoing recovery, we believe that second half GDP numbers are likely to be far better than first half and we believe that FY18 GDP growth is likely to be around 7%.
Endurance Technologies – CMP `1,265 Target Price `1,285, book profit Endurance Technologies, the largest domestic 2W auto ancillary put a robust show in the 2QFY18. Consolidated sales grew 12% while bottom-line grew by 11.6% due to the higher tax rate in the quarter. The EBITDA margin was at 14.5% vs. 14.1% in 1QFY18 and 13.9% in 2QFY17. Domestic business grew 10.4% while European business grew by 16% yoy. The European business saw ~200bps margin expansion while domestic business margins expanded by ~20bps. Company continues to maintain ~8-10% growth guidance and has indicated that it is in position to start ABS supplies from 1QFY20. While we like the company, recent price run up has left no room for upgrade the rating. While we raise our price target to `1,285, we downgrade the stock to neutral. One should book profit in the scrip at the CMP.
Economic and Political News IMF to update India growth rate forecast in January
RBI given ammunition to hold rates as economy recovers
Manufacturing shrugs off GST, demonetisation blues
OPEC agrees extended oil supply cut for full 2018
Economy scripts a turnaround, expands 6.3% in Q2
Corporate News MCX completes first settlement cycle in options contract on gold futures.
Laurus Labs receives tentative approval from USFDA for Tenofovir Disoproxil Fumarate.
Reliance Power executes a pact for 750 MW in Bangladesh.
LIC to pare stake in Bank of Baroda to 5.2 percent from 7.2 percent
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Market Outlook December 1, 2017
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Top Picks HHHHH Company
Market Cap(` Cr)
CMP (`)
Target (`)
Upside (%)
Rationale
Alkem Laboratories 23,759 1,987 2,125 6.9
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 1,531 509 570 12.0 We expect the company would report strong profitability owing to better product mix, higher B2C sales and amalgamation synergy.
Blue Star 7,085 739 867 17.3
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 19,335 617 712 15.5
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 6,883 114 180 58.0
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 3,111 397 425 7.1 High order book execution in EPC segment, rising B2C sales and higher exports to boost the revenues and profitability
Music Broadcast 2,178 382 434 13.7 Expected to benefit from the lower capex requirement and 15 year long radio broadcast licensing.
Navkar Corporation 2,822 188 265 41.3 Massive capacity expansion along with rail advantage at ICD as well CFS augur well for the company
Siyaram Silk Mills 3,105 662 700 5.7 Strong brands and distribution network would boost growth going ahead. Stock currently trades at an inexpensive valuation.
TV Today Network 2,357 395 435 10.1
Market 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 corporate to benefit the stock.
Maruti Suzuki 2,59,858 8,602 9,489 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
2,372 440 655 48.7 We expect loan book to grow at 24.3% over next two year; change in borrowing mix will help in NIM improvement
Century Plyboards India
7046 317 399 25.9
We expect CPIL to report net Revenue/PAT CAGR of ~17%/16% over FY2017-20E mainly due to healthy growth in plywood & lamination business, forayed into MDF & Particle boards on back of strong brand & distribution network.
LT Foods 1875 70 96 37We expect sales/PAT to grow at 13.5%/20% over next two years on the back of strong distribution network & addition of new products in portfolio.
Source: Company, Angel Research
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Market Outlook December 1, 2017
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Key Upcoming Events
Result Calendar
Date Company
November 14, 2017 Tata Global, JK Tyre, CEAT, Jyoti Structures, Bank of Baroda, Reliance Capital, Corporation Bank, MOIL
November 15, 2017 Automotive Axle
Source: Bloomberg, Angel Research
Global economic events release calendar
Date Time Country Event Description Unit Period Bloomberg Data
Last Reported Estimated
Dec 01, 2017 2:25 PMGermany PMI Services Value Nov F 54.90
2:25 PMGermany PMI Manufacturing Value Nov F 62.50 62.50
Dec 05, 2017 3:00 PMUK PMI Manufacturing Value Nov 56.30 56.50
3:30 PMEuro Zone Euro-Zone GDP s.a. (QoQ) % Change 3Q F 0.60
Dec 06, 2017 2:30 PMIndia RBI Reverse Repo rate % Dec 6 5.75 5.75
2:30 PMIndia RBI Repo rate % Dec 6 6.00 6.00
2:30 PMIndia RBI Cash Reserve ratio % Dec 6 4.00 4.00
Dec 08, 2017 3:00 PMUK Industrial Production (YoY) % Change Oct 2.50
India Imports YoY% % Change Nov 7.60
India Exports YoY% % Change Nov (1.10)
China Exports YoY% % Change Nov 6.90
7:00 PMUS Change in Nonfarm payrolls Thousands Nov 261.00 198.00
7:00 AMChina Consumer Price Index (YoY) % Change Nov 1.90 1.80
Dec 09, 2017 7:00 PMUS Unnemployment rate % Nov 4.10 4.10
Dec 12, 2017 5:30 PMIndia Industrial Production YoY % Change Oct 3.80
Source: Company, Angel Research; Note: *December year end; #September year end; &October year end; Price as on November 30, 2017
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Stock WatchDecember 01, 2017
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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