What we published. March 9, 2017

Transcription

1 What we published March 9, 2017

2 Deal What Team we published At Your Service 1 Earnings growth for FY18 and FY19 expected at 20%+ 2 Key Stock recommendations and dividend opportunities 3 Lower Volatility fueling upsides in Equity Markets including Nifty 4 Surge in G-Sec yields triggered FII interest 5 Technical and F&O Picture continue to point towards newer highs for Benchmarks 6 European elections next big trigger for global markets 2

3 Deal What Team we published At Your Service 1 Earnings growth for FY18 and FY19 expected at 20%+ 2 Key Stock recommendations and update 3 Lower Volatility fueling upsides in Equity Markets including Nifty 4 Hawkish RBI triggers FII inflow into debt segment 5 Technical and F&O Picture continue to point towards newer highs for Benchmarks 6 European elections next big trigger for global markets 3

4 Q3 Deal FY Team 17 Suggests At Your worst Service is behind us In our I-Direct earnings wrap Q3FY2017, we expect higher double digit (25%) earnings recovery in FY18E Going forward, we believe the worst is behind us with some spillover effects of demonetisation being witnessed in Q4FY17E thereby leading to flat earnings (Sensex) trajectory in FY17E (up 2.2% YoY). Given the low base, stable commodity prices and revival of consumption led demand, we expect higher double digit (25%) earnings recovery in FY18E Click to read the detailed report 4

5 Despite Deal Team minor downgrade, At Your Service earnings growth for FY18 and FY19 at 20%+ We have revised down our FY17 and FY 18 Sensex EPS estimate marginally. Growth in earnings estimate for FY18 and FY19 remain healthy at 24% and 20% respectively Downgrade witnessed post Q3FY17 Bajaj Auto/Hero Moto/Tata Motors Bharti Airtel SBI/Axis Bank Asian Paints Upgrade witnessed post Q3FY17: Reliance Industries ONGC/Tata Steel ITC Dr. Reddy Click to read the detailed report 5

6 Deal What Team we published At Your Service 1 Earnings growth for FY18 and FY19 expected at 20%+ 2 Key Stock recommendations and update 3 Lower Volatility fueling upsides in Equity Markets including Nifty 4 Hawkish RBI triggers FII inflow into debt segment 5 Technical and F&O Picture continue to point towards newer highs for Benchmarks 6 European elections next big trigger for global markets 6

7 New Deal initiative Team coverage: At Your Service Trent Ltd. At the inflection point on the back of store additions of Westside. Listing of new retail peers could re-rate Star Bazaar. ZARA continues to enjoy the brand affinity Click to read the detailed report 7

8 New Deal initiative Team coverage: At Your Service Bhartiya International 40% upside Highlights Spreading wings in steady leather business: BIL s increased focus on its newer businesses coupled with higher opportunities in exports market, we expect robust growth of 25.0% CAGR Real estate (RE) business - potential value unlocker: Residential projects are marketed under Nikoo Homes brand in two phases, which received a great response. Potential of RE business not yet priced in CMP: On the real estate front, we have valued BIL s 30% stake in Bhartiya City at 368/share (0.8x FY18E NAV and 20% holding company discount). Hence, in our view, the Street has not factored in real value of BIL s real estate business Click to read the detailed report 8

9 Consolidation Deal Team in At Telecom Your Service Industry: Upgraded Bharti to Buy Even with Airtel falling to No.2 position, We prefer the stock owing to its consolidation benefits Click to read the detailed report 9

10 Lot Deal of Team companies At likely Your to Service declare dividend in March 2017 Click to read the detailed report 10

11 Deal What Team we published At Your Service 1 Earnings growth for FY18 and FY19 expected at 20%+ 2 Key Stock recommendations and update 3 Lower Volatility fueling upsides in Equity Markets including Nifty 4 Hawkish RBI triggers FII inflow into debt segment 5 Technical and F&O Picture continue to point towards newer highs for Benchmarks 6 European elections next big trigger for global markets 11

12 Positive Deal Team momentum At Your in global Service equity market continue in February Global Stock markets continue to mover higher on the back of as lower volatility and the improvement in growth outlook. Interest rate hike is being viewed as a indicator of improving growth prospects by the US Fed Click to read the detailed report 12

13 Volatility cool-off in developed markets may fuel further upsides in equities Declining trend of US VIX picks up pace post US Presidential elections Brexit US VIX reading at multi-year lows US Election verdict European volatility also moving lower despite its own headwinds Jun-16 Jun-16 Jul-16 Jul-16 Aug-16 Aug-16 Sep-16 Sep-16 Oct-16 Oct-16 Nov-16 Nov-16 Nov-16 Dec-16 Dec-16 Jan-17 Jan-17 Feb-17 US VIX Index Brexit US Election verdict Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Euro Stox 50 Volatility Index 2500 In Derivatives thematic report, we highlighted declining trend in volatility will propel upsides in equities. European Volatility Index drifting lower but still has scope for further drop in volatility No. of occurances Volatility range From historical standpoint, the current Volatility readings are near lows, suggesting Calm equity markets No of occurances Volatility range Source: Bloomberg, ICICIdirect.com Research 13

14 India VIX following suit: Entered low volatility regime post Union Budget 40 India VIX decline to sub 14 level post Budget key India VIX Levels Volatility has come below pre-demonetisation levels. Post Union Budget, India VIX declined from 17% to 14% in a single day 10 Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct Positive bias in Nifty likely to remain Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 Nifty Spot Nifty on course to make new highs on account of falling volatility scenario Source: Bloomberg, ICICIdirect.com Research 14

15 Nifty daily price distribution in low volatility period: Indicating sustainability at higher levels Low volatility period of (207 sessions) Low volatility period of 2014 (121 sessions) Frequency Frequency % -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% -2.0% -1.5% -1.0% -0.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% Nifty Daily Return Nifty Daily Return In both instances above, we can see that days with negative returns were quite low. The sharp decline in volatility could keep the positive bias intact in the Nifty. The equity index could make newer highs. Intermediate profit bookings are expected to attract buying, which would limited downsides. Source: Bloomberg, ICICIdirect.com Research 15

16 Deal What Team we published At Your Service 1 Earnings growth for FY18 and FY19 expected at 20%+ 2 Key Stock recommendations and dividend opportunities 3 Lower Volatility fueling upsides in Equity Markets including Nifty 4 Surge in G-Sec yields triggered FII interest 5 Technical and F&O Picture continue to point towards newer highs for Benchmarks 6 European elections next big trigger for global markets 16

17 FII Deal turned Team buyers At in Your debt Service market after four months The rise in yields provided FIIs an opportunity to invest in Indian G-Secs. US 10 year G-Sec yield has moved around 20 bps since the last week of February on increased expectation of a US Fed rate hike in its March policy meeting. The same may keep pressure on Indian G-Sec as well Click to read the detailed report 17

18 Deal What Team we published At Your Service 1 Earnings growth for FY18 and FY19 expected at 20%+ 2 Key Stock recommendations and dividend opportunities 3 Lower Volatility fueling upsides in Equity Markets including Nifty 4 Surge in G-Sec yields triggered FII interest 5 Technical and F&O Picture continue to point towards newer highs for Benchmarks 6 European elections next big trigger for global markets 18

19 Technical's Deal Team picture At Your suggest Service positive bias : Nifty heading for life highs... Technical Picture remains positive. Market to move towards its life highs of Golden crossover confirms the positive stance. Click to read the detailed report 19

20 F&O Deal data Team suggest At Your targets Service of 9000 and 9200 on Nifty in coming months.. Upcoming key events and risks market perceive... Highest Option base is at 8800 Put and 9000 call for March. This suggest positive consolidation bias to continue. Highest net call addition at strikes beyond 9000: suggesting Nifty to make life highs... Highest net Put additions at , suggesting limited decline... OI (In Lacs) Call OI Addition OI (In Lacs) Put OI Addition Click to read the detailed report 20

21 Deal What Team we published At Your Service 1 Worst is behind us : earnings growth for FY18 and FY19 at 20%+ 2 Key Stock recommendations and dividend opportunities 3 Lower Volatility fueling upsides in Equity Markets including Nifty 4 Surge in G-Sec yields triggered FII interest 5 Technical and F&O Picture continue to point towards newer highs for Benchmarks 6 European elections next big trigger for global markets 21

22 European elections next big trigger for global markets... In our Trending insights report we mentioned upcoming elections in Germany, Netherlands and France are likely to drive global markets, starting with Netherland elections on March 15. Key fear within market participants is that the parties in favour of a European exit come to power. Month March April May September Dates Risks markets perceive Upcoming key events and risks market perceive Netherland General elections 30. UK to trigger Article 50 (UK notifying to move out of Europe) Netherland : Geert Wilders, leader of Dutch PVV party wins UK:Article 50 is triggered with hard brexit stance 23. Presidential & general election in France (round 1) France : Marine Le Pen (National Front)leader finishes in top 2 spots 7. Presidential & general election in France (round 2) France : Marine Le Pen (Front National)leader wins election on anti-euro sentiments 17. Catalonia (1/5th of Spain Economy) independence referendum from Spain 23.General elections in Germany Cataloina : Catalonia wins indepence from spain Germany: Frauke Petry, AFD party wins influential Source: Bloomberg, ICICIdirect.com Research 22

23 Euro likely to strengthen towards 1.20, if anti-european Union (EU) parties loose... CFTC Euro speculative positioning (in Thousands) Short Euro positions starting getting added since 2014, when Euro was trading close to 1.25 levels... Jun-14 Jul-14 Sep-14 Nov-14 Dec-14 Feb-15 Mar-15 May-15 Jul-15 Aug-15 Oct-15 Dec-15 Jan-16 Mar-16 Apr-16 Jun-16 Aug-16 Sep-16 Nov-16 Dec-16 Feb-17 Net short positions since the start of 2017 have declined in the euro, suggesting a lowered chances of euro heading to parity Euro Spot Euro likely to move towards key shorting level of In case the Pro-EU wins in upcoming elections, euro is likely to move towards 1.20 In case of an Anti-EU wins in upcoming elections, euro is likely to head below parity vs. dollar 1.00 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Anti-EU parties loosing elections will weaken the Dollar. It will also strengthen the EM Currency and EM asset class appeal. Source: Bloomberg, CFTC, ICICIdirect.com Research 23

24 Pankaj Pandey Head Research ICICIdirect.com Research Desk, ICICI Securities Limited, 1st Floor, Akruti Trade Centre, Road No 7, MIDC Andheri (East) Mumbai

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