Market Update

Sunday, September 9, 2018

Share Market Services: MCX SUPPORT & RESISTANCE LEVEL Update by TradeIndi...

Share Market Services: MCX SUPPORT & RESISTANCE LEVEL Update by TradeIndi...: MCX FREE TIPS MCX SUPPORT & RESISTANCE LEVEL GOLD OCT FUTURE R2–30700 R1-30600 S1-30400 S2-30300 SILVER DEC FUTURE ...

MCX SUPPORT & RESISTANCE LEVEL Update by TradeIndia Research

MCX FREE TIPS

MCX SUPPORT & RESISTANCE LEVEL

GOLD OCT FUTURE

R2–30700
R1-30600
S1-30400
S2-30300

SILVER DEC FUTURE

R2 –37600
R1- 37400
S1-37000
S2-36800

CRUDE OIL SEP FUTURE

R2 –5000
R1-4970
S1-4910
S2-4880

COPPER AUG FUTURE

R2 –428
R1-425.50
S1-420.50
S2-418

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Thursday, September 6, 2018

Mid & smallcaps plunged 10-40% as rupee fell to 72/$. Do you own any?

The Indian currency has fallen from 70 to 72 per dollar in just 21 sessions.

The sharp slide by Indian rupee to 72/USD is nothing less than a shocker for the economy and investors. The rupee has depreciated by about 13 percent so far in 2018 and has fallen from 70 to 72 per dollar in 21 sessions.

The currency hit a low of 70/USD on August 13 and since then, it has moved in just one direction and that is on the downside. It touched 71/USD on August 31 and 72/$ on September 6.

In comparison, benchmark indices have risen over 1 percent since August 13 when the rupee touched 70/USD for the first time in history, but high beta small and midcap stocks suffered the most. Select stocks in the S&P BSE Small and Midcap indices slipped 20-40% in the same period.

The S&P BSE Sensex rose by about 1.6 percent or nearly 600 points during this period. The S&P BSE Midcap index gained 1.3 percent, and the S&P BSE Small-cap index edged higher by about 1 percent.

However, weakness was seen in over 50 high-beta smallcap names which include Intrasoft Technologies, Ok Play India, Camlin Fine Sciences, Indosolar, DB Realty, PC Jeweller, Mangalam Drugs, etc.

In the S&P BSE Midcap index, as many as 8 stocks have plunged in double-digits since August 13 which includes Bharat Electronics (down 20%), Reliance Communication (down 15%), Federal Bank (down 11%), and Mangalore Refinery (down 10%).

If we look at the three episodes in 2012, 2013, and 2014 when the rupee was weak, data suggests that mid & small-cap stocks usually come under pressure whenever the currency depreciates.

The Nifty50 and largecaps managed reasonably well, exiting each episode with a less than 10 percent loss or small gains. “Midcaps had significant and painful sell-offs in 2011 and 2013, but attractive gains in 2014,” Sunil Sharma, Chief Investment Officer, Sanctum Wealth Management told Moneycontrol.

“While definitive statements can’t be made because each cycle is different, clearly this suggests caution with respect to mid and small-cap exposure until currency depreciation stabilizes,” he said.

In terms of sectors, IT and Pharma clearly benefit from a depreciating rupee. FMCG benefits due to the inelasticity of demand for fast moving goods, and the ability of most FMCG companies to pass on price rises.

Sectors & Outlook on rupee:

The Indian rupee touched a fresh low of Rs 72/USD largely weighed down by concerns over rising crude prices, simmering trade tensions, weak local equity markets, broad strength in the US dollar (dollar index up about 0.5%) and weakness in the emerging market currencies.

Tracking the momentum, the rupee could well touch Rs 72.50-73/$ in the near-term. Experts suggest that companies with high foreign debt will be impacted by the increased debt servicing caused by falling rupee.

Source: https://www.moneycontrol.com/news/business/markets/50-mid-smallcaps-plunged-10-40-as-rupee-fell-to-72-do-you-own-any-2925451.html

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Wednesday, September 5, 2018

RBL Bank, Prabhat Dairy among top 10 stocks that could return up to 60%

RBL Bank is likely to see improving return profile over the next couple of years, due to improving advances & loan mix, higher CASA, lower cost ratios and improving asset quality

The market is continuing to correct and consolidate after hitting record highs last week dragged by concerns like weak rupee and higher crude prices, which may impact the country's current account deficit and economic growth.

The Nifty has so farlost more than 200 points and the Sensex around 700 points from their record highs of 11,760.20 and 38,989.65, respectively, hit on August 29.

Experts suggest that the correction was due as the indices had rallied more than 10 percent year-to-date.

Crude oil prices have rallied nearly 23 percent year-to-date to USD 79 a barrel since August 15, while Indian rupee has fallen nearly 12 percent year-to-date against the US dollar.

“The ongoing depreciation has room till 73, but the journey till there is less likely to be steep because of the ongoing trade war tensions, and a higher likelihood of only a gradual US rate hike will ensure that we may not have any runaway rally in US dollar or weakness in rupee,” Anand James Chief Market Strategist at Geojit Financial Services told

Brokerage: IIFL

RBL Bank: Buy | Target: Rs 739 | Return: 18%

RBL Bank (one of the fastest growing private banks) is likely to see improving return profile over the next couple of years, due to improving advances & loan mix, higher CASA, lower cost ratios and improving asset quality.

We expect the bank to report industry-leading loan CAGR of around 31.5 percent over FY18-20E. We forecast revenue and PAT CAGR of 27.5 percent and 36.8 percent, respectively, over FY18-20E.

We forecast return on assets (RoA) and return on equity (RoE) will increase by 24 bps and 317 bps to 1.4 percent and 14.6 percent, respectively, over FY18-20E. Considering the multiple levers, we value the stock at 3.6x FY20E P/ABV to arrive at the 12-months target price of Rs 739.

Karur Vysya Bank: Buy | Target: Rs 116 | Return: 24%

Karur Vysya Bank will benefit from its digital banking initiative, asset quality improvement, and advances growth. Further, improving loan mix, higher CASA, lower cost ratios to also support its return profile.

We forecast its RoA & RoE to increase by 48bps and 540bps to 1 percent and 11.5 percent, respectively, over FY18-20E. KVB is currently trading at around 1.5x FY20E P/ABV, which is attractive from a risk-reward point of view.

Reduction in stressed asset formation and improvement in core profitability would drive re-rating of the stock. We forecast its revenue and profit to register 14.1 percent and 50.9 percent CAGR over FY18-20E, respectively.

Considering the multiple levers, we value the bank at 1.8x FY20E P/ABV, to arrive at the 12-month target price of Rs 116.

City Union Bank: Buy | Target: Rs 235 | Return: 20%

City Union Bank will benefit from its increasing loan book led by better traction in MSME and retail loan book segments. Its focus on lower slippages and higher recovery will lead to declining credit cost over the next couple of years.

In addition, focus on high yielding products, higher CASA & CD ratio and lower cost ratios to also support its return profile.

We forecast its RoA & RoE to increase by 7bps and 13bps to 1.64 percent and 15.4 percent respectively over FY18-20E. Considering multiple levers, we assign 2.8x on FY20E P/ABV to arrive at target price of Rs 235.

Kalpataru Power Transmission: Buy | Target: Rs 451 | Return: 23%

KPT's order book at Rs 13,700 crore and L1 status in Rs 2,340 crore order provides strong revenue visibility (over 2 years) in standalone business.

Traction in international transmission & distribution (Bangladesh, Sri Lanka etc) and railways (Africa & CIS regions) will lead to sales / PAT CAGR of 15.5 percent / 18.5 percent over FY18-20E.

We value standalone EPC business at RS 384 per share; BOOT assets at 1xBV at Rs 14 per share; JMC at Rs 39 per share; SSLL at Rs 2 per share, 30 percent holding company discount on each and Rs 12 per share for real estate business. We recommend Buy with a SOTP based target price of Rs 451 per share.

Prabhat Dairy: Buy | Target: Rs 195 | Return: 25%

Prabhat Dairy is a Maharashtra based private dairy company (milk processing capacity of 1.1 million litres per day, around 70 percent direct sourcing) with a strong B2B presence. It sells fresh cow milk and value added products under its flagship brand Prabhat and Volup (icecream).

Prabhat is targeting to expand its reach to 0.2 million retail outlets by FY20 (0.1 million in FY18) driving strong growth in B2C business from a low base and increase the segment's sales contribution to 50 percent from the current 30 percent, in the next 2-3 years.

We estimate revenue and PAT CAGR of 12 percent and 32 percent respectively over FY18-20E owing to its strong B2B presence, increasing share of B2C business, and margin improvement (led by operating leverage). We recommend Buy with target price of Rs 195.

Eveready Industries: Buy | Target: Rs 22% | Return: 22%

Eveready's revenue mix is shifting from batteries & flashlights (82 percent of revenues in FY14 to 64 percent in FY18; 58 percent in FY20E) towards lighting and appliances (12 percent in FY14 to 31 percent in FY18; 34 percent in FY20E).

Entry into confectionaries will add Rs 70 crore to cumulative topline over FY18-20E.

Implementation of BIS compliance for dry cell batteries starting October 2018 will reduce dumping of cheap Chinese batteries, pushing volumes for domestic companies.

Eveready has around Rs 100 crore worth of land bank which can be monetised to either pay off long term debt (Rs 120 crore) or take care of other contingencies, if any.

We expect company to post consolidated sales and PAT CAGR of 11 percent and 52 percent respectively over FY18-20E (PAT CAGR is optically high due to 43 percent drop in FY18 PAT).

Abbott India: Buy | Target: Rs 9,639 | Return: 15%

Abbott's branded business and 21 product launches led to revenue growth of 13.6 percent YoY in FY18 versus Indian pharma industry growth of 5.2 percent. Abbott expects to introduce 100+ products over next five years which is expected to provide further growth opportunities.

Due to the stable branded business and cash rich balance sheet, company enjoys ROE of 20 percent plus and ROIC of 50 percent plus. We expect revenue / PAT CAGR of 16 percent / 21 percent over FY18-20E. We recommend Buy on Abbott India with target price of Rs 9,639.

Sanofi India: Buy | Target: Rs 7,446 | Return: 14%

Sanofi has brands like Lantus, Combiflam, Amaryl and Allegra which feature amongst the top 100 brands in Indian pharma industry. Sanofi's insulin portfolio has been growing in double digits due to growth in its diabetes brands. We are positive on Sanofi's business due to the increase in lifestyle related diseases in India.

We project Sanofi's revenue / PAT CAGR of 15 percent / 17 percent over CY18-20 due to strong brand equity and favourable industry dynamics. We recommend Buy on Sanofi India with target price of Rs 7,446.

Brokerage: HDFC Securities

HG Infra Engineering: Buy | Target: Rs 386 | Return: 60%

HG Infra Engineering is an EPC company with focus on highways, roads and bridges in addition to civil works and water supply projects. It has been a sub-contractor for established players like L&T, Tata Projects and IRB Infra. Strong and persistent execution has helped it transform from a sub-contractor to a frontline EPC bidder.

HG has grown to pre-qualify for projects up to Rs 1,120/1,600 crore in EPC/HAM respectively. The transformation is visible, with HG quadrupling its revenues over FY13-18.

With a further pickup in NHAI orders in second half of FY19E, EPC players will only add to their FY18E book/bill of around 3.3x. This should address longevity concerns on their earnings up-cycle. For HG, EPS should rise to Rs 24.7 per share in FY20E.

HG has a firm grip over working capital (and hence, debt) and should deliver high RoEs more than 20 percent. We initiate coverage with a target price of Rs 386 (valuing core EPC operations at 15x FY20E EPS).

Brokerage: Anand Rathi

Khadim India: Buy | Target: Rs 976 | Return: 29%

We initiated coverage on Khadim India with a Buy rating and a target price of Rs 976 based on 16x FY20e EV/EBITDA. We believe it is best positioned to benefit from the domestic footwear industry shifting towards branded footwear.

We anticipate it reporting a 19 percent revenue CAGR over FY18-20 driven respectively by its dual strategy of expanding its retail network (a 16 percent revenue CAGR) and its distribution channel (a 25 percent revenue CAGR).

Driven by operating leverage kicking in and lower interest costs we expect Khadim to deliver a 28 percent PAT CAGR over FY18-20. At the CMP, the stock trades at an EV/EBITDA of 13x FY20e, a 35 percent discount to its peers (such as Bata and Relaxo).

Source: https://www.moneycontrol.com/news/business/markets/rbl-bank-prabhat-dairy-among-top-10-stocks-that-could-return-up-to-60-2915831.html

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6 ways your regular investments can ensure financial success

Charm of any process lies in the ease of following that process

Limited income and a long list of financial goals make many turn away from the thought of getting into savings and investment mode. However, it should not be the case. Archimedes said, "Give me a lever long enough and a fulcrum on which to place it, and I shall move the world." When it comes to achieving your financial goals, regular investments (lever) over a long period of time (fulcrum) helps you achieve impossible sounding financial goals (moving the world). Here is how regular investments can ensure financial success.

Invest as you earn

Charm of any process lies in the ease of following that process. An average man on the street may frown at the idea of going to a place a km away, if he has to take 10 turns to reach that place. But show him a place 2 km away on a straight road and he is happy with it.

Most of us earn regular income by way of salary, pension and interest. Even self-employed individuals can visualise their cash flows in many cases. That makes investing on the go a natural process. Instead of making one large investment, it is less stressful to invest small amounts at regular intervals. “If you do anything regularly, it becomes a habit. It has been observed that investors, who complete 60 instalments of their SIP, are likely to continue investing over their life-time,” says Mohit Gang, co-Founder and CEO of Moneyfront.in, a mutual fund distribution platform.

Helps build an emergency fund

Meet a financial planner and the first prescription you get is to create an emergency fund. Depending on your job profile and your needs, you have to set aside expenses to cover three months to one year. The bad news is your monthly expenses also include expenses towards loan EMI and insurance premiums. That makes it a large sum for many.

If you have to build a corpus of Rs 3 lakh in emergency funds over the next three years, you may want to simply start a recurring fixed deposit of Rs 9,300 per month at 7 percent rate of interest.

Arrange down payment for home and other large purchases

Next in line comes large financial goals such as buying a home. Given home prices, the purchase needs to be funded with borrowed money, especially if you are keen to buy a home in a city like Mumbai. But no lender will fund the property if you do not have around 20 percent of the property value. This amount is called down payment. The bank is willing to fund the property only after you contribute to the same.

If you decide to buy a house five years from now, start a reverse EMI now. Either choose a short term bond fund or a recurring fixed deposit and start depositing money each month. Rs 15,000 invested per month for five years will return Rs 10.73 lakh at 7 percent rate of interest. “The magic of compounding works in your favour. And you end up building a desired corpus over a period of time without much stress,” says Gang.

Prepare for goals that are far away

In the case of millennials, retirement is a faraway situation. Many of them do not even have a fair idea of the lifestyle they would have when they retire. Even employed individuals in their 40s find it difficult to visualise their retirement. Run of the mill calculations using 6 percent rate of inflation, throw eye-popping numbers. For example, a household that spends Rs 50,000 per month will need Rs 1.6 lakh per month to enjoy the same lifestyle after 20 years.

As we move on in our life, our lifestyle also changes. Our needs and the price tags that are associated with them also vary by a wide margin. This uncertainty may demotivate many. But if one starts saving regularly and gradually increase the investment he can accumulate a large corpus. Such large sums then can be earmarked for specific financial goals such as retirement, health funds and charity.

Interest rate risk is taken care of

Bond funds were earlier seen as relatively safe haven. As the business cycles turn shorter, interest rate risk becomes prominent and make bonds market volatile. An upsurge in interest rates, led to a fall in bond prices. Volatility in bond funds have unsettled many investors. If you invest at regular intervals, you get to buy the bond portfolio at various price points. Over the long term, the interest rate risk stand minimised.

If you are an investors in assured returns instruments with a maturity date such as fixed deposits, bonds and fixed maturity plans, investing regularly helps. You end up locking in yields at various levels. As the instruments mature at various point of time, you are not exposed to the risk associated with reinvestment of the proceeds.

Reduce market timing risk

Systematic investment plans of equity mutual funds are lapped up by savvy investors for this reason. Ajay Kinjawadekar, Founder of MoneySafe Financial Services, says, “As you invest at regular interval, you do away the risk of investing all your money at the peak of the market.” It lets you invest in a volatile asset class such as equity without losing peace of mind. If you have a long term view on your equity mutual fund investments, you are more likely to accumulate wealth.

Source: https://www.moneycontrol.com/news/business/personal-finance/6-ways-your-regular-investments-can-ensure-financial-success-2916381.html

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