Vol.
: 329
13 FEB, 2017
Index
Market View 1 MARKET VIEW
TH E RE S UL T O F ST ATE S EL EC TION WIL L H AV E S E N TIME N T AL IM-
Company Update 2 P AC T
Around the
Economy 3 As discussed in last note, the market has embraced the
budget with high positivity. The impact of demonetization has also
Knowledge Corner 3
been digested and factored in by the market. Cautious stance by
Mutual Fund 4 The RBI on rate front is also discounted by the market. Now the
real test for the market will be the result of states election and par-
Commodity Corner 5
ticularly the state of UP. Any poor show by the ruling party in the
Forex Corner 6 center will have sentimental impact on the market. The broader pol-
Report Card 7 icy statement by President Trump regarding the strength of US Dol-
lar versus major currencies of the world, particularly Chinese Yuan
Short Term Call Status 8
and Japanese Yen has an immediate effect on Dollex. The Dollar in-
Editor & Contributor dex seems to have topped out and declining gradually. The state-
Darshana Mishra
ments on sweeping tax reforms by Trump administration lead the
rally in US and Europe.
Special Contributors
Kunal Shah
Dhaval Ghodasara Under the circumstances, the global cues are positive and the
market is in consolidation mode with positive bias. The next big
event will be GST implementation and its initial effect on economy.
Till then the election outcome, Trump effect and other such issues
will dominate the market. Technically there is a strong resistance at
8850 / 28500 which market tried to conquer but failed during last
week. It is advisable to remain highly cautious at higher levels, if it
For suggestions, feedback
and queries is not an investment but trading.
jstreet@jhaveritrade.com
Kamal Jhaveri
MD- Jhaveri Securities
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13, FEB 2017
Company Update : Edelweiss Financial Services Ltd.
Company Basics Financial Basics Share Holding Pattern
BSE Code 532922 FV (`) 1.00 Holder's Name % Holding
EPS (`) (TTM) 0.14 Public 57.47
NSE Symbol EDELWEISS P/E (x) (TTM) 20.4 Promoter 37.11
Others 5.42
EQUITY (` in Cr.) 79.57 P/BV (x) (TTM) 2.54
MKT.CAP (` in Cr.) 9362.17 BETA 0.7
Outlook and valuation : We forecast EPS growth of 37%/25% for FY17-18. We believe ROEs will expand 4.2 ppts
over FY16-18 to 16.4%. Despite a 90% run-up in the stock price YTD, we envisage further upside. Earnings upgrade
and higher multiple for credit business at 2x FY18F P/BV (vs. 1.5x earlier) drive our TP to Rs 150. NBFCs peers with
16-17% ROEs trade at 2.0-2.5x P/BV.
Company Overview :
Edelweiss Capital Limited (ECL) is one of India's fastest growing integrated investment banking companies. The Group's
services include investment banking, institutional equities, private client broking, asset management, wealth management,
insurance broking, wholesale financing and mutual funds. During the year 2006, the company made NBFC registration of
ECL Finance Limited and managed the first Qualified Institutional Placement under the new regulatory framework in India.
As of May 2008, the company had received final regulatory approval from the Securities & Exchange Board of India (SEBI)
to start its mutual fund business.
Investment Rational :
Strong performance in the market.
Edelweiss is one of the best pick among the NBFC space. Credit book is delivering good ROEs which I s being driven by healthy asset
quality, controlled costs and higher margins Future asset growth visibility is very high in the credit line businesses. What we specifically
like is its non monoline credit book which is well diversified across sectors.Q1 profit up by 54% YoY, and EPS by 8%. Loans grew up by
29% YOY across segments'. Credit business now forms 70% of earnings from 35% in FY11.
Edelweiss Financial Services Consolidated ROEs at 15% Ex-insurance ROEs have been improving in recent years as EDEL scales up
its credit business. Concurrently, the drag from low-yielding treasury investments has shriveled 1QFY17 annualized consolidated ROE
leapt to 15% from 12 % in FY16.Ex insurance ROE also improved to 19.4% YoY. We expect consolidated ROEs of 16-18% by FY18.
Agency business gaining strong footing
Last 7-8 years have been spent to build different agency line businesses and majority of them have gained considerable size now. In
capital market segment, broking average daily volume increased by 20% yoy to Rs60 bn for the quarter. Interestingly, broking busi-
nesses has enabled the NBFC to gain clients to whom they cross- sell wealth management, insurance products etc. Currently, nearly,
15% of its insurance products and 10-12% of housing loans are sold via its broking arm.
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Around The World
Weekly Market Recap :
The Reserve Bank of India (RBI) after its sixth bi-monthly monetary policy meeting on Wednesday, 8 February 2017, decided to keep the
policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.25%. Consequently, the reverse repo rate under the LAF re-
mains unchanged at 5.75%, and the marginal standing facility (MSF) rate and the bank rate at 6.75%.
The market rose last week on firm global stocks. Buying ahead of December IIP data due on Friday, 10 February 2017, and optim ism
about corporate earnings steered the domestic market higher. A positive trend in Asia and Europe also boosted sentiment in the domes-
tic market.
Market Eye Week ahead :
On the macro front, the government will announce monthly inflation data based on consumer price index (CPI) for January 2016 on Mon-
day, 13 February 2017. The government will announce monthly inflation data based on wholesale price index (WPI) for January 2016 on
Tuesday, 14 Feb. The Wholesale Price Index (WPI)-based inflation rose to 3.4% in December 2016 from 3.2% in November 2016, while
snapping decline for last three straight months.
China's Consumer Price Index (CPI) data for January 2017 will be unveiled on Monday, 13 Feb. US Core Consumer Price Index (CPI)
data for January 2017 will be unveiled on Wednesday, 15 February 2017. US crude oil inventories data will be unveiled on Wednesday,
15 Feb. The Energy Information Administration's (EIA) Crude Oil Inventories measures the weekly change in the number of barrels of
commercial crude oil held by US firms.
Key Events / Factors to Watch
1. Mon : Results: Petronet LNG,PFC Ltd,NBCC, NMDC Ltd,Hind Petro.
2. Tue : - Results: Tata Motors, Vedanta Ltd, Voltas.
3. Wed : Results : Grasim Ind, Nestle India
4. Thu: Dividend: Bharat Forge, Bosch ltd, Power Grid.
5. Fri : Results: Dividend: SRF.
Knowledge Corner :
Qualified institutional placement (QIP)
These Qualified institutional placement (QIP) is a capital-raising tool, primarily used in India and other parts of southern
Asia, whereby a listed company can issue equity shares, fully and partly convertible debentures, or any securities other
than warrants which are convertible to equity shares to a qualified institutional buyer (QIB).
How much can companies raise via QIP : In a single financial year a company can raise not more than 5 times its net
worth based on the audited financial statements of the previous financial year.
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Mutual Fund Corner
Top 10 Sector Break-Ups
Fund Name
Sector Weights Fund (%)
Scheme Name BIRLA SUN LIFE ADVANTAGE FUND
Financial 35.34
AMC BIRLA un Life Asset Management Company Automobile 17.82
Energy 2.63
Type Open Ended & Equity-oriented
Healthcare 12.07
Category Open-ended FMCG 4.45
Launch Date Feburary 1995 Cons. Durable 2.77
Metals 4.36
Fund Manager Satyabrata Mohanty since Oct 2011 Construction 6.03
Net Assets (` Diversified 3.58
Rs. 1842.9 crore as on Oct 31,2016
In crore ) Chemicals 5.18
History 2013 2014 2015 2016 Risk Analysis
Volatility Measures
NAV (Rs) 173.66 278.11 292.67 323.30
Standard Deviation 17.14
Total Return (%) 7.23 60.14 4.77 10.47 Sharpe Ratio 1.30
Beta 1.10
Rank (Fund/Category) 27/73 9/145 61/78 18/143
R-Squared 0.80
Alpha 14.94
52 Week High (Rs) 173.76 280.58 314.86 362.13
52 Week Low (Rs) 136.14 164.16 272.70 252.92
Composition (%)
Equity 98.26
Net Assets (Rs.Cr) 278.89 393.02 580.62 1473.59 Debt 3.52
Cash -1.79
Expense Ratio (%) 2.87 2.85 2.81 -
Fund Performance v/s S&P BSE 100 Fund Style
Investment Style
Growth Blend Value
Large
Capitalization
Medium
Small
Fund
S&P BSE 200
(Rebased to 10,000) Source : - www.valueresearchonline.com
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Commodity Corner
BULLION
FUNDAMENTAL: Bullion prices ended with gains where gold prices gained by around one percent amid political risk of European elec-
tions and worries over U.S. President Donald Trump's policies buoyed safe haven demand for the bullion. Silver prices gained as an im-
proving China signals a better global economy and gives support to the more industrial metals. The dollar pared gains against a cur-
rency basket on Friday after earlier strength from U.S. President Donald Trump's pledge to announce a major tax plan within weeks
cooled some market nerves, reinvigorating dollar bulls. U.S. economic data has also stoked talk that the Federal Reserve would press
ahead with U.S. interest rate hikes sooner rather than later. U.S. import prices rose more than expected in January, while initial jobless
claims dropped unexpectedly last week to the lowest in nearly 43 years. Gold is highly sensitive to rising U.S. interest rates, which in-
crease the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced. The dollar pared gains against a
currency basket after earlier strength from U.S. President Donald Trump's pledge to announce a major tax plan within weeks cooled
some market nerves, reinvigorating dollar bulls. Asian gold demand was mixed this week with Indian jewellers stocking up for the wed-
ding season while rising prices kept buyers on the sidelines elsewhere.
RECOMMENDATION : BUY GOLD @ 28850 SL 28600 TGT 29150-29350 BUY SILVER @41950 SL 41450 TGT 42600-43250
BASE METALS
FUNDAMENTAL: Base metals prices rallies as investors piled into risky assets after U.S. President Trump calmed international tensions
by affirming the "one- China" policy and promised big tax cuts. Base metals were also boosted after China reported better-than-expected
trade data for January as demand picked up both at home and abroad, an encouraging start to 2017 for the world's largest trading na-
tion. Copper LME prices jumped above $6000 to their highest level since June 2015, on talk of BHP Billiton declaring force majeure on
shipments from its Escondida mine in Chile. Copper prices also seen supported by supply concerns and Chinese trade data that under-
scored stronger demand prospects for the metal. China reported better-than-expected trade data for January as demand picked up both
at home and abroad, an encouraging start to 2017 for the world's largest trading nation. January exports rose 7.9 percent from a year
earlier as global demand perked up, while imports expanded 16.7 percent on improved domestic appetite for coal, crude oil and iron ore,
preliminary data from the General Administration of Customs showed.
RECOMMENDATION : BUY ALUMINIUM @ 122 SL 120 TGT 124.5-126 BUY COPPER @ 399 SL 385 TGT 408-420 BUY ZINC @ 192 SL 188
TGT 196-202 BUY NICKEL @ 700 SL 685 TGT 722-735
ENERGY
FUNDAMENTAL : Crude oil prices ended with nominal losses on weekly basis where prices recovered almost all the losses on Friday af-
ter reports that OPEC members delivered more than 90 percent of the output cuts they pledged in a landmark deal that took effect in
January. Supply from the 11 members of the Organization of the Petroleum Exporting Countries with production targets under the deal
fell to 29.92 million barrels per day, according to the average assessments of the six secondary sources OPEC uses to monitor output,
or 92 percent compliance. The International Energy Agency (IEA) - one of OPEC's six sources - said the cuts in January equated to 90
percent of the agreed reductions in output, far higher than the initial 60 percent compliance with a 2009 OPEC deal. Another increase in
U.S. oil rigs limited gains. Drillers added eight oil rigs in the week to Feb. 10, bringing the total count up to 591, the most since October
2015, energy services firm Baker Hughes Inc said. The IEA, which advises industrial nations on energy policy, said if current compliance
levels hold, the global oil stocks overhang that has weighed on prices should fall by about 600,000 barrels per day (bpd) in the next six
months.
RECOMMENDATION : BUY CRUDE @ 3540 SL 3400 TGT 3620-3720 SELL NAT.GAS @ 210 SL 218 TGT 201-196
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Commodity Corner
Forex Corner
Market Recap :
The The Indian rupee weakened marginally
against the US dollar ahead of the key consumer
price inflation (CPI) data, which will be released
after 5.30pm on Monday.
Indias 10-year bond yield was at 6.801%, from
its Fridays close of 6.805%. Bond yields and
prices move in opposite directions.
The dollar index, which measures the US cur-
rencys strength against major currencies, was
trading at 100.63 down 0.17% from its previous
close of 100.80.
Market Eye Week ahead :
The USDINR On daily chart beloved all short term, medium term, and long term moving average which is 20,
100 and 200.Whereas on weekly chart pair has continually tread below support levels at 50WMA. Which suggest
short term trend is bearish. So for trading perspective, one could buy up to the level 68.00-68.22 with SL of 67.00
for target of 68.40-68.50.
USD/INR
Level S2 S1 CP R1 R2 High Low Close
USD/INR 66.74 66.86 66.98 67.10 67.22 67.10 66.86 66.98
EUR/INR
Level S2 S1 CP R1 R2 High Low Close
EUR/INR 71.08 71.23 71.41 71.56 74.74 71.59 71.26 71.38
GBP/INR
Level S2 S1 CP R1 R2 High Low Close
GBP/INR 83.30 83.52 83.75 83.97 84.20 83.98 83.53 83.74
JPY/INR
Level S2 S1 CP R1 R2 High Low Close
JPY/INR 58.76 58.45 58.94 59.25 59.43 59.12 58.63 59.07
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J Street Recommendations Report Card
Nifty last week opened at 8785.45, attained a high at8822.10 and fell to a low of 8715. Nifty
closed the week at 8793.55 thereby showed a net rise of 0.60% on week to week basis.
Traders long and holding the same can revise up the stop loss to 8700 and lock profits and
loss.Supply zones are at 8848-8968 and 8849-9119.
Top Fundamental Stocks
Absolute
Stocks Rec. Date CMP on Rec. CMP Target Return @ Status
CMP
Alembic Pharma-
30/08/2016 630 556 732 -17% Buy
ceuticals
Coromandel
25/07/2016 235 353 308 29% Buy
International
Capital First 06/06/2016 552 667 660 -6% Profit book
Wonderla Holidays 25/04/2016 387 382 498 -1% Accumulate
Mold-Tek Packaging 04/04/2016 138 48 179 -2% Buy
Jamna Auto 22/02/2016 133 201 181 -11% Buy
MT Educare 01/02/2016 164 128 230 -4% Buy
Garware-Wall Ropes 28/12/2015 425 622 550 14% Buy
AYM Syntax 23/11/2015 121 82 223 -2% Buy
Natco Parma 02/11/2015 509 773 636 31% Buy
SRF 21/09/2015 1140 1645 1374 -6% Buy
Ahluwalia contracts 24/08/2015 235 294 368 3% Buy
Infinite Computer
20/07/2015 190 235 255 -3% Buy
Sol.
Sadbhav
04/05/2015 298 280 430 3% Buy
Engineering Ltd.
Omkar speciality
16/03/2015 152 166 251 0% Buy
Chemicals
DHFL 16/02/2015 252 305 368 -4% Accumulate
TV Today Network 27/01/2015 222 277 337 -19% Buy
M&M 12/01/2015 1238 1294 1452 -5% Buy
Havells India 27/10/2014 274 436 346 7% Buy
PTC India Fin. Ser. 07/07/2014 39 43 45 5% Profit book
Adani Port 05/07/2014 280 312 347 3% Accumulate
It's not important whether you are right or wrong, Its about how much money you make when you're right and how
much you lose when you're wrong.
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J Street Short Term Call Status
Sr. BUY/ TRIGGER %
No.
DATE STOCK RANGE RANGE TGT SL STATUS
SELL PRICE RETURN
1 27-Dec-16 GLENMARK SELL 895 884 889.50 852.00 919 TA 4.2
2 28-Dec-16 CESC BUY 620 632 626.00 656.00 598 TA 4
3 29-Dec-16 ADANIPORT BUY 265 270 267.50 281.00 259 TA 4.2
4 2-Jan-17 ABIRLANUVO BUY 1270 1300 1285.00 1355.00 1230 TA 4
5 3-Jan-17 TECHM BUY 484 490 487.00 502.00 470 TA 4.1
6 4-Jan-17 NTPC BUY 163 166 164.50 173.00 159 TA 4.1
7 5-Jan-17 HCLTECH BUY 855 863 859.00 895.00 823 TA 4.2
8 6-Jan-17 POWERGRID BUY 187 191 189.00 199.00 182 SL -3.8
9 9-Jan-17 SIEMENS BUY 1155 1170 1162.50 1214.00 1125 TA 4.2
10 10-Jan-17 MARUTI BUY 5650 5690 5670.00 5915.00 5485 TA 4.1
11 11-Jan-17 YESBANK BUY 1260 1285 1272.50 1335.00 1232 TA 4
12 12-Jan-17 ZEEL BUY 474 480 477.00 500.00 460 TA 4.1
13 13-Jan-17 IOC BUY 350 357 353.50 371.00 339 TA 4.2
14 16-Jan-17 TATAELAXSI BUY 1414 1416 1415.00 1488.00 1370 TA 4.8
15 18-Jan-17 SPARC BUY 325 330 327.50 344.00 313 SL -3.8
16 19-Jan-17 ULTRACMCO BUY 3470 3520 3495.00 3660.00 3390 TA 4.1
17 20-Jan-17 AMRAJABAT BUY 915 928 921.50 965.00 888 SL -3.5
18 23-Jan-17 HAVELLS BUY 398 403 400.50 419.00 388 TA 4.1
19 24-Jan-17 BEML BUY 1235 1245 1240.00 1305.00 1190 TA 4.1
20 25-Jan-17 GRASIM BUY 900 916 908.00 952.00 875 TA 4.2
21 30-Jan-17 PETRONET BUY 391 395 393.00 412.00 378 SL -3.5
22 31-Jan-17 GODREJCP BUY 1580 1610 1595.00 1680.00 1530 OPEN .
23 1-Feb-17 NBCC BUY 268 272 270.00 283.00 260 OPEN .
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J Street Short Term Call Status
BUY/ TRIGGER %
Sr. No. DATE STOCK RANGE RANGE TGT SL STATUS
SELL PRICE RETURN
24 2-Feb-17 M&M BUY 1285 1296 1290.50 1350.00 1250 OPEN
25 3-Feb-17 UPL BUY 730 738 734.00 766.00 712 OPEN
26 6-Feb-17 COALINDIA BUY 324 328 326.00 341.00 315 OPEN
27 7-Feb-17 SIEMENS BUY 1220 1234 1227.00 1282.00 1184 OPEN
28 8-Feb-17 CESC BUY 800 808 804.00 840.00 776 TA 4.2
29 9-Feb-17 GAIL BUY 483 488 485.50 505.00 471 OPEN
30 10-Feb-17 MOTHERSUMI BUY 345 352 348.50 366.00 337 OPEN
STATUS CALLS RATIO
TA+PB 18 81.81
SL+EXIT 04 18.18
TOTAL 22 100.00
One call on daily basis is given keeping view of short term trading on closing basis.
Time frame and expected % of return is also mentioned with the suggested call.
This call are purely given on technical trading system generated by the Technical Research Desk.
Generally Expected Return on investment is 5-6 % with time horizon of 6-7 days.
Profit Booking update is considered if on an average expected return exceed 3.50-4.00 % against the
Expected return of 5-6%
Risk- Reward ratio percentage wise depends on the volatility of stock Normally it stands ( 3 : 9)
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