Friday 29 April 2016

Nifty Fut(May): Sustain Below 7820-7780 Zone, Expect 7540-7450 In The Short Term

SGX NF: 7880 (CMP)

NSE-NF: 7895 (LTP)

Trading Idea: NSE-NF (May)

Either sell around 7920-7980 or on rise around 8010-8055-8075-8095;

TGT: 7820*-7780-7740-7705-7660*-7605-7540*-7505-7440-7295 (5-15 days);

TSL> 8150-8180

Note: Consecutive closing (3 days) above 8150-8180 for any reason, NF may further rally up to 8240*-8310-8405-8550 & 8750-8935-9210 in the near to mid term (alternative bullish case scenario).

Yesterday's epic BOJ inaction may be an indication that Central Bankers are increasingly out of ammunition for more QQE. Although, there was not so much expectation of more BOJ QQE this time, some of the BOJ/Kuroda comments about GDP and inflation (lower target then previous estimates) in Japan hurts the traders sentiment and consequently USDJPY dumped (risk aversion mode). It seems that BOJ is in no mood for more QQE until USDJPY fall below 105 or more and basically kicking the can to the Japanese Govt for more structural or monetary stimulus. Perhaps, BOJ and Abenomics are not so sure about the effect of the NIRP and they may observe for more time and mood of the Japanese people are also not so great about the possible spillover effect of this NIRP.

After failed NIRP (negative interest of certain bank deposits) in Jan'16, BOJ is thinking for some negative interest on lending too !!.

All eyes now will be on June end for Fed, G-7 and BOJ meet. Its now almost certain that Fed is not going to think seriously for any hike before Dec'16 (after US election) and until then it will continue its verbal intervention in a co-ordinated manner with ECB/BOJ/PBOC to take care of the market volatility. Ultimately Fed dot-plots may be changed to four hikes in four years rather than the Dec'15 projection of four hikes in a year (2016) and by its own words, one should not pay so much attention in its dot-plots as its a mere academical projection. By this way, Fed is loosing its own credibility and there are some questions that Fed is indeed "Federal Bank Of America or China" as its basically taking care of the USDCNY equation and USD outflow concerns from China.

But the main concern in China is now credit bubble and increasing corporate bond defaults.

Apart from these, Brexit & also some types of Grexit fear may add some more volatility in the market in the weeks/months ahead.

BOJ may consider some 3-D QQE after forthcoming G-7 meeting in Japan at June end so that Japan may not be termed as "currency manipulator" as a "host country".

After all the years of competitive QQE (Fed/ECB/BOJ/PBOC), it seems that its a "zero sum" game as there is little improvement in real economic growth and policy makers are now claiming to avert the deflation/de-growth at least. On the other side, QQE easy money paved the way for excess production of commodities (like oil, steel etc) and the consequent poor demand & excess supply dynamics is now quite visible along with related debt bombs.

Now, the question may be with decades of ZIRP/NIRP, how much more Central Bankers may do in future to avert any serious market meltdown or economic recession ? 

Going ahead, C-3 and PBOC also may choose not to use QQE more aggressively and keep some "bullets" in the arsenal for future "war with deflation/recession" and in the meantime, Govt has to do more for structural reform.

Back to home, with ongoing domestic political battle, there is little hope for for passage of GST & other important reform bills this time too in RS. This along with growing concerns for the current state of drought and acute water crisis in major parts of the country and concerns about Bank NPAS fiasco & consequent normal lending activities may put some more pressure on our market apart from global factors.

On the other side, although there are some hopes for better monsoon this year, one good year of monsoon may not be enough to compensate the previous two years of bad monsoon.

On the positive sides, Q4FY16 results so far are decent and there are also some early indication about overall economic recovery (?) and increased infra spending (specially for road sectors) by the Govt.

Among all these, market will be volatile and there will be enough opportunities to trade the same and perhaps, major Central Bankers may also want that too !!.

NF may be also on the verge of "Golden Cross" and for any uptrend from here, it has to sustain above 8125-8180 zone.

Analytical Charts:









Thursday 28 April 2016

Indusind Bank: 1055-1085 May Be A Big Hurdle

Trading Idea: Indusind Bank

CMP: 1040

Either sell around 1045-1055 or on rise 1085-1100;

TGT: 994*-970-949-935*-895-855*-832-799* (1-3/6M)

TSL> 1110

Note: Consecutive closing (3 days) above 1110 zone for any reason, IIB may further rally up to 1150*-1200 & 1280 in the near to long term (alternative bullish case scenario).

Q4FY16 PAT of IIB printed at Rs.620.35 cr against consensus of 629.20 (YOY: 495.27; QOQ: 581.02).

Q4FY16 diluted EPS was at 10.33 against estimate of 10.47 (lagged by 1.35%).  Previous median forecast of EPS was at 11.13 (YOY: 9.20; QOQ: 9.68).

In short Q4FY16 result of IIB was slightly below street estimate and provision also raised by 20.65% from Rs.177 cr to Rs.213.6 cr (QOQ). But, retail loan momentum is picking up and many analysts are banking up on it with 28% CAGR in EPS and giving a TP of around 1175 in 12 months.

For IIB:

Q4FY16 TTM EPS: 39.15 (FY16/Actual-Diluted)

Projected FWD EPS: 46.45-55.05-65.25 (FY:17-19/Estimated)

Average PE: 22

As par BG metrics and current market parameters:

Present median valuation of IIB may be around: 905 (FY:16/TTM)

Projected fair value might be around: 985-1075-1170 (FY:17-19/FWD)

INDUSINDBK EPS(TTM) BV(Act)  P/E(AVG) Low High Median  200-DEMA 10-DEMA
Q4FY16/TTM 39.15 193.4 22 881.58 922.00 901.79 902.33 986.98
FY17/FWD 46.45 215.75 22 960.26 1004.29 982.27 902.33 986.98
FY18/FWD 55.05 240.55 22 1045.38 1093.31 1069.34 902.33 986.98
FY19/FWD 65.25 268.15 22 1138.11 1190.30 1164.20 902.33 986.98

Analytical Charts:









Wednesday 27 April 2016

Bharti Airtel: Ahead Of Q4 Result; May Face Strong Resistance Around 366-375 Zone

Trading Idea: Bharti Airtel

CMP: 360

Either sell around 366-370 or on rise around 376-386-396;

TGT: 355-345*-325-314*-303-290-280*-260 (1-3/6M)

TSL> 400

Note: Consecutive closing (3 days) above 400 for any reason, Bharti may further rally up to 420-435* and 453*-470 & 520*-720 in the near to long term (alternative bullish case scenario).

Q4FY16 result and buy back details will be published today.

Consolidated Q3FY16 TTM EPS: 13.63

Consensus Q4FY16 PAT: Rs.995 cr (YOY: 1255.30; QOQ: 1116.90)

Estimated Q4FY16 EPS: 2.49 (YOY: 3.14; QOQ: 2.79)

Estimated Q4FY16 TTM/FY16 EPS: 12.98 (YOY/FY15: 12.97)

Average PE: 20 (Industry PE: 10)

Some analysts are also estimating significantly higher Q4 PAT of around Rs.1179 cr with some pressure on operating margin/EBITDA level amid incremental opex for upgradation of network.

All eyes will be also on the ARPU and plan to counter the forth coming R-Jio aggression along with its ongoing de-leveraging plans (specially African assets) to prune its massive debt of around Rs.66367 cr stands as on FY15.

Analytical Charts:








Tuesday 26 April 2016

HDFC Bank:Sequential Flat EPS Growth (QOQ); 1110-1135 Zone May Be A Big Hurdle

Trading Idea: HDFC Bank

CMP: 1093

Either sell around 1100-1110 or on rise around 1135-1155;

TGT: 1075*-1040-1025-1005-990*-960-925*-900 (1-3/6M)

TSL> 1185

Note: Consecutive closing (3 days) above 1185 for any reason, HDFC Bank may further rally up to 1210*-1230-1255*-1290 & 1330-1350 in the near to long term (alternative bullish case scenario).

Q4FY16 EPS of HDFC Bank came at 13.20 against consensus of 13.30 (lagged by 0.75%).

For HDFC Bank:

Q4FY16 TTM EPS: 48.20 (FY16/Actual)

Projected FWD EPS: 56.95-67.25-79.45 (FY:17-19/Estimated)

Average PE: 21

As par BG metrics and current market scenario:

Present median valuation of HDFC Bank may be around: 1035 (FY:16/TTM)

Projected fair value might be around: 1130-1225-1330 (FY:17-19/FWD)


 
HDFCBANK EPS(TTM) BV(Act)  P/E(AVG) Low High Median  200-DEMA 10-DEMA
Q4FY16/TTM 48.2 245.29 21 1025.42 1046.28 1035.85 1038.82 1081.5
FY17/FWD 56.95 320.9 21 1114.62 1137.29 1125.95 1038.82 1081.5
FY18/FWD 67.25 415.55 21 1211.23 1235.86 1223.54 1038.82 1081.5
FY19/FWD 79.45 540.95 21 1316.52 1343.29 1329.90 1038.82 1081.5
 
Analytical Charts:








 

Monday 25 April 2016

HDFC: 1175-1205 Zone May Be A Big Hurdle Despite De-Leveraging Push

Technically, HDFC (CMP:1132) need to stay above 1160-1175-1205 zone for any rally up to 1250-1275 and 1295-1325 & 1380-1405 in the near to long term.

On the other side, inability to sustain above 1160, it may face selling pressure and fall below 1120-1095 zone, it may further drift towards 1065-1045-1010 zone in the near term.

Trading Idea: HDFC

CMP: 1132

Either sell below 1160 or on rise around 1175-1205;

TGT: 1120-1095*-1065-1045-1010*-975*-960-940* (1-3/6M)

TSL> 1220

Note: Consecutive closing (3 days) above 1220 zone for any reason, HDFC may further rally up to 1250-1275*-1295-1325-1350* & 1380-1405 in the near to long term (alternative bullish case scenario).

Some analysts are expecting somewhat muted result from HDFC in Q4FY16 which will include one time exceptional gain of Rs.1220 cr from a 9% stake sale to Standard Life in Aug'15. 

All eyes will be also on any potential pressure on developer loans in Q4FY16 and as par some news, HDFC may provide around Rs.450 cr as additional provisioning for stressed assets.

As par MAQ, valuation of HDFC under SOTP may be around 1168 as below:

HDFC core business:            685

HDFC Bank:                         338

HDFC Standard Life:             60

HDFC Asset Management:    34

HDFC Non-Life Insurance:    13

Gruh Finance:                        37

Alternate Assets:                     1
                                       ----------------
Target Price:                      1168



Analytical Charts:














Friday 22 April 2016

RIL: Ahead Of Result, Big Hurdle May Be 1090-1110 And Need To Sustain 1030-1010 Zone *Result Update*

Trading Idea: RIL

CMP: 1041

Either sell below 1060-1070 or on rise around 1090-1110;

TGT: 1030*-1010-998-965*-945-930-910-885* (1-3/6M)

TSL> 1120

Note: Consecutive closing (3 days) above 1120 for any reason, RIL may further rally up to 1150*-1165-1190* and 1215-1250-1275* & 1290-1340-1410* in the near to long term (under alternative bullish case scenario).

RIL will publish its Q4FY16 result today and the consensus figures are (standalone):

PAT: Rs.7022 cr (YOY-6243; QOQ-7218)

EPS: 21.68 (YOY-19.30; QOQ-20.30)

FY16 PAT: Rs.27119 cr (FY15: 22719)

FY16 EPS: 83.78 (FY15 EPS: 70.20)

Expected YOY Growth: 19.37% (on the back of superior refining margin and improvement in petrochemical segment)

Expected Q4 GRM: 10.8 (QOQ-11.5)

All eyes will be also on the telecom ventures (R-Jio) and as par some estimates (SOTP), it may burn cash for RIL for the first few years and may have negative impact of around 250/- per share.

** RIL Q4FY16 result was slightly above street estimates, but QOQ Petrochem EBITDA fall and lack of clarity about R-Jio launches may keep the scrip under pressure.

Stand alone Q4FY16 EPS of RIL was at 22.60 against consensus of 21.67 (beat by 4.29%; YOY-19.30; QOQ-22.30).

Q4FY16 GRM was at 10.80 against median expectation of 10.80 (beat by 0%) and YOY-10.10 (+6.97%); QOQ-11.50 (- 6.09%).

Falling crude oil prices boosted margin for Petrochemical & refinery business. This along with incremental higher volumes, better GRM (YOY) and product delta helped 15.94% higher YOY & 1.48% QOQ growth in PAT. 

Although consolidated Q4FY16 PAT was at Rs.7398, but it includes one time exceptional item of Rs.171 cr. So consolidated PAT of Rs.7227 (7398-171) beats estimates of Rs.6948 cr by around 4%.

In the R&M segment, Q4FY16 EBIT came around Rs.6394 cr, which was marginally lower on QOQ basis and the company is apprehending some tough import competition from the "Fly by night" producers from China in the months ahead (like steel).

The stand alone O&G business of RIL also reported loss as EBIT level due to lower realization and decline in production along with drop in oil prices for US shale production.

Looking ahead, Q1FY17 GRM now averaging around $5.2 against Q1FY16 average of around $7.7, RIL may report Q1FY17 GRM around $8.2-8.7, which may put some pressure on the scrip.

For RIL (Standalone basis):

Q4FY16 TTM EPS: 84.70 (FY16/Actual)

Projected FWD EPS: 97-111.15-127.25 (FY:17-19)

Average PE: 12

As par BG metrics and current market scenario:

Present median valuation of RIL may be around: 1015 (FY:16/TTM)

Projected fair valuations might be around: 1085-1160-1245 (FY:17-19/FWD)


RELIANCE EPS(TTM) BV(Act)  P/E(AVG) Low High Median  200-DEMA 10-DEMA
Q4FY16/TTM 84.7 667.09 12 995.53 1030.39 1012.96 975.08 1044.58
FY17/FWD 97 730.55 12 1065.36 1102.67 1084.02 975.08 1044.58
FY18/FWD 111.15 800.5 12 1140.42 1180.36 1160.39 975.08 1044.58
FY19/FWD 127.25 876.25 12 1220.22 1262.96 1241.59 975.08 1044.58

      
Analytical Charts: