Vol.

: 326
09 JAN, 2017

Index

MARKET VIEW

Market View

Company Update

Around the
Economy

The noise around demonetization is receding slowly but the effect is yet to be as3 sessed and experienced. Other uncertainties like policy of US President Trump, the
outcome of state elections, uncertainty around GST rollout, the controversy of budget
3 declaration date and dilemma around FPI taxation are going to play major role in first
half of 2017. The roller coaster ride of US Dollar with positive bias is also keeping FIIs
4
on tenterhook. The combined effect of all these factors is keeping the market ranged
5 bound. In last week, the market tried to go beyond 200 dma but could not close beyond 8280. The proposal regarding visa fees in US Senate is going to affect negatively
6 to technology companies, if passed as law in USA. The absence of market leader segment is also keeping the indices ranged bound. It is difficult to ascertain the future of
7 banking sector in near term, which is keeping the market in tight range. The technology
sector is also facing challenges. The only sector which can lead the market is oil and
8 gas. So keep close watch on this sector going forward.

Knowledge Corner
Mutual Fund
Commodity Corner
Forex Corner
Report Card
Short Term Call Status
Editor & Contributor
Darshana Mishra

Special Contributors
Kunal Shah
Dhaval Ghodasara

MARKET IS AT CRUCIAL JUNCTION

During last three write ups, we have emphasized the importance of remain selective in the market. It is important to identify outperformer from every sector in
this ranged bound market from short to medium term perspective. Technically, there is
strong resistance in the range of 8280-8340 and strong support at 7900.

For suggestions, feedback

and queries
jstreet@jhaveritrade.com

Kamal Jhaveri

-1-

Vol.: 326
09 JAN 2017

Company Update : Edelweiss Financial Services Ltd.

Financial Basics

Company Basics
BSE Code
NSE Symbol
EQUITY (` in Cr.)
MKT.CAP (` in Cr.)

EDELWEISS

FV (`)
EPS (`) (TTM)
P/E (x) (TTM)

1.00
0.14
20.4

79.57

P/BV (x) (TTM)

2.54

BETA

0.7

532922

9362.17

Share Holding Pattern

Holder's Name
Public
Promoter
Others

% Holding
57.47
37.11
5.42

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 businesses 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.

- 2-

Vol.: 326
09 JAN ,2017

Around The World

Weekly Market Recap :
Core sector output rose 4.9% in November 2016 on the back of a strong expansion in steel production and electricity generation, but the
pace of growth was down from 6.6% in October 2016, data released on Monday, 2 Jan, 2017. On the macro front, manufacturing PMI in
India fell to 49.60 in December 2016 from 52.30 in November. A reading above 50 indicates economic expansion, while a reading below
50 points toward contraction.
On the global front, China's Caixin Manufacturing Purchasing Managers' index (PMI) rose 51.9, compared to 50.9 in November on the
back of increased demand. The Nikkei/Markit Services Purchasing Managers' Index was little changed at 46.80 in December 2016 from
46.70 in November 2016.

Market Eye Week ahead :

The advance gross domestic product (GDP) data will be released by the government after market hours on Friday, 6 January 2017. The
index of industrial production (IIP) data for November 2016, will be released after market hours on Thursday, 12 January 2017. The government will also announce monthly inflation data based on consumer price index (CPI) for December 2016 after market hours on Thursday, 12 January 2017.

On the global front, Asian stock markets including Indian equities will on Monday, 9 January 2017, react to the outcome of the crucial US
non-farm payrolls data for December 2016 due later in the global day on Friday, 6 January 2017.

Key Events / Factors to Watch

1. Mon : Results: 8k Miles Software
2. Tue : - Results: Indusind Bank Ltd
3. Wed : Results : South Indian Bank
4. Thu: Results: TCS, Bajaj Corp, Cyient ltd
5. Fri : Results: Infosys, MCX Ltd, Gruh Finance

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.
- 3-

Vol.: 326
09 JAN ,2017

Mutual Fund Corner

Top 10 Sector Break-Ups

Fund Name

Fund (%)

Sector Weights

Scheme Name

BIRLA SUN LIFE ADVANTAGE FUND

AMC

BIRLA un Life Asset Management Company

Financial
Automobile

35.34
17.82

Energy

2.63

Healthcare

12.07

Type

Open Ended & Equity-oriented

Category

Open-ended

FMCG

4.45

Launch Date

Feburary 1995

Cons. Durable

2.77

Metals

4.36

Construction

6.03

Diversified

3.58

Chemicals

5.18

Fund Manager
Net Assets
In crore )

History

Satyabrata Mohanty since Oct 2011

(`

Rs. 1842.9 crore as on Oct 31,2016

2013

2014

2015

2016

173.66

278.11

292.67

323.30

7.23

60.14

4.77

10.47

27/73

9/145

61/78

18/143

52 Week High (Rs)

173.76

280.58

314.86

362.13

52 Week Low (Rs)

136.14

164.16

272.70

252.92

NAV (Rs)
Total Return (%)
Rank (Fund/Category)

Risk Analysis
Volatility Measures
Standard Deviation

17.14

Sharpe Ratio

1.30

Beta

1.10

R-Squared
Alpha

0.80
14.94

Composition (%)
98.26

Equity
Net Assets (Rs.Cr)
Expense Ratio (%)

278.89

393.02

580.62

2.87

2.85

2.81

1473.59
-

Debt

3.52

Cash

-1.79

Fund Performance v/s S&P BSE 100

Fund Style
Investment Style
Growth

Blend

Value

Medium
Small

Fund
S&P BSE 200
(Rebased to 10,000)
- 4-

Capitalization

Large

Source : - www.valueresearchonline.com

Vol.: 326
09 JAN ,2017

Commodity Corner
BULLION
FUNDAMENTAL: Bullion prices ended with gains buoyed by uncertainty surrounding the pace of interest-rate increases by the Federal

Reserve. However upside seen limited as the dollar strengthened lifted by U.S. non-farm payrolls data that showed a slowing in hiring
last month but an increase in wages. Non-farm payroll data showed that the United States added 156,000 jobs in December, less than
expected, but a rebound in wages pointed to sustained labour market momentum, stronger growth and further interest rate rises from the
Fed. Average hourly wages jumped 0.4% to $26 last month, while hourly pay increased 2.9% from December 2015 to December 2016,
marking the fastest 12-month increase since a recovery that began in mid-2009. Minutes from the Fed's December policy meeting
showed most officials thought the U.S. economy could grow more quickly because of tax cuts and infrastructure spending under President-elect Donald Trumps incoming administration. At the same time, policymakers "emphasized their considerable uncertainty" about
future economic policy changes. The rising dollar and the environment of higher interest rates were always going to be headwinds but
not insurmountable ones if investors were looking for safety.
RECOMMENDATION : BUY GOLD @ 27400 SL 27000 TGT 27850-28200 BUY SILVER @39700 SL 38500 TGT 40800-41500

BASE METALS
FUNDAMENTAL: Base metals prices ended with gains as support seen after the U.S. dollar lost some of its steam. Chinese plans to add

2,100 km (746 miles) of track to its railway network this year bolstered demand expectations. Sentiment has been boosted by strong
manufacturing data from the United States and China, which accounts for nearly half of global copper consumption estimated at about
22 million tonnes this year. Robust data from the United States is one reason behind the stronger dollar, which so far has been viewed
by traders as a signal of economic strength. Almost all Federal Reserve policymakers thought the economy could grow more quickly because of fiscal stimulus under the Trump administration and many were eyeing faster interest rate increases, minutes from the central
bank's December meeting showed. The International Copper Study Group (ICSG) expects global copper ore output to be 19.90 million
tonnes in 2017, flat at 2016s. 2017 term TC/RCs of copper concentrate signed between Chinese copper smelters and overseas copper
ore suppliers decreased, mainly because the growth of global copper ore supply was expected to fall in 2017.
RECOMMENDATION : BUY ALUMINIUM @ 114 SL 112 TGT 116.50-118 BUY COPPER @ 375 SL 367 TGT 385-394 BUY ZINC @ 1 SL 168
TGT 178-185 BUY NICKEL @ 695 SL 675 TGT 715-730

ENERGY
FUNDAMENTAL : Crude oil prices last week seen supported as output cuts by OPEC members met with lingering concern that other pro-

ducers could try to shirk their share of planned decreases aimed at curbing global oversupply. Production cuts by OPEC kingpin Saudi
Arabia and signs that it plans further trims have helped buoy the market. The Kingdom cut oil output in January by at least 486,000 barrels per day (bpd) to 10.058 million bpd, fully implementing an agreement by the Organization of the Petroleum Exporting Countries
(OPEC) and other producers to curb a global supply glut. State oil giant Saudi Aramco has started talks with customers globally on possible cuts of 3 percent to 7 percent in February crude loadings. On Friday, a Kuwaiti oil official said that country had also reduced production in line with the deal, and there are also reports of supply cuts from Abu Dhabi. Still, doubts remained that all producers would
fully implement planned reductions.Natural gas prices dropped heavily by almost 11 percent as pressure seen after the weather forecasts predicting higher temperatures than previously expected in the next two weeks.
RECOMMENDATION : BUY CRUDE @ 3600 SL 3480 TGT 3750-3940 BUY NAT.GAS @ 214 SL 200 TGT 228-240

- 5-

Vol.: 326
09 JAN,2017

Commodity Corner

Forex Corner

Market Recap :

The Indian rupee on Monday weakened against

the US dollar, tracking the losses in the Asian currencies markets and also on the pessimism on
domestic markets following lower economic
growth projections last Friday.

Traders were also worried that the full-year gross

domestic product (GDP) may come even lower
than estimates after the impact of demonetization
is factored in.

Indias economic growth is likely to decelerate to

7.1% in 2016-17 from 7.6% the previous year,
while gross value added will be at 7% year-onyear, according to Central Statistics Office (CSO)
estimates.

Market Eye Week ahead :

The USDINR On daily chart pair above all short term, medium term, and long term moving average which is 20,
100 and 200.Whereas on weekly chart pair has continually taking support at 50WMA. Which suggest short term
trend is bullish. So for trading perspective, one could buy up to the level 68.00-68.15 with SL of 67.54 for target
of 68.45-68.80.

USD/INR
Level

S2

S1

CP

R1

R2

High

Low

Close

USD/INR

67.54

67.82

68.17

68.45

68.80

68.51

67.88

68.11

Level

S2

S1

CP

R1

R2

High

Low

Close

EUR/INR

70.80

71.51

71.89

71.89

72.58

72.96

71.20

72.20

Level

S2

S1

CP

R1

R2

High

Low

Close

GBP/INR

83.22

83.76

84.13

84.67

86.60

85.04

83.58

84.37

Level

S2

S1

CP

R1

R2

High

Low

Close

JPY/INR

57.62

58.22

58.55

59.15

59.49

58.88

57.95

58.82

EUR/INR

GBP/INR

JPY/INR

-- 46--

Vol.: 326
09 JAN,2017

J Street Recommendations Report Card

Nifty last week opened at 8210.09, attained a low at 8133.79 and moved up to register a high at 8306.84. Nifty
finally closed the week at 8243.80 thereby showed a net rise of 58 points on week to week basis. Traders long and
holding the same can revise up the stop loss to 8133. On rise and close above 8306 with bullish candle, Nifty can
move up towards 8470-8600. Below 8133 expect sideways volatility between 8310 and 7893.
Top Fundamental Stocks
Rec. Date

CMP on Rec.

CMP

Target

Absolute
Return @
CMP

30/08/2016

630

606

732

-10%

Buy

25/07/2016

235

320

308

17%

Buy

Capital First

06/06/2016

552

605

660

-14%

Profit book

Wonderla Holidays

25/04/2016

387

350

498

-9%

Accumulate

Mold-Tek Packaging

04/04/2016

138

49

179

0%

Buy

Jamna Auto

22/02/2016

133

184

181

-19%

Buy

MT Educare

01/02/2016

164

124

230

-7%

Buy

Garware-Wall Ropes

28/12/2015

425

627

550

14%

Buy

AYM Syntax

23/11/2015

121

76

223

-10%

Buy

Natco Parma

02/11/2015

509

638

636

8%

Buy

SRF

21/09/2015

1140

1573

1374

-11%

Buy

Ahluwalia contracts

24/08/2015

235

255

368

-11%

Buy

20/07/2015

190

230

255

-5%

Buy

04/05/2015

298

273

430

1%

Buy

16/03/2015

152

166

251

0%

Buy

DHFL

16/02/2015

252

256

368

-19%

Accumulate

TV Today Network

27/01/2015

222

279

337

-18%

Buy

M&M

12/01/2015

1238

1206

1452

-11%

Buy

Havells India

27/10/2014

274

364

346

-11%

Buy

PTC India Fin. Ser.

07/07/2014

39

39

45

-5%

Profit book

Stocks
Alembic Pharmaceuticals
Coromandel
International

Infinite Computer
Sol.
Sadbhav
Engineering Ltd.
Omkar speciality
Chemicals

Status

286
-5%
Accumulate
05/07/2014
280
347
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.
Adani Port

- 7-

Vol.: 326
09 JAN ,2017

J Street Short Term Call Status

Sr.
No.

DATE

STOCK

BUY/
SELL

RANGE

RANGE

24-Nov-16

M&M

SELL

1196

1185

28-Nov-16

SUNPHRMA

BUY

706

29-Nov-16

HINDALCO

BUY

30-Nov-16

ADANIPORT

1-Dec-16

SL

STATUS

%
RETURN

1190.50 1134.00

1235

TA

5.4

714

710.00 742.00

685

SL

-4.3

176

180

178.00 188.00

170

EXPIRE

BUY

274

278

276.00 290.00

266

TA

4.2

BEL

BUY

1430

1445

1437.50 1501.00

1400

TA

4.4

2-Dec-16

BHARTIARTL

SELL

324

316

320.00 300.00

338

TA

4.2

5-Dec-16

KOTAKBANK

SELL

720

732

726.00 690.00

753

EXPIRE

6-Dec-16

MOTHERSUMI BUY

312

316

314.00 330.00

301

TA

4.4

7-Dec-16

BEML

BUY

870

882

876.00 915.00

848

TA

4.6

10

8-Dec-16

GODREJIND

BUY

396

405

400.50 420.00

385

TA

4.1

11

9-Dec-16

HINDALCO

BUY

175

180

177.50 188.00

169

EXPIRE

12

12-Dec-16

TECHM

BUY

465

475

470.00 493.00

450

TA

4.2

13

13-Dec-16

AMBUJACEM SELL

210

206

208.00 196.00

216

TA

4.3

14

14-Dec-16

KSCL

BUY

425

432

428.50 448.00

410

TA

4.1

15

15-Dec-16

UPL

SELL

658

648

653.00 624.00

678

TA

4.2

16

16-Dec-16

GRANULES

BUY

114

118

116.00 126.00

109

SL

-4

17

19-Dec-16

POWERGRID

BUY

180

185

182.50 192.00

175

TA

18

20-Dec-16

AJANTAPHRMA

SELL

1790

1750

1770.00 1680.00

1840

TA

4.2

19

21-Dec-16

SIEMENS

SELL

1095

1080

1087.50 1040.00

1125

SL

-4

20

22-Dec-16

BEML

BUY

920

935

927.50 971.00

894

TA

4.3

21

23-Dec-16

BHARTIARTL

SELL

295

292

293.50 280.00

301

OPEN

22

26-Dec-16

BIOCON

SELL

892

890

891.00 848.00

930

SL

-4

23

27-Dec-16

GLENMARK

SELL

895

884

889.50 852.00

919

TA

4.2

- 7-

TRIGGER
PRICE

TGT

Vol.: 326
09, 2017

J Street Short Term Call Status

Sr. No.

DATE

STOCK

BUY/
SELL

RANGE

RANGE

TRIGGER
PRICE

TGT

SL

STATUS

%
RETURN

24

28-Dec-16

CESC

BUY

620

632

626.00

656.00

598

TA

25

29-Dec-16

ADANIPORT

BUY

265

270

267.50

281.00

259

TA

4.2

26

2-Jan-17

ABIRLANUVO

BUY

1270

1300

1285.00

1355.00

1230

OPEN

27

3-Jan-17

TECHM

BUY

484

490

487.00

502.00

470

TA

4.1

28

4-Jan-17

NTPC

BUY

163

166

164.50

173.00

159

OPEN

29

5-Jan-17

HCLTECH

BUY

855

863

859.00

895.00

823

OPEN

30

6-Jan-17

POWERGRID

BUY

187

191

189.00

199.00

182

OPEN

STATUS

CALLS

RATIO

TA+PB

18

78.26

SL+EXIT

05

21.73

TOTAL

23

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)

- 7-

Vol.: 326
09 JAN,2017