Ashika Monthly Insight Flip July 2016

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JUNE 2016 Inside this issue 01 Market Overview 19 Foreign Direct Investment (FDI) 44 Technical View 08 at a 04 Stock Picks 17 Valuation Monthly • Godrej Properties Ltd. Glance Insight • Capital First Ltd. 49 Market Diary 50 Commodity 52 World • Aarti Industries Ltd. Performance • Steel Strips Wheels Ltd. 27 Sector Outlook 33 Economy Review 41 Mutual Fund Overview Monthly Economic Round up Event Calender Name Designation Email ID Contact No. Paras Bothra VP Equity Research paras@ashikagroup.com +91 22 6611 1704 Krishna Kumar Agarwal Equity Research Analyst krishna.a@ashikagroup.com +91 33 4036 0646 Partha Mazumder Equity Research Analyst partha.m@ashikagroup.com +91 33 4036 0647 Arijit Malakar Equity Research Analyst amalakar@ashikagroup.com +91 33 4036 0644 Chanchal Bachhawat, CFA Equity Research Analyst chanchal.bachhawat@ashikagroup.com +91 22 6611 1712 Tirthankar Das Technical & Derivative Analyst tirthankar.d@ashikagroup.com +91 33 4036 0645 SEBI Registration No. INH000000206 Disclosure The Research Analysts and /or Ashika Stock Broking Limited do hereby certify that all the views expressed in this research report accurately reflect their views about the subject issuer(s) or securities. Moreover, they also certify the followings:- • The Research Analyst or Ashika Stock Broking Limited or his/its Associates or his/its relative, has any financial interest in the subject company (ies) covered in this report. Yes • The Research Analyst or Ashika Stock Broking Limited or his/its Associates or his/its relative, have actual/beneficial ownership of 1% or more in the subject company, at the end of the month immediately preceding the date of the publication of the research report. No • The Research Analyst or Ashika Stock Broking Limited or his/its Associates or his/its relatives has any material conflict of interest at the time of publication of the research report. No • The Research Analyst or Ashika Stock Broking Limited or his/its Associates have received any compensation or compensation for investment banking or merchant banking or brokerage services or for product other than for investment banking or merchant banking or brokerage services from the companies covered in this report in the past 12 months. No • The Research Analyst or Ashika Stock Broking Limited or his/its Associates have managed or co managed in the previous 12 months any private or public offering of securities for the company (ies) covered in this report. No • The Research Analyst or Ashika Stock Broking Limited or his/its Associates have received any compensation or other benefits from the company (ies) covered in this report or any third party in connection with the Research Report. No • The Research Analyst has served as an officer, director or employee of the company (ies) covered in the research report. No • The Research Analyst or Ashika Stock Broking Limited has been engaged in Market making activity of the company (ies) covered in the research report. No Disclaimer This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ashika Stock Broking Ltd. is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. The report is based upon information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied upon such. Ashika Stock Broking Ltd. or any of its affiliates or employees shall not be in anyway responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Ashika Stock Broking Ltd., or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.
FDI - WINDOW OF OPPORTUNITY The stock markets around the world were jolted by the sudden exit of UK from European Union (EU), the event popularly coined as ‘Brexit’. While the global markets expected Britons to vote to ‘remain’ in the EU, the outcome came in as a surprise. This is after the British Prime Minister urged his countrymen to remain in EU. However, post the adverse outcome, he wished to step down as the Prime Minister of the nation, respecting the decision and silencing the murmurs for a second referendum. According to experts, the outcome comes at an inopportune time when the prime minister had been re-elected with a strong mandate and the ruling party won with absolute majority, thus providing stability to the government. Now, the successor to the present prime minister has to see through the whole unfortunate EU leaving episode. The pound had to take the beating while the dollar strengthened relatively as well as on buying demand as investors flocked to safe haven. The strengthening dollar as well as the Brexit issue is a major hindrance for the Fed to raise rates and might actually pause to let the whole episode percolate down without ruffling too many feathers. However, experts around the world are on a wait and watch mode with regards to the unforeseen events and risks it poses after the actual aftermath of the event. Majority of them have opined that the recession and the extent in EU will not spread like a wild fire just as the case in 2008 since it is not emanating from the same root causes. Nevertheless, it is a big impediment to the global stability and if the views of prominent experts are to be trusted, this is actually an opportunity for the Asian economies and foreign investors might be seen flocking in the short term. The Britons exited the EU as the campaign led by former London mayor, Boris Johnson, and UK’s right-wing populist political party, the UK Independence Party (UKIP) highlighted the opportunity costs for staying in EU. One of the reasons was migration within EU and rising inequality. While in reality the inequality has actually come down in the recent years as highlighted by an article in Live mint (titled It isn’t inequality that led to Brexit). Morgan Stanley has in fact raised its probability of a global recession in the next 12 months to 40 percent, up from 30 percent before. The notion or rationale has been the negative impact of political uncertainty on risk assets. According to Morgan Stanley, the event will likely spread to the impending US elections to be held in early November and further to general elections to be held in the Netherlands next year, presidential election in France (late April and early May) and national elections in Germany (late September). In the domestic markets, vastly people are keenly following the latest update on monsoon with utmost interest. Monsoon, the mega event of the year has left half of the country unsatiated so far although the latest updates suggest heightened advancement. The sentiment was captured by low bond yields on an expectation of reduction in interest rates led by bumper crop production this year. After the initial above average forecasts by the forecasting agencies – IMD and Skymet, the monsoon has so far clocked deficit of 13% as of 28th June. The deficit has narrowed from 17% (as of 23rd June, 2016) and 23% deficit on 16th June. The percentage points are calculated by comparing the expected centimeters of rainfall with the Long Period Average (LPA) of past 50 years. While the LPA is 89 cms, IMD expects a total of 94 cm of rainfall this monsoon. The monsoon however arrived in Kerala a week later than its normal onset date of 1st June, but is believed to have rapidly advanced over peninsular Indian states. As of 28th June, 49% of the country had received normal rainfall, 17% had received excess rainfall and 34% had got deficient or scanty rain. In the southern peninsula rainfall has been 16% above average and in north-west India it has been 2% more than normal. However, central India, east and north-east India have seen a deficit of 23% and 26%, respectively. Clearly, when the first estimates are for 106% of the long-period average (LPA), the monsoon is expected to have spread across whole of India by end of June. Besides, this year the dreaded El Nino is 1
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Ashika Monthly Insight Flip July 2016

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