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Nifty posted positive returns for the month May 2016
Time Period Index Level Change
Apr 29- May 31 7850 to 8160 3.95%
6,900.00
7,100.00
7,300.00
7,500.00
7,700.00
7,900.00
8,100.00
8,300.00
8,500.00
8,700.00
May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16
Nifty 50
Top 5 Monthly Gainers
Company Name
% Gain in May
2016
Remarks
L&T 17.81%
The stock surged 17.81% in the month of May as the company reported strong numbers in Q4 FY 16.
Revenue increased 18.3 % YOY to Rs 33,157 crore due to progress in project execution in
infrastructure and power. Infrastructure segment constitutes 47% of the total revenues in FY 16. The
Government focus on the infrastructural segment will help the company to register growth in its core
business in coming years. The consolidated order book of the company stands at Rs.`2.5 lac crore.
Bosch 13.99%
The company registered highest Q4 EBITDA margins in last two years at 21.5% due to decline in cost.
The company have received approval from the board and shareholders for selling its less profitable
starter motor and generator business. The business generates 10% of Bosch sales but contributes only
1% of EBIT. Sale of business is expected to boost margins for the company in the future.
Asian Paints 13.88%
The company reported net profit of Rs. 408 crore, an 19.88% increase in consolidated profit, for the
quarter Q4 FY 16. The sales of the company grew 12.29% YOY at Rs.3919 crore. The growth in sales
was supported by pay commission hike, normal monsoon expectation and traction in small cities.
HDFC
13.35%
The company received approval to sell its 10% stake in HDFC life, its insurance subsidiary through an
IPO. It is expected to raise $400 million through the IPO. It has already sold 9% stake of its insurance
business in the month of march to partner standard life Mauritius holdings
Tech Mahindra 13.23%
Tech Mahindra is to acquire ‘Target TOPCO limited’ for $163 million which is a financial firm in the UK.
The purchase will allow the company to capture a greater market share of the UK’s financial services
software and services market. In addition, the good Q4FY16 result also pushed the share price. The
net profit of the company has almost doubled to Rs. 897 crores in Q4 FY 16 from Rs. 472 in the same
quarter last year.
Top 5 Monthly Losers
Company Name
% Loss in
May 2016
Remarks
Adani Ports 17.51%
Moody’s and S&P revised the rating of Adani ports to Negative from stable on poor port volume and high
debt. The loans and advances of the company are continuously rising from Rs. 4400 crore in FY 12 to Rs.
7000 crore in FY 16. The net debt of the company stands at Rs. 20000 crores. In addition to that the
company has huge capex plans which will result in negative cash flow in FY 17.
Cipla 12.58%
The company posted 69% fall in net profit for Q4 FY 16, due to one-off costs related to its business in
Europe and some emerging markets. The company is working on exiting some emerging markets due to
complexities and changing its European business from ‘direct to consumer’ to ‘business to business’. The
margins will remain under pressure due to investment in research and development. The company expects
R&D to be 8% of sales in FY 17 v/s 6.5% in FY 16.
Lupin 8.91%
Lupin’s share price tanked 8.91% in the month due to concerns over the US Food and Drug Administration
(USFDA)’s observations on its Goa plant. In march, the company received 9 adverse observations and it is
expected to resolve in next two to three months. Any delay in the resolution will impact new product
approvals and will hit the sales. Similarly, the interest cost is expected to increase in FY 17 because of the
$800 million loan it took to fund Gravis acquisition.
Bank of Baroda 8.17%
The paramount NPA problem is keeping the PSU banks stocks under pressure. Bank of Baroda’a Gross NPA
stands at 9.99% and Net NPA stands at 5.06% as on 31st March 2016. The bank reported a net loss of
Rs.3230 crore in Q4FY16. Advances declined by 10.3% to Rs. 38377 crore (YOY)due to decline in retail, SME,
farm credit, overseas and corporate advances.
Eicher Motors 6.89%
The share price of Eicher motors tanked in May 2016 as the promoters sold more than 4% stake in the
company in secondary market. The proceeds of the sale will be utilize for personal use such
as portfolio and other investments, and charitable purposes.
Domestic actions
Topic
Month End Level
Change Description
April May
Monthly NIFTY 7,850 8,160 3.95%
Nifty 50 gained 3.95% on MOM basis because of recovery in corporate earnings
after a drop in the last four quarters. In addition to that, the rise was also
supported by the good monsoon expected in the country after a period of two
years.
FII net inflow( Rs. Cr) 3,655 2,559 -30%
The FIIs slowed down their inflows in May 2016 due to concern over rate hike in
the US.
DII net inflow (Rs. Cr) -2,554 6,758 364.6%
The DII have turned net buyers in May 2016 on the expectation of rate cut in
upcoming RBI policy, healthy corporate earnings and improvement in economic
data such as Government achieved the fiscal deficit target of 3.9% and GDP
growth rate of the FY 2015-2016 7.6%.
S&P BSE Small Cap 11,021 11,142 1.10%
The emphasis of the government on infrastructure, rural and social sectors has also
pushed the small caps. Most of the small cap companies fall under these sectors.
S&P BSE Mid Cap 11,043 11,366 2.92%
The midcap sector has rallied on account of the good quarterly performance of the
companies in auto ancillary and NBFC space and cement space. Most of the
companies fall in the mid-cap sector.
(20,000)
(15,000)
(10,000)
(5,000)
-
5,000
10,000
15,000
20,000
25,000
Equity (Rs.crore)
Equity (Rs.crore)
FII inflows though positive shows downward trend
-20000
-15000
-10000
-5000
0
5000
10000
15000
20000
25000
30000
May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16
Equity (Rs. crore)
DII Inflows shows positive trend
-20000
-15000
-10000
-5000
0
5000
10000
15000
20000
May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16
DII Inflows (Rs. In crore)
Sensex PE and PB reaching attractive zone
3.05
2.93
3.03
2.89
2.752.75
2.622.62
2.59
2.49
2.65
2.71
2.79
2.83
2.88
2.9
2.97
2.93
3.04
2.96
3.06
3.09
3.06
3.03
2.952.95
3.07
2.96
2.74
2.94
2.75
2.73
2.71
2.55
2.71
2.8
2.74
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
3
3.1
3.2
15
16
17
18
19
20
21
22
23
May-13 Nov-13 May-14 Nov-14 May-15 Nov-15 May-16
Sensex PE & PB Ratio
PE Ratios PB Ratios
International Action
Topic
Index Level
Difference Description
April May
Oil Price (Brent) $48.13 $49.55 2.95%
The oil prices surged as the oil production in the US is continuously falling. In addition to
that, recent attacks in Nigeria on pipelines and production facilities by the militants have
sharply reduced the oil output. This has resulted in lowering the gap between demand and
supply of the crude oil.
Dow Jones 17,774 17,786 0.07%
Dow Jones did not gain much on MOM because people were worried about rise in US
interest rates in upcoming policies which will hurt the performance of the stocks.
MSCI Emerging
Markets Index
(ETF)
$34.39 $33.12 -3.69%
The Caxin PMI (tracks small and medium-sized enterprises) for China is continuously
declining , it stood at 49.2 in the month of May v/s 49.4 in the previous month ( a PMI
below 50 indicates contraction in the economic activity). Similarly, the Brazilian market
declined by 10% in May as compared to previous month. This is because sharp fall in
energy stocks due to corruption issues in the sector.
Events to watch in June 2016
Date Country Event Previous Estimates
2nd
June 2016 USA OPEC meeting - -
3rd
June 2016 India
NIKKEI service
PMI
53.7 -
3rd
June 2016 Europe Service PMI 53.1 53.1
7th
June 2016 India RBI Policy 6.50% -
7th
June 2016 Europe GDP (YOY) 1.50% -
7th
June 2016 China CPI data 2.30% -
14th June 2016 India WPI data 0.34% -
30th June 2016 India
Foreign debt
(USD)
482.9B
-
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What is driving Indian financial markets in June 2016

  • 1.
  • 2. Nifty posted positive returns for the month May 2016 Time Period Index Level Change Apr 29- May 31 7850 to 8160 3.95% 6,900.00 7,100.00 7,300.00 7,500.00 7,700.00 7,900.00 8,100.00 8,300.00 8,500.00 8,700.00 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Nifty 50
  • 3. Top 5 Monthly Gainers Company Name % Gain in May 2016 Remarks L&T 17.81% The stock surged 17.81% in the month of May as the company reported strong numbers in Q4 FY 16. Revenue increased 18.3 % YOY to Rs 33,157 crore due to progress in project execution in infrastructure and power. Infrastructure segment constitutes 47% of the total revenues in FY 16. The Government focus on the infrastructural segment will help the company to register growth in its core business in coming years. The consolidated order book of the company stands at Rs.`2.5 lac crore. Bosch 13.99% The company registered highest Q4 EBITDA margins in last two years at 21.5% due to decline in cost. The company have received approval from the board and shareholders for selling its less profitable starter motor and generator business. The business generates 10% of Bosch sales but contributes only 1% of EBIT. Sale of business is expected to boost margins for the company in the future. Asian Paints 13.88% The company reported net profit of Rs. 408 crore, an 19.88% increase in consolidated profit, for the quarter Q4 FY 16. The sales of the company grew 12.29% YOY at Rs.3919 crore. The growth in sales was supported by pay commission hike, normal monsoon expectation and traction in small cities. HDFC 13.35% The company received approval to sell its 10% stake in HDFC life, its insurance subsidiary through an IPO. It is expected to raise $400 million through the IPO. It has already sold 9% stake of its insurance business in the month of march to partner standard life Mauritius holdings Tech Mahindra 13.23% Tech Mahindra is to acquire ‘Target TOPCO limited’ for $163 million which is a financial firm in the UK. The purchase will allow the company to capture a greater market share of the UK’s financial services software and services market. In addition, the good Q4FY16 result also pushed the share price. The net profit of the company has almost doubled to Rs. 897 crores in Q4 FY 16 from Rs. 472 in the same quarter last year.
  • 4. Top 5 Monthly Losers Company Name % Loss in May 2016 Remarks Adani Ports 17.51% Moody’s and S&P revised the rating of Adani ports to Negative from stable on poor port volume and high debt. The loans and advances of the company are continuously rising from Rs. 4400 crore in FY 12 to Rs. 7000 crore in FY 16. The net debt of the company stands at Rs. 20000 crores. In addition to that the company has huge capex plans which will result in negative cash flow in FY 17. Cipla 12.58% The company posted 69% fall in net profit for Q4 FY 16, due to one-off costs related to its business in Europe and some emerging markets. The company is working on exiting some emerging markets due to complexities and changing its European business from ‘direct to consumer’ to ‘business to business’. The margins will remain under pressure due to investment in research and development. The company expects R&D to be 8% of sales in FY 17 v/s 6.5% in FY 16. Lupin 8.91% Lupin’s share price tanked 8.91% in the month due to concerns over the US Food and Drug Administration (USFDA)’s observations on its Goa plant. In march, the company received 9 adverse observations and it is expected to resolve in next two to three months. Any delay in the resolution will impact new product approvals and will hit the sales. Similarly, the interest cost is expected to increase in FY 17 because of the $800 million loan it took to fund Gravis acquisition. Bank of Baroda 8.17% The paramount NPA problem is keeping the PSU banks stocks under pressure. Bank of Baroda’a Gross NPA stands at 9.99% and Net NPA stands at 5.06% as on 31st March 2016. The bank reported a net loss of Rs.3230 crore in Q4FY16. Advances declined by 10.3% to Rs. 38377 crore (YOY)due to decline in retail, SME, farm credit, overseas and corporate advances. Eicher Motors 6.89% The share price of Eicher motors tanked in May 2016 as the promoters sold more than 4% stake in the company in secondary market. The proceeds of the sale will be utilize for personal use such as portfolio and other investments, and charitable purposes.
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  • 6. Domestic actions Topic Month End Level Change Description April May Monthly NIFTY 7,850 8,160 3.95% Nifty 50 gained 3.95% on MOM basis because of recovery in corporate earnings after a drop in the last four quarters. In addition to that, the rise was also supported by the good monsoon expected in the country after a period of two years. FII net inflow( Rs. Cr) 3,655 2,559 -30% The FIIs slowed down their inflows in May 2016 due to concern over rate hike in the US. DII net inflow (Rs. Cr) -2,554 6,758 364.6% The DII have turned net buyers in May 2016 on the expectation of rate cut in upcoming RBI policy, healthy corporate earnings and improvement in economic data such as Government achieved the fiscal deficit target of 3.9% and GDP growth rate of the FY 2015-2016 7.6%. S&P BSE Small Cap 11,021 11,142 1.10% The emphasis of the government on infrastructure, rural and social sectors has also pushed the small caps. Most of the small cap companies fall under these sectors. S&P BSE Mid Cap 11,043 11,366 2.92% The midcap sector has rallied on account of the good quarterly performance of the companies in auto ancillary and NBFC space and cement space. Most of the companies fall in the mid-cap sector.
  • 7. (20,000) (15,000) (10,000) (5,000) - 5,000 10,000 15,000 20,000 25,000 Equity (Rs.crore) Equity (Rs.crore) FII inflows though positive shows downward trend -20000 -15000 -10000 -5000 0 5000 10000 15000 20000 25000 30000 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Equity (Rs. crore)
  • 8. DII Inflows shows positive trend -20000 -15000 -10000 -5000 0 5000 10000 15000 20000 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 DII Inflows (Rs. In crore)
  • 9. Sensex PE and PB reaching attractive zone 3.05 2.93 3.03 2.89 2.752.75 2.622.62 2.59 2.49 2.65 2.71 2.79 2.83 2.88 2.9 2.97 2.93 3.04 2.96 3.06 3.09 3.06 3.03 2.952.95 3.07 2.96 2.74 2.94 2.75 2.73 2.71 2.55 2.71 2.8 2.74 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 3 3.1 3.2 15 16 17 18 19 20 21 22 23 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Sensex PE & PB Ratio PE Ratios PB Ratios
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  • 11. International Action Topic Index Level Difference Description April May Oil Price (Brent) $48.13 $49.55 2.95% The oil prices surged as the oil production in the US is continuously falling. In addition to that, recent attacks in Nigeria on pipelines and production facilities by the militants have sharply reduced the oil output. This has resulted in lowering the gap between demand and supply of the crude oil. Dow Jones 17,774 17,786 0.07% Dow Jones did not gain much on MOM because people were worried about rise in US interest rates in upcoming policies which will hurt the performance of the stocks. MSCI Emerging Markets Index (ETF) $34.39 $33.12 -3.69% The Caxin PMI (tracks small and medium-sized enterprises) for China is continuously declining , it stood at 49.2 in the month of May v/s 49.4 in the previous month ( a PMI below 50 indicates contraction in the economic activity). Similarly, the Brazilian market declined by 10% in May as compared to previous month. This is because sharp fall in energy stocks due to corruption issues in the sector.
  • 12. Events to watch in June 2016 Date Country Event Previous Estimates 2nd June 2016 USA OPEC meeting - - 3rd June 2016 India NIKKEI service PMI 53.7 - 3rd June 2016 Europe Service PMI 53.1 53.1 7th June 2016 India RBI Policy 6.50% - 7th June 2016 Europe GDP (YOY) 1.50% - 7th June 2016 China CPI data 2.30% - 14th June 2016 India WPI data 0.34% - 30th June 2016 India Foreign debt (USD) 482.9B -
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