Vol.

: 265
19th October,2015

Index

MarketView
1 Market View:

Nifty Reclaims 8200

CompanyUpdate
2
Last time we have discussed about the importance of Q2 results for continued up move in the

market. The results are a mixed bag in the sense that the result of TCS is flat while the Q2
Aroundthe
numbers of Reliance Industries have surprised the market with record profit of Rs. 6720 Crore
Economy

3 and record levels of EBITDA. It has beaten the consensus convincingly and one of the most

under owned stock by large cap funds. The data coming out of USA has added to the
KnowledgeCorner 3 uncertainty around the rate hike in December. If we go by the statements made by Mr. Bernanke, the rate hike will be delayed and will be discussed in the year 2016, paving the way for

MutualFund
4 easy liquidity in the system. Considering this scenario and continued softness in commodity
prices, India is logically a preferred investment destination. The negative spiral for WPI seems

to have ended and may come into positive territory very soon. The IIP data has supported the
CommodityCorner5
market but a decline in September exports is a cause of concern going ahead. Some decisions

taken by the government in last week are worth mentioning. Those road projects which are
ForexCorner
6 completed more than 50% but stalled for want of funds will get financial support from the

government. This step will go a long way in addressing the real problem of the sector.
ReportCard
7
The international market is stable with positive bias and supporting the Indian market to stay

above 8100 level. Weather the market can reclaim 200 dma at 8390 will be totally dependent

on the Q2 results. The indirect tax collection data are encouraging and moving steadily on the
Editor&Contributor
path of good growth. Even with this positivity, one should remain cautious at higher level as the
MargiShah
easy liquidity is one of the main reasons for the stability at international level. Any withdrawal of

easy liquidity may affect the ongoing rally from short to medium term.

Considering the total scenario, it is advisable to invest with capacity to invest more at every
SpecialContributors
decline. Technically any sustained rise above 8225-8250 range will take the market to 8400.
AsheshTrivedi
AdityaNahar

Kamal Jhaveri
MD- Jhaveri Securities

Forsuggestions,feedback
andqueries
jstreet@jhaveritrade.com

-1-

Vol.: 265
19th October,2015

Company Update : SRF Ltd.

Financial Basics

Company Basics
503806

FV (`)
EPS (`)

10.00
52.74

NSE Symbol

SRF

P/E (x)

21.74

EQUITY (` in Cr.)

57.42

P/BV (x)
BETA
RONW (%)

2.90
1.3170
10.52

BSE Code

MKT.CAP (` in Cr.)

6582.92

Share Holding Pattern

Holder's Name
Foreign
Institutions
Promoters
Non Prom.
Public & Others
Government

% Holding
16.04
12.59
52.38
0.00
15.17
3.82

Valuation : SRF Ltd. is currently trading at 15.74x FY16E EPS of Rs.72.80 and 12.51x FY17E EPS of
Rs. 91.60, valued the stock at 15xFY17E (three year average) with the target price of Rs. 1374.

Company overview
SRF Limited is multi-product, multi-business organization and industrial intermediate segment. The company
was incorporated in 1970. The business divisions of the company include Technical Textile Business, Chemical
Business, Packaging Films Business and Engineering Plastics Business. The company has 12 production plant
across the globe. Out of 12 nine in India and the remaining in Dubai, South Africa, Thailand. It is market leader in
majority of its product. SRF has strong presence in international market with exporting around 75 countries.
Investment Rational
SRF is one of the leading and sole domestic supplier of HFC 134 a and growth in passenger vehicles spur
sales
This elements contributed 23% of SRFs fluorochemicals revenues. The market-size of HFC-134a in India is
8.0KTPA, which is expected to rise with the rise of automobile and refrigerator sales. We estimate HFC-134as
consumption to clock 10.1% CAGR till FY20 as sales of passenger vehicles pick up from FY17 (HFC-134a gas is
used as refrigerants in cars). With a capacity of 17.5KTPA, SRF is the sole domestic producer of R-134a and its
market share increased to 41% in FY15. Imports have broadly remained flat at ~4,700 MT during the past 5 years.
Specialty Chemical is on strong footing
SRF is on a strong footing in Specialty Chemicals, as it is knowledge driven and has high entry barriers. We expect
the business to grow at a CAGR of 28% over FY15-17 to `1005.40 Cr. Given that it is a niche business, we believe it
will continue to enjoy PBIT margin of 35%.

Packaging Business has a good strength

The total demand for films in India is 360,000 MT/year and is growing at 10%. Capacity utilization swings
between 73% and 86%. Currently, the industry is operating at peak utilization of ~86%. With higher capacity
utilization, film manufacturers have begun enjoying higher margins.
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Vol.:
265
19th October,2015

Around The World

Weekly Market Recap :

Inflation based on the consumer price index (CPI) increased to 4.4% in September 2015 from with 3.7% in August 2015.

The data announced on 14 October 2015, showed that the annual rate of inflation based on monthly wholesale price
index (WPI) stood at negative 4.54% (provisional) for September 2015 as compared to negative 4.95% (provisional) in
August 2015.

Meanwhile, data released by the government on 15 October 2015, showed that India's merchandise exports declined for
tenth straight month in September 2015. Merchandise exports dropped 24.3% to $21.85 billion in September 2015 over
September 2014. Imports dipped 25.4% to $32.32 billion. The trade deficit narrowed 27.6% to $10.5 billion in September
2015 from $14.47 billion in September 2014.

Market Eye Week ahead :

On political front, Assembly elections in the state of Bihar are being held in five phases. Voting for the first phase of the election held
on 12 October and the second on 16 October.
Among global news, a preliminary reading of manufacturing PMI indices of Japan, Euro zone and the US for October 2015, indicating
health of manufacturing activity of respective regions for that month will be announced on Friday, 23 October 2015.
Governing Council of the European Central Bank (ECB) will announce the policy decision after a monetary policy meeting in Malta on
Thursday, 22 October 2015.

KEY EVENTS/FACTORS TO WATCH

1. Mon: Gruh Finance, Gati, HCL technology, Hind zinc, Kitex garments,UltraTech Cement ,Petronet LNG, SKS microfinance
earnings

2. Tue: ACC, BASF India, Bajaj Finance, Biocon, DHFL, Federal Bank, Hero MotoCorp, Zee media earnings

3. Wed: Bajaj Auto, Blue Dart, HDFC Bank, Idea cellular, Wipro, Tata Coffee, JSW steel, M&M Financial Services earnings.

4. Fri : Asian Paints, Bharti Infratel, GSFC, Rallis India, Inox Leisure, Omkar Speciality chemicals earnings

5. Sat : L&T finance, Godrej consumer products earnings

Knowledge Corner :
Securities-Based Lending

The practice of making loans using securities as collateral. Securities-based lending (SBL) provides ready access to capital that can
be used for almost any purpose such as buying real estate, purchasing personal property like jewelry or a sports car, or investing in a
business. The only restrictions are other securities-based transactions like buying shares or repaying a margin loan.

Also known as "securities-based borrowing" or "non purpose lending,"

SBL is separate and distinct from "securities lending." Securities-based lending became increasingly popular with U.S. broker-dealers
and banks from 2011 onwards as an additional revenue stream, facilitated by the steady rise in equities and record-low interest rates.

- 3-

Vol.: 265
19th October,2015

Mutual Fund Corner

Top 10 Sector Break-Ups

Fund Name
Scheme Name

Fund (%)

Axis Focused 25 Fund

Financial

28.94

AMC

Axis Asset Management Company Ltd

Services

17.09

Type

Multi Cap

Technology

11.24

Category

Open-ended and Equity

Automobile

10.91

Diversified

9.79

Launch Date

June 2012

Engineering

8.48

Fund Manager

Sudhanshu Asthana

Healthcare

5.99

Textiles

3.96

Metals

2.38

Net Assets
(` In crore )

Rs. 304.8 crore as on Aug 31, 2015

History

2012

NAV(Rs)

11.51

TotalReturn(%)

2013

2014

2015

12.18

16.90

17.39

5.82

38.75

2.90

+/CNXNifty

+/CNXMNC

-0.94

7.36

6.91

Rank(Fund/Category)

34/74

87/119

71/187

52WeekHigh(Rs)

12.24

17.15

18.82

52WeekLow(Rs)

10.27

11.49

16.56

Risk Analysis
Volatility Measures
Standard Deviation
Sharpe Ratio

13.73
0.69

Beta

R-Squared
Alpha

Composition (%)
Equity

98.78

NetAssets(Rs.Cr)

147.41

116.94

180.29

Debt

0.07

ExpenseRatio(%)

2.36

3.13

3.16

Cash

1.15

Fund Style
Investment Style
Growth

Blend

Value

Medium
Small

Capitalization

Large

Source : - www.valueresearchonline.com

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Vol.: 265
19th October,2015

Commodity Corner
BULLION
FUNDAMENTAL: Bullion prices last week ended with gains where gold by around two percent and silver by 1.50% on bets against a U.S. interest rate
hike. Not many are confident it will rise much further due to conflicting bets that the Federal Reserve will only raise rates next year, versus expectations among some that a hike was still possible by December. Investors have flocked to prices this month as deteriorating U.S. economic data
fanned hopes that the Federal Reserve would delay raising interest rates till 2016. Gold is holding near its 200-day moving average, a level it
broke this week for the first time since May. Not many are confident it will rise much further due to conflicting bets that the Federal Reserve will only
raise rates next year, versus expectations among some that a hike was still possible by December. China increased its gold holdings by nearly 1
percent in September even as total foreign exchange reserves dipped, central bank data showed. Gold reserves rose by 480,000 fine troy ounces,
or 14.9 tonnes, to 54.93 million ounces, or 1,708.5 tonnes at the end of September, the People's Bank of China (PBOC) said. The central bank
added 16.2 tonnes in August and nearly 19 tonnes in July. The rise in China's gold holdings comes at a time when its total foreign exchange reserves
are falling as the central bank steps up intervention to stabilise the yuan currency. China should increase its gold holdings to around 5 percent of
its total reserves to help diversify currency risks, a WGC official said earlier this year. In recent days, data showing low inflation, weak retail sales and
contracting manufacturing activity helped prices march higher. The dollar remained relatively steady, following the release of mixed data in the
U.S. The University of Michigan's Consumer Survey Center reported strong results from its semi-monthly index, confirming robust weekly figures on
consumer sentiment earlier in the month. The university's Consumer Sentiment Index surged more than five points to 92.1 for October, falling in the
high end of a consensus range between 87.5 and 93.0.
RECOMMENDATION : SELL GOLD @ 27400 SL 27850 TGT 26850-26400. SELL SILVER @ 37600 SL 38500 TGT 36800-36000

BASE METALS
FUNDAMENTAL: Base metals prices last week ended with mixed node where lead prices gained by around 1.5% whereas other base metals seen
under pressure as a stronger dollar weighed on the market and planned output cuts by miners failed to ease concerns over ample supplies. Prices also
seen under pressure as better-than-expected U.S. data on industrial output and consumer sentiment lifted the dollar, making metals denominated in the
currency more expensive for non-U.S. buyers. Copper market was also pressured by renewed oversupply concerns, as copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 11.4 percent. LME-approved warehouse inventories, meanwhile, dropped to a new eightmonth low of 292,950 tonnes, down more than 20 percent since a peak in late August. But they have still risen nearly 66 percent this year, suggesting
robust global inventories. Ample stocks offset previous upbeat sentiment on the back of output reductions, even as Chile's Antofagasta Plc became the
latest producer to cut back its copper exploration activities. In September, China imported 1.21 million tonnes of copper concentrate, up 58,000 tonnes
or 5.0% month-onmonth, but down 6.2% year-on-year, according to China Customs. Imports of copper concentrate from January to September totaled
9.33 million tonnes, up 9.3% year-on-year, a big drop from the 17.4% growth during the same period of last year. The world primary nickel production
had totaled 1.994 Mt during the calendar year 2014. The production during 2015 is expected to fall to 1.954 Mt. The 2016 production will further fall to
around 1.942 Mt, INSG said. The world primary nickel usage is expected to grow further in 2015 and 2016. The usage which had totaled 1.863 Mt in
2014 is likely to increase to 1.905 Mt in 2015 and to 1.965 Mt in 2016. According to ILZSG forecasts, global demand for refined lead metal will see a
decline of 0.7% to 10.82 million tonnes in 2015. On the other hand, ILZSG predicts a demand growth of 2.6% to 11.11 million tonnes in 2016. The slowdown in e-bike production in China will lead to 0.6% decline in refined lead metal usage by that country in 2015. The Chinese usage is expected to rise
by 2.6% in 2016 in the wake of increased usage by the automotive and industrial battery sectors.
RECOMMENDATION : BUY COPPER @ 340 SL 334 TGT 348-356. BUY ZINC @ 114 SL 110 TGT 118-124. BUY NICKEL @ 670 SL 650 TGT 690710.BUY LEAD @ 113 SL 109 TGT 118-122.

ENERGY
FUNDAMENTAL: Crude oil prices last week ended with more than 4.50% losses after the U.S. government reported a larger-than-expected crude
stockpile build. The Energy Information Administration said crude inventories rose by 7.6 million barrels for the week ended Oct 9. The crude build
comes amid lower processing of oil in the United States as refiners shut for seasonal maintenance after the peak summer driving season. The IEA issued a bleak outlook for the next year with forecasts of minimal reductions from record-levels of global oversupply. The EIA said gasoline stockpiles
fell by 2.6 million barrels as less of the motor fuel was turned out last week. That helped cushion some of the bearish impact on crude prices.
Thursday's slide, however, extended this week's pressure on prices of U.S. crude and global benchmark Brent, both down since Monday on worries of
record OPEC production. Crude oil prices saw some support earlier on Thursday from Chinese crude imports data, which showed a near 9 percent hike
from January through September. While relentless OPEC supply was weighing on the market, some trader think oil may be headed higher in the
near-to- medium term due to lagging U.S. shale oil output. Natural gas last week ended with more than the percent losses as healthy stockpiles and
warm weather keep up the pressure to sell. The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S.
in the week ended October 9 rose by 100 billion cubic feet, above expectations for an increase of 93 billion. That compared with builds of 95
billion cubic feet in the prior week, 105 billion cubic feet in the same week last year, while the five-year average change for the week is an increase of 87 billion cubic feet. Total U.S. natural gas storage stood at 3.733 trillion cubic feet. Stocks were 447 billion cubic feet higher than last year at
this time and 168 billion cubic feet above the five-year average of 3.565 trillion cubic feet for this time of year. A day earlier, natural gas prices tacked
on 2.0 cents, or 0.8%, as investors bet that chilly weather across the eastern U.S. will boost early-winter demand for the heating fuel. Updated
weather-forecasting models called for unusually cold temperatures across the eastern half of the U.S. through October 21.
RECOMMENDATION : BUY CRUDE OIL @ 2980 SL 2900 TGT 3080-3160. SELL NAT.GAS @ 165 SL 174 TGT 155-148.

- 5-

Vol.: 265
19th October,2015

Commodity Corner

Forex Corner

Market Recap :

The Indian rupee on Monday strengthened for the

fourth consecutive session against the US dollar
from its previous close tracking the gains in local
equity markets.

The domestic currency opened at Rs 64.765 against

the dollar and registered an intraday high and low of
64.73 and 64.85 so far during the day.

In the spot currency market, the Indian unit was last

seen trading at 64.80.

The rupee had ended marginally higher at 64.81

against the US dollar by gaining one paisa on Friday
due to fag-end selling pressure on the greenback
from banks and exporters.

The dollar index, which measures the US currencys

strength against major currencies, was trading at
94.657, up 0.13% from its previous close of 94.54.

Market Eye Week ahead :

The USD-INR ended flat last week at 64.94 and is likely to trade in range of 64.50-65.50 for the coming week. Upticks
will attract selling interest from exporters as they hedge their future receivables.On the lower side it is most likely that we
see dollar buying interest come in from local government banks on account of their regular demand. The dollar rose
broadly on Fridaylast week but The greenback's gain was limited by Friday's mixed U.S. data on industrial output, job
openings and consumer sentiment. USDINR is likely to trade negative on the back of raised bets the Federal Reserve
would not raise U.S. interest rates until 2016.

USD/INR
Level

S2

S1

CP

R1

R2

High

Low

USD/INR

64.72

64.49

65.04

65.27

65.59

65.37

Level

S2

S1

CP

R1

R2

High

Low

Close

EUR/INR

73.39

73.05

74.02

74.36

74.99

74.64

73.67

73.74

Level

S2

S1

CP

R1

R2

High

Low

Close

GBP/INR

99.55

98.79

100.14

100.90

101.49

100.74

99.39

99.62

Level

S2

S1

CP

R1

R2

High

Low

Close

JPY/INR

54.00

53.46

54.48

55.02

55.50

54.96

53.94

54.54

64.82

Close

64.94

EUR/INR

GBP/INR

JPY/INR

-- 46--

Vol.: 265
19th October,2015

J Street Recommendations Report Card

The macroeconomic data, next batch of Q2 results of India Inc., trend in global markets, investment by foreign portfolio
investors (FPIs), the movement of rupee against the dollar, Bihar elections Phase 3rd ,4th,& 5th) and crude oil price
movement will dictate trend on the bourses in the coming week.

Nifty has formed a long legged doji cross last week. The Doji is a powerful Candlestick formation, signifying
indecision between bulls and bears. Expect the resistance to be tested at 8250-8300-8330. Further sustained up move
and close above 8337 can lead to a rally to 8420-8500. Hold long position with a stop loss of 8088. Weakness can resume on fall and close below 8090.

Top Fundamental Stocks

Rec. Date

CMP on Rec.

CMP

Target

Absolute
Return @
CMP

SRFLtd.

21/09/2015

1140

1328

1374

16%

Buy

Ahluwaliacontracts

24/08/2015

235

269

368

14%

Buy

SunPharma

03/07/2015

831

905

1041

9%

Buy

InfiniteComputerSol.

20/07/2015

190

189

255

-1%

Buy

NitinSpinnersLtd.

06/07/2015

79

64

94

-19%

Buy

BankofBaroda

01/06/2015

163

175

217

8%

Buy

AmbikaCottonMills

18/05/2015

880

875

1149

-1%

Buy

SadbhavEngineering

04/05/2015

298

310

430

4%

Buy

CARELtd.

20/04/2015

1666

1341

2250

-20%

Buy

SetcoAutomotiveLtd.

30/03/2015

242

225

304

-7%

Buy

Omkarspeciality
Chemicals

16/03/2015

152

219

251

44%

Buy

DHFL

16/02/2015

252

237

368

-6%

Buy

TVTodayNetwork

27/01/2015

222

267

337

20%

Buy

M&M

12/1/2015

1238

1280

1452

3%

Buy

HavellsIndia

27/10/2014

274

260

346

-5%

Buy

AllCargoLogistics

05/08/2014

260

318

342

22%

Buy

PTCIndiaFin.Ser.

07/07/2014

39

49

45

26%

Buy

AdaniPort

05/07/2014

280

318

347

13%

Hold

L&T

05/07/2014

1750

1581

1866

-10%

Buy

Stocks

Status

It'snotimportantwhetheryouarerightorwrong,Itsabouthowmuchmoneyyoumakewhenyou'rerightandhow
muchyoulosewhenyou'rewrong.
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Vol.: 265
19th October,2015