spark chitra katha chitra katha - spark capitalmailers.sparkcapital.in/uploads/strategy/india chitra...

Chitra Katha

A story told through charts...

Spark Chitra Katha

Market data

BSE Sensex 24,551

NSE Nifty 7,461

Date March 16, 2016

Performance (%)

1m 3m 12m

BSE200 4% -4% -13%

Sensex 4% -3% -14%

Find Spark Research on Bloomberg (SPAK <go>),

Thomson First Call, Reuters Knowledge and Factset

GAUTAM SINGH [email protected] +91 22 4228 8152

GAURAV NAGORI, CFA [email protected] +91 44 4344 0072

‘Spark Chitra Katha’ monitors key macro and market data on an ongoing basis. Importantly, look out for the

interesting charts, which highlights evolving trends, extracted and interpreted from the maze of thousands of

macro and market data points.

Key highlights of this issue:-

Retail inflation heads South: Beating market expectations (5.5%), CPI inflation declined to a four month low of 5.2% in

Feb’16, down from 5.7% in Jan’16. A sharp fall in food inflation (Wt:46%) to 5.5% from 6.7% in Jan’16 mainly contributed

to the decline in CPI inflation. Core inflation, however, went up to 5% in Feb’16, from 4.7% in Jan’16. Post the

announcement of Budget FY17, we had revised our CPI inflation estimate downwards to 5% for Mar’17 from 5.6% earlier

on account of postponement of the 7th Pay and no sharp increase in service tax rate. Assuming a normal monsoon in

2016, CPI inflation is likely to fall to 4.5% by Jun'16, leading to a sharp jump in the real interest rate (~2.25%). Therefore,

we believe that the high real interest rate would provide the room to the RBI to cut repo rate by 25-50 bps in 1HFY17.

Govt taking expenditure route to revive economic growth. The total expenditure (plan + non-plan) has been

increased by 10.8% to Rs. 19.8tn in FY17BE, the fastest growth since FY11. The sharp rise in expenditure has been led

by 15% jump in plan expenditure, again the fastest growth since FY11. Govt has met the fiscal deficit target of 3.9% in

FY16RE without resorting to any accounting jugglery or cuts in plan expenditure. This is the first time in at least last three

years when Govt didn’t resort to cut in plan expenditure in order to meet the fiscal deficit target. Rather, plan expenditure

was Rs. 119bn higher than initially budgeted for FY16.

Govt provides Rs. 512bn for the Seventh Pay Commission recommendations. Our analysis (see slide 3) shows that

Govt has provided for the Seventh Pay Commission recommendations largely as salary hikes and allowances have been

deferred. Irrespective of the 7th CPC, Central govt employees would have got a normal increase in their Pay, Allowances

and Pensions in FY17. Excluding the normal ~9% rise, Govt has factored in ~Rs 512bn rise in total Pay, Allowances and

Pensions of the Central Govt employees in FY17BE. However, the total delta in Pay, Allowances and Pensions of Central

govt employees is Rs. 801bn in FY17BE as compared to FY16.

BSE 200 DII ownership by market cap at 4 years high: Our analysis of BSE 200 constituents ownership for Dec’15

quarter indicates that DII’s ownership by market cap has surged to 12.3%, the highest in the last 4 years whereas FII’s

ownership has largely remained flat at 21.6% versus 21.9% last year. DII’s have increased the highest in sectors such as

Metals and Mining (Coal India), Consumer discretionary and Cement.

Nifty valuations around last 10 year average: Nifty at current levels is trading at last 10 year average of 15x and 2.2x

on 12 month forward PE and PB basis respectively. Our analysis of past historical returns of last 10 years shows that

investing when Nifty 12 month forward PE at 15x has delivered 8-10% return in next 1 year. Buffet’s favorite ratio to

gauge undervaluation- Market cap to GDP for India is at 64% vis-à-vis 75% on an average in last 10 years. Also, currently

75% of BSE 200 stocks are trading below their 200 DMA.

-30%

-20%

-10%

0%

10%

Mar-15 Jun-15 Sep-15 Dec-15 Mar-16

Sensex BSE 200

Chitra Katha

Segment-wise contribution to growth (ppt):

Consumption up, investment lowest in 5 qtrs

Source: CSO, Spark Capital Research

Investment growth drops significantly; HH

consumption witnesses a marginal pick up


Supply side GDP also inches up, led by...


...marginal uptick in agri and Industry...


...while construction activities slow down


Nominal GDP growth above real GDP growth on positive deflator in Q3FY16

Nominal GDP bounces in Q3 FY16, above

real GDP growth


6.6

7.7

7.3

10.3

6.4

9.2

3

5

7

9

11

13

15

17

Mar-

13

Jun-1

3

Sep

-13

Dec-1

3

Mar-

14

Jun-1

4

Sep

-14

Dec-1

4

Mar-

15

Jun-1

5

Sep

-15

Dec-1

5

(%, yoy)

Real GDP growth Nominal GDP growth

0.9

3.6 3.6 3.1 3.62.6

-0.3

0.1 0.50.5

1.62.6 2.0

2.91.4

-1.0 0.0 -0.1 -0.1

0.52.4

0.8 2.01.3

1.3

-1.0

1.0

3.0

5.0

7.0

9.0

Dec-14 Mar-15 Jun-15 Sep-15 Dec-15

C G I (X-M) E&O

1.55.6

6.4

4.5

8.2

4.1

-6

-3

0

3

6

9

12

Mar-

13

Jun-1

3

Sep

-13

Dec-1

3

Mar-

14

Jun-1

4

Sep

-14

Dec-1

4

Mar-

15

Jun-1

5

Sep

-15

Dec-1

5

(%, yoy)

HH consumption Investment (GCF)

2.1

1.9 2.2

7.6 6.5 6.8

10.4

8.9 8.8

-2

1

4

7

10

13

Dec-1

2

Mar-

13

Jun-1

3

Sep

-13

Dec-1

3

Mar-

14

Jun-1

4

Sep

-14

Dec-1

4

Mar-

15

Jun-1

5

Sep

-15

(%, yoy)

Agriculture Industry Services

8.4 7.17.4

3

4

5

6

7

8

9

Dec-1

2

Mar-

13

Jun-1

3

Sep

-13

Dec-1

3

Mar-

14

Jun-1

4

Sep

-14

Dec-1

4

Mar-

15

Jun-1

5

Sep

-15

Real GVA growth (%, yoy)

3.2

2.6

-8

-5

-2

1

4

7

10

Sep

-12

Dec-1

2

Mar-

13

Jun-1

3

Sep

-13

Dec-1

3

Mar-

14

Jun-1

4

Sep

-14

Dec-1

4

Mar-

15

Jun-1

5

Sep

-15

(%, yoy)

Mining Construction

Macro Indicators: Growth

Chitra Katha

Electricity prod. growth accelerates to 6.6%

in Jan’16, steep rise in past 2 months


IIP growth contracts third straight month...


...led by a fall in manufacturing output


Manufacturing PMI hints at recovery ahead


Mining production growth lowest in last 7

months


Segment-wise weight in IIP (%);

Manufacturing accounts for >75% of IIP


IIP: Industrial production contracts for third consecutive month in Jan’16 due to fall in manufacturing output


Mining 14.16

Manufacturing

75.53

Electricity 10.32

2.8

-1.2-1.5

-4

-2

0

2

4

6

8

10

Jan-1

5

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

%, yo

y

Industrial Production Index (IIP)

3.4

5.1

2.7 3

.9

2.1

5.2

4.8 6

.6

2.7

10.6

-4.7

-2.2

-2.8

-8

-4

0

4

8

12

Jan-1

5

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

%, yo

y

Manufacturing

49.1

51.1

47

50

53

56

59

62

Sep

-10

Feb

-11

Jul-11

Dec-1

1

May-1

2

Oct-

12

Mar-

13

Aug

-13

Jan-1

4

Jun-1

4

No

v-1

4

Ap

r-15

Sep

-15

Feb

-16

India manufacturing PMI

-1.8

1.6

1.2

-0.6

2.1

-0.4

1.3

4.5

3.5

5.3

1.9

2.7

1.2

-2

0

2

4

6

Jan-1

5

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

%, yo

y

Mining

3.3

3.2

6.6

-3

0

3

6

9

12

15Jan-1

5

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

%, yo

y

Electricity

Chitra Katha

Consumer goods production flat led by…


...a sharp fall in non-durable goods output


Cap goods prod. falls for 3rd straight month


Basic goods production marginally up


Intermediate goods production growth up


Segment-wise weight in IIP (%)


IIP: Decline in production of cap goods and non-durables lead to the fall in IIP


-1.9

4.9

-0.6 2

.8

-2.2

7.2

1.1 6.0

1.2

18.3

1.0

3.0

0.0

-5

0

5

10

15

20

Jan-1

5

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

%, yo

y

Consumer Goods

Capital Goods 8.8

Consumer Goods:

Durables 8.5

Consumer Goods:

Non Durables

21.3

Basic Goods 45.7

Intermediate Goods

15.7

12.4

8.3

9.1

5.5

3.0

-2.0

10.1

21.3

10.1 16.5

-24.5

-19.1

-20.4

-30

-25

-20

-15

-10

-5

0

5

10

15

20

25

Jan-1

5

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

%, yo

y

Capital Goods

-5.7

16.4

5.80.3

-3.0 -3.1-10

0

10

20

30

40

50

Jan-1

5

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

%, yo

y

Durables Non Durables

4.8

-0.7

1.8

-2

0

2

4

6

8

Jan-1

5

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

%, yo

y

Basic Goods

0.1 1.3

2.7

-4

-2

0

2

4

6

8Jan-1

5

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

%, yo

y

Intermediate Goods

Chitra Katha

Core sector prod. surges in Jan’16...

Source: Ministry of Commerce and Industry

...led by sharp up-tick in cement production


Coal production growth also accelerates


Electricity production grew significantly


Fertilizer prod. continue to decline


Production of natural gas falls sharply



3.3 2

.7

6.0

-2

0

2

4

6

8

10

12

14

Jan-1

5

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

%, yo

y

Electricity

-2.3

-4.1

-4.6

-6.0 -6.1

-15.2-16-14-12-10

-8-6-4-20246

Jan-1

5

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

%, yo

y

Crude Oil Natural Gas

3.4

-2.80

.1

9.1

-10

-5

0

5

10

15

Jan-1

5

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

%, yo

y

Steel Cement

0.9

6.1

9.1

4.7 2.14.8

-10

-5

0

5

10

15

20

Jan-1

5

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

%, yo

y

Coal Ref inery Products

7.1

-0.4

5.2

-0.1

1.3

5.8

8.6

12.6 18.1

16.2

13.4

13.0

6.2

-202468

101214161820

Jan-1

5

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

%, yo

y

Fertilizers

3.2

3.2

-1.3

0.9 2

.9

-2

0

2

4

6

8

10

Dec-1

4

Jan-1

5

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

%, yo

y

Eight core industries index

Eight core infra-related sectors show uptick in output led by higher output in Coal, Cement and Electricity

Chitra Katha

LCV sales growth remain +ve for 5-months

Source: SIAM, Spark Capital Research

-3.96.5

9.7

33.6

34.3

-20

-10

0

10

20

30

40

50

60

70

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

Feb

-16

%, yo

y

LCV: Domestic sales MHCV: Domestic sales

LCV exports witness a sharp fall in growth


-8.9

5.0

6.5

21.4

-30

-20

-10

0

10

20

30

40

50

60

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

Feb

-16

%, yo

y

LCV exports MHCV exports

CV sales maintain the momentum


Passenger vehicle sales remain low...


...while two wheeler sales pick up


Three-wheeler domestic sales rebound


Auto sales: Passenger vehicle sales growth decelerates while two-wheeler sales inch up


8.4

19.9

-3.8

11.1

-10

-5

0

5

10

15

20

25

30

35

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

Feb

-16

%, yo

y

CV: Domestic sales CV exports

5.8

1.7

-3.0

23.7

-30

-20

-10

0

10

20

30

40

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

Feb

-16

%, yo

y

PV: Domestic sales PV exports

12.8

-5.8

-20

-10

0

10

20

30F

eb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

Feb

-16

%, yo

y

2-Wheeler sales: Domestic 2-Wheeler exports

-10.3

32.1

-31.8

2.7

-60

-40

-20

0

20

40

60

80

100

-20

-10

0

10

20

30

40

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

Feb

-16

%, yo

y

3-Wheeler sales: Domestic 3-W exports (RHS)

Chitra Katha

…while rural wage growth remains low

Source: RBI Spark Capital Research

Cargo traffic growth inches up too

Source: CEIC, Spark Capital Research

Lead indicators hint at mixed trend in economic activities

Hiring activities remain elevated in Feb’16...

Source: RBI, Spark Capital Research


Foreign tourist arrivals pick up in Jan’16


6.7

-5

0

5

10

15

20

Oct-

10

Jan-1

1

Ap

r-11

Jul-11

Oct-

11

Jan-1

2

Ap

r-12

Jul-12

Oct-

12

Jan-1

3

Ap

r-13

Jul-13

Oct-

13

Jan-1

4

Ap

r-14

Jul-14

Oct-

14

Jan-1

5

Ap

r-15

Jul-15

Oct-

15

Jan-1

6

Foreign Tourist Arrivals (yoy, %) 3-month moving average

3.3

4.2

-8

-6

-4

-2

0

2

4

6

8

10

Aug

-10

No

v-1

0

Feb

-11

May-1

1

Aug

-11

No

v-1

1

Feb

-12

May-1

2

Aug

-12

No

v-1

2

Feb

-13

May-1

3

Aug

-13

No

v-1

3

Feb

-14

May-1

4

Aug

-14

No

v-1

4

Feb

-15

May-1

5

Aug

-15

No

v-1

5

Feb

-16

Cargo Traf f ic growth (ytd, %, yoy)

17.7

-1.0

6.0

20.0

17.7

20.7

-5

0

5

10

15

20

25

May/1

1

Aug/1

1

Nov/1

1

Fe

b/1

2

May/1

2

Aug/1

2

Nov/1

2

Fe

b/1

3

May/1

3

Aug/1

3

Nov/1

3

Fe

b/1

4

May/1

4

Aug/1

4

Nov/1

4

Fe

b/1

5

May/1

5

Aug/1

5

Nov/1

5

Fe

b/1

6

Naukri Job Speak Index (% yoy, 3-month moving average)

17.6

3.2

-1.8

-5

0

5

10

15

20

25

30

May-0

5

Dec-0

5

Jul-06

Fe

b-0

7

Sep-0

7

Apr-

08

Nov-0

8

Jun-0

9

Jan-1

0

Aug-1

0

Mar-

11

Oct-

11

May-1

2

Dec-1

2

Jul-13

Fe

b-1

4

Sep-1

4

Apr-

15

Nov-1

5

Rural wage growth: Nominal ( % yoy) Rural wage growth:Real ( % yoy)

Chitra Katha

Lowering differential between petrol and diesel prices leading to sales mix reversal favoring Petrol PV

Petrol and Diesel price differential in downtrend

Source: Bloomberg, Spark Capital Research

Diesel and Petrol PV vehicles sales mix

Source: Industry, Spark Capital Research

Structurally declining kerosene volume

Source: PPAC, Spark Capital Research

Petrol versus Diesel YoY volume growth

Source: PPAC, Spark Capital Research

-5

0

5

10

15

20

25

Jun

-12

Aug

-12

Oct-

12

Dec-1

2

Feb-1

3

Ap

r-13

Jun

-13

Aug

-13

Oct-

13

Dec-1

3

Feb-1

4

Ap

r-14

Jun

-14

Aug

-14

Oct-

14

Dec-1

4

Feb-1

5

Ap

r-15

Jun

-15

Aug

-15

Oct-

15

Dec-1

5

Feb-1

6

Petrol (% YoY 3mma) Diesel (% YoY 3mma)

0

5

10

15

20

25

30

35

Jun

-11

Oct-

11

Feb-1

2

Jun

-12

Oct-

12

Feb-1

3

Jun

-13

Oct-

13

Feb-1

4

Jun

-14

Oct-

14

Feb-1

5

Jun

-15

Oct-

15

Feb-1

6

Mumbai Petrol-Diesel differential (Rs/Ltr)

8478 75

6553

42 4755

1622 25

3547

58 5345

0

10

20

30

40

50

60

70

80

90

100

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

Diesel (%) Petrol (%)

-20

-15

-10

-5

0

5

10

15

Jun

-12

Aug

-12

Oct-

12

Dec-1

2

Feb-1

3

Ap

r-13

Jun

-13

Aug

-13

Oct-

13

Dec-1

3

Feb-1

4

Ap

r-14

Jun

-14

Aug

-14

Oct-

14

Dec-1

4

Feb-1

5

Ap

r-15

Jun

-15

Aug

-15

Oct-

15

Dec-1

5

Feb-1

6

LPG (% YoY 3mma) Kerosene (% YoY 3mma)


Chitra Katha Inflation down to a four month low; to fall to 4.5% by Jun’16...

Macro Indicators: Retail inflation

CPI inflation eases to a four month low of 5.2% in Feb’16

Source: GoI, Spark Capital Research

MSP driven food category eases led by fall in pulses prices


Food category contribution to CPI inflation comes down


Sharp fall in food inflation in Feb’16


5.7

5.2

4.7 5.0

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

Jun-1

4

Jul-14

Aug-1

4

Sep-1

4

Oct-

14

Nov-1

4

Dec-1

4

Jan-1

5

Fe

b-1

5

Mar-

15

Apr-

15

May-1

5

Jun-1

5

Jul-15

Aug-1

5

Sep-1

5

Oct-

15

Nov-1

5

Dec-1

5

Jan-1

6

Fe

b-1

6

(%, yoy)

CPI inflation Core inflation

5.5

4.4

5.3

4.0

4.5

5.0

5.5

6.0

6.5

7.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Jul-

14

Aug-1

4

Sep-1

4

Oct-

14

Nov-1

4

Dec-1

4

Jan-1

5

Fe

b-1

5

Mar-

15

Apr-

15

May-1

5

Jun-1

5

Jul-

15

Aug-1

5

Sep-1

5

Oct-

15

Nov-1

5

Dec-1

5

Jan-1

6

Fe

b-1

6

Inflation (%, yoy)

Food and Beverages Services Housing (RHS)

8.5

3.6

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Jun-1

4

Jul-14

Aug-1

4

Sep-1

4

Oct-

14

Nov-1

4

Dec-1

4

Jan-1

5

Fe

b-1

5

Mar-

15

Apr-

15

May-1

5

Jun-1

5

Jul-15

Aug-1

5

Sep-1

5

Oct-

15

Nov-1

5

Dec-1

5

Jan-1

6

Fe

b-1

6

MSP linked food (wt:16.9%) Non-MSP linked food (32:5%)

1.0 0.9 0.8 0.9 1.0 0.8 0.8 1.0 1.4 1.6 1.7 1.7 1.5

2.1 2.0 1.8 1.7 1.9

1.0 1.0 1.3

1.3 1.3 1.3 1.4 1.2

0.4 0.4 0.4 0.4

0.4

0.3 0.4 0.4

0.4 0.4 0.4 0.4

0.3

0.5 0.5 0.4 0.4

0.4

0.4 0.4 0.4

0.4 0.4 0.4 0.4

0.4

0.6 0.5 0.5 0.5

0.5

0.4 0.4 0.5

0.5 0.5 0.5 0.6

0.6

0.9 0.9 0.9 1.1

1.2

0.9 0.8 0.9

1.0 1.1 1.2 1.2

1.2

5.4 5.2

0

1

2

3

4

5

6

Fe

b-1

5

Mar-

15

Apr-

15

May-1

5

Jun-1

5

Jul-15

Aug-1

5

Sep-1

5

Oct-

15

Nov-1

5

Dec-1

5

Jan-1

6

Fe

b-1

6

Contribution to CPI inflation, ppt

MSP linked food Non-MSP linked food Fuel & Light

Clothing & Footwear Housing Services

CPI

Chitra Katha

WPI inflation remains in –ve zone

Source: Office of the Economic Adviser

Food inflation softens


Manufactured index up (m/m)


WPI inflation to slip into positive territory in next two months

Category-wise contribution to WPI inflation

Source: Office of the Economic Adviser, Spark Capital Research

Macro Indicators: Wholesale inflation

0.1

-1.6-2.2

-0.9

-5

-4

-3

-2

-1

0

1

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

Feb

-16

%, yo

y

Core WPI WPI inf lation

6.03.4

-9.2-6.4

-20

-15

-10

-5

0

5

10

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

Feb

-16

%, yo

y

Food inf lation Fuel inf lation

-0.3 -0

.1

0.0 0.3

-0.1

-0.4

-0.4

0.2

0.0

-0.2

-0.4

0.2 0.3

-0.6

-0.4

-0.2

0.0

0.2

0.4

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

Feb

-16

%, m

om

Manufactured products index (%, mom)

2.8 2.3

-0.6 0.6 1.3

0.4

1.8 1.7

-3.0 -2.8

-1.8 -1.0

1.7 2.2

-0.9 -0.9

-0.7

-4.6 -3.7

-2.0

-0.9

-0.9

Dec-1

3

Jan-1

4

Fe

b-1

4

Mar-

14

Apr-

14

May-1

4

Jun-1

4

Jul-14

Aug-1

4

Sep-1

4

Oct-

14

Nov-1

4

Dec-1

4

Jan-1

5

Fe

b-1

5

Mar-

15

Apr-

15

May-1

5

Jun-1

5

Jul-15

Aug-1

5

Sep-1

5

Oct-

15

Nov-1

5

Dec-1

5

Jan-1

6

Fe

b-1

6

ppt

Primary Articles Fuel & Power Manufactured WPI

Chitra Katha

RBI keeps policy rates unchanged in Feb


No change in SLR and CRR


Banks’ base rate down 60bps since Apr’15


A tight liquidity situation


10-year G-sec yields soften post Budget


Yield curve steepens


RBI to cut rate by 25-50bps in 1HFY17; Further interest rate easing to be led by improving liquidity

Macro Indicators: Interest Rates

6.75

5.75

7.75

5

6

7

8

9

10

Oct-

13

Dec-1

3

Feb

-14

Ap

r-14

Jun-1

4

Aug

-14

Oct-

14

Dec-1

4

Feb

-15

Ap

r-15

Jun-1

5

Aug

-15

Oct-

15

Dec-1

5

Feb

-16

%

Repo Reverse Repo MSF rate

4.0

4.0

23.0

21.50

21.0

21.5

22.0

22.5

23.0

23.5

3.0

3.5

4.0

4.5

5.0

Oct-

13

Dec-1

3

Feb

-14

Ap

r-14

Jun-1

4

Aug

-14

Oct-

14

Dec-1

4

Feb

-15

Ap

r-15

Jun-1

5

Aug

-15

Oct-

15

Dec-1

5

Feb

-16

CRR (%) SLR (%) - RHS

10.039.85

9.509.4

9.5

9.6

9.7

9.8

9.9

10.0

10.1

10.2

Oct-

13

Dec-1

3

Feb

-14

Ap

r-14

Jun-1

4

Aug

-14

Oct-

14

Dec-1

4

Feb

-15

Ap

r-15

Jun-1

5

Aug

-15

Oct-

15

Dec-1

5

Feb

-16

Base Rate: Five Major Banks (%)

-134

-250

-200

-150

-100

-50

0

50

100

150

200

250

No

v-1

4

Feb

-15

Ap

r-15

Jun-1

5

Aug

-15

Oct-

15

Dec-1

5

Feb

-16

LAF + MSF (7D moving avg.) - Rs. bn

8.76

8.05

7.517.75

8.04

7.0

7.5

8.0

8.5

9.0M

ay-1

4

Jun-1

4

Jul-14

Sep

-14

Oct-

14

Dec-1

4

Jan-1

5

Mar-

15

Ap

r-15

Jun-1

5

Jul-15

Sep

-15

Oct-

15

Dec-1

5

Jan-1

6

Mar-

16

10-year Gsec yield (%)

7.0

7.5

8.0

8.5

3M 6M 1Y 2Y 3Y 4Y 5Y 7Y 9Y 10Y 15Y

%

Current 6M back 1Y back

Chitra Katha

Gap between deposit & credit growth narrows


Credit-deposit ratio inches up to 76.7%


Investment deposit ratio falls


Forex reserves remains near historic high


Import covers reaches above 12months


RBI’s intervention comes down in Jan’16


Sharp rebound in credit growth since Nov’15, leading to pick up in CD ratio

Macro Indicators: Monetary Conditions

11.0

11.6

9

10

11

12

13

20-F

eb

-15

20-M

ar-

15

17-A

pr-

15

15-M

ay-1

5

12-J

un-1

5

10-J

ul-15

7-A

ug

-15

4-S

ep

-15

2-O

ct-

15

30-O

ct-

15

27-N

ov-1

5

25-D

ec-1

5

22-J

an-1

6

19-F

eb

-16

%, yo

y

Deposit growth Credit growth

76.7

74

75

76

77

20-F

eb

-15

20-M

ar-

15

17-A

pr-

15

15-M

ay-1

5

12-J

un-1

5

10-J

ul-15

7-A

ug

-15

4-S

ep

-15

2-O

ct-

15

30-O

ct-

15

27-N

ov-1

5

25-D

ec-1

5

22-J

an-1

6

19-F

eb

-16

Credit Deposit Ratio (%)

29.1

28

29

30

31

20-F

eb

-15

20-M

ar-

15

17-A

pr-

15

15-M

ay-1

5

12-J

un-1

5

10-J

ul-15

7-A

ug

-15

4-S

ep

-15

2-O

ct-

15

30-O

ct-

15

27-N

ov-1

5

25-D

ec-1

5

22-J

an-1

6

19-F

eb

-16

Investment Deposit Ratio (%)

350.9

310

320

330

340

350

360

20-F

eb

-15

3-A

pr-

15

15-M

ay-1

5

26-J

un-1

5

7-A

ug

-15

18-S

ep

-15

30-O

ct-

15

11-D

ec-1

5

22-J

an-1

6

4-M

ar-

16

US

$, b

n

Foreign Exchange Reserves ($, bn)

2.7

3.1

6.7

12.1

7.9

7.7

5.4

2.6

0.6

0.2

-1.6 -0

.1

1.9

0.0

-0.2 0.0

Oct-

14

No

v-1

4

Dec-1

4

Jan-1

5

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

US

$, b

n

RBI Intervention: Net US$ Purchase

8.7

12.012.6

5

6

7

8

9

10

11

12

13

Feb

-14

Ap

r-14

Jun-1

4

Aug

-14

Oct-

14

Dec-1

4

Feb

-15

Ap

r-15

Jun-1

5

Aug

-15

Oct-

15

Dec-1

5

Feb

-16

Import cover (no. of month)

Chitra Katha

Credit growth in Agriculture sector picks up to 13.4% in Jan’16,

following 12.5% growth in Sep ‘15

Source: MOSPI, Spark Capital Research

Marginal pick up in industrial credit growth in Jan’16; but it still

remains very low

Source: Ministry of Statistics and Programme Implementation (MOSPI)

Services sector credit growth also picks up to 8.9% in Jan’16, after

remaining at around 6.5% for over a year

Source: SEBI, Spark Capital Research

Credit card outstanding continues to grow in double digits in

Jan’16, reflecting positive sentiments at urban consumer level

Source: CGA, Spark Capital Research

Sectoral deployment of credit: Marginal uptick in credit growth picks up in Agri and Services sectors


24.4

5.6

0

5

10

15

20

25

30

35

40

Jan-0

7

Jul-07

Jan-0

8

Jul-08

Jan-0

9

Jul-09

Jan-1

0

Jul-10

Jan-1

1

Jul-11

Jan-1

2

Jul-12

Jan-1

3

Jul-13

Jan-1

4

Jul-14

Jan-1

5

Jul-15

Jan-1

6

Industrial credit growth (%, yoy) (Share in total credit: 45%)

9.28.9

0

5

10

15

20

25

Sep

-11

No

v-1

1

Jan-1

2

Mar-

12

May-1

2

Jul-12

Sep

-12

No

v-1

2

Jan-1

3

Mar-

13

May-1

3

Jul-13

Sep

-13

No

v-1

3

Jan-1

4

Mar-

14

May-1

4

Jul-14

Sep

-14

No

v-1

4

Jan-1

5

Mar-

15

May-1

5

Jul-15

Sep

-15

No

v-1

5

Jan-1

6

Services credit growth (%, yoy) (Share in total credit: 24%)

25.8

24.1

-5

0

5

10

15

20

25

30

Sep

-11

No

v-1

1

Jan-1

2

Mar-

12

May-1

2

Jul-12

Sep

-12

No

v-1

2

Jan-1

3

Mar-

13

May-1

3

Jul-13

Sep

-13

No

v-1

3

Jan-1

4

Mar-

14

May-1

4

Jul-14

Sep

-14

No

v-1

4

Jan-1

5

Mar-

15

May-1

5

Jul-15

Sep

-15

No

v-1

5

Jan-1

6

Credit Card Outstanding (%, yoy)

12.8

13.4

4

8

12

16

20

24

28

32

Jan-0

7

Jul-07

Jan-0

8

Jul-08

Jan-0

9

Jul-09

Jan-1

0

Jul-10

Jan-1

1

Jul-11

Jan-1

2

Jul-12

Jan-1

3

Jul-13

Jan-1

4

Jul-14

Jan-1

5

Jul-15

Jan-1

6

Cre

dit

gro

wth

(%

)

Agri (Share in total credit: 11%)

Chitra Katha

Bank credit: Personal loan growth picks up; Industry loan growth witnesses marginal uptick

Share (%) (Rs. Bn)

Jan-16 Jan-16 Jan-16 Dec-15 Nov-15 Oct-15 Sep-15 Aug-15 Jan-15

I Gross Bank Credit (II + III) 100.0 64,983 9.5 9.2 8.6 8.1 8.4 8.2 9.6

II Food Credit 1.5 1,002 -6.3 1.7 0.5 -6.0 -2.3 -2.0 3.7

III Non-food Credit (1 to 4) 98.5 63,981 9.8 9.3 8.8 8.3 8.6 8.4 9.7

1 Agriculture & Allied Activities 13.1 8,514 13.4 12.7 11.8 11.1 12.8 12.1 16.6

2 Industry (Micro & Small, Medium and Large ) 41.9 27,244 5.6 5.3 5.0 4.6 4.9 5.0 6.4

3 Services 22.7 14,732 8.9 9.2 6.8 6.8 5.9 5.9 7.2

3.1 Transport Operators 1.5 984 7.8 11.0 5.4 5.6 6.7 4.6 1.6

3.2 Computer Software 0.3 187 8.1 11.9 11.6 11.3 10.7 12.3 -9.2

3.3 Tourism, Hotels and Restaurants 0.6 371 1.8 6.9 3.1 1.2 1.1 1.2 -8.5

3.4 Shipping 0.2 103 8.8 8.1 6.0 3.4 6.3 3.9 -0.3

3.5 Professional Services 1.6 1,033 24.7 36.1 15.8 13.2 13.9 11.4 5.9

3.6 Trade 5.6 3,662 7.2 11.0 8.9 9.2 12.2 12.3 11.0

3.6.1 Wholesale Trade (other than food procurement) 2.5 1,650 -0.6 2.1 3.9 4.8 9.7 8.8 6.0

3.6.2 Retail Trade 3.1 2,012 14.6 19.5 13.5 13.1 14.6 15.6 16.3

3.7 Commercial Real Estate 2.7 1,766 7.1 5.9 4.5 4.2 2.0 4.5 13.4

3.8 Non-Banking Financial Companies (NBFCs) 5.0 3,260 10.7 5.5 2.4 2.8 1.2 0.3 5.1

3.9 Other Services 5.2 3,367 7.1 6.2 6.9 9.0 3.9 4.3 7.6

4 Personal Loans 20.8 13,491 18.1 16.1 18.0 16.9 18.0 17.3 16.4

4.1 Consumer Durables 0.3 170 14.0 13.4 12.9 11.4 12.7 12.7 35.4

4.2 Housing (Including Priority Sector Housing) 11.1 7,238 18.4 19.3 18.6 17.6 18.0 17.8 17.1

4.3 Advances against Fixed Deposits 1.0 639 2.1 6.4 9.3 10.5 13.1 10.2 7.5

4.4 Advances to Individuals against share, bonds, etc. 0.1 58 12.7 46.5 78.3 23.6 26.0 32.8 50.2

4.5 Credit Card Outstanding 0.6 386 24.1 23.3 27.7 22.1 22.2 21.8 22.8

4.6 Education 1.1 683 7.5 8.1 7.9 6.7 7.3 6.2 5.8

4.7 Vehicle Loans 2.2 1,420 15.2 -3.1 15.5 14.3 16.3 17.0 22.0

4.8 Other Personal Loans 4.5 2,898 25.5 23.2 20.6 20.6 23.1 20.4 15.4

Growth (yoy, %)



Chitra Katha

Bank credit: Loan growth in energy, mining, chemical and textile sectors has taken the biggest hit



Share (%) (Rs. Bn) Growth (yoy, %)

Jan-16 Jan-16 Jan-16 Dec-15 Nov-15 Oct-15 Sep-15 Aug-15 Jan-15

2.1 Mining & Quarrying (incl. Coal) 1.4 387 5.2 -0.3 -5.4 -6.8 -12.1 -14.0 1.2

2.2 Food Processing 5.6 1,525 -2.4 -1.9 -1.3 0.3 2.8 7.9 13.1

2.2.1 Sugar 1.3 365 4.4 3.7 7.9 7.2 4.0 4.8 11.5

2.2.2 Edible Oils & Vanaspati 0.7 193 -6.5 -5.7 -5.4 -1.3 -0.4 -4.2 -0.7

2.2.3 Tea 0.1 36 13.2 12.9 9.7 -6.4 -1.4 1.2 4.9

2.2.4 Others 3.4 931 -4.5 -3.6 -4.0 -1.7 3.2 11.9 17.4

2.3 Beverage & Tobacco 0.7 178 -4.6 -3.4 -3.0 -6.5 -8.5 -5.8 13.2

2.4 Textiles 7.4 2,027 2.7 2.1 1.2 0.2 1.0 1.5 1.4

2.4.1 Cotton Textiles 3.7 1,017 4.3 3.3 2.2 1.2 0.4 2.0 1.5

2.4.2 Jute Textiles 0.1 22 -1.4 -10.5 -7.7 -7.4 1.8 0.1 13.9

2.4.3 Man-Made Textiles 0.8 208 4.1 5.2 5.6 4.2 6.4 5.9 -4.4

2.4.4 Other Textiles 2.9 780 0.4 0.1 -0.9 -1.7 0.4 -0.2 2.5

2.5 Leather & Leather Products 0.4 103 0.1 -0.7 0.7 0.7 0.2 -0.2 4.3

2.6 Wood & Wood Products 0.4 96 -0.2 4.7 4.3 3.4 6.0 7.2 3.9

2.7 Paper & Paper Products 1.3 362 7.0 5.2 3.9 4.3 3.8 3.6 4.7

2.8 Petroleum, Coal Products & Nuclear Fuels 1.8 477 -14.7 -10.4 -20.9 -19.7 -22.9 -21.4 -5.7

2.9 Chemicals & Chemical Products 5.7 1,562 3.4 2.9 1.5 3.3 3.3 1.3 -1.0

2.9.1 Fertiliser 0.8 229 -8.2 -8.1 2.0 -0.7 0.9 -7.8 -6.0

2.9.2 Drugs & Pharmaceuticals 1.9 513 6.6 6.9 6.6 5.8 6.3 7.7 0.4

2.9.3 Petro Chemicals 1.3 362 7.1 -0.5 -11.4 0.1 -2.4 -0.3 -0.3

2.9.4 Others 1.7 458 3.5 7.2 7.2 5.1 5.7 0.7 0.0

2.10 Rubber, Plastic & their Products 1.3 363 -3.7 0.7 -2.4 -4.2 1.0 -0.5 2.7

2.11 Glass & Glassware 0.3 89 0.9 0.0 -2.2 -4.2 -3.2 -2.9 1.8

2.12 Cement & Cement Products 2.0 538 -3.8 -1.1 0.4 -0.8 3.0 4.5 7.5

2.13 Basic Metal & Metal Product 15.0 4,099 10.5 8.8 8.7 7.5 8.8 10.0 7.0

2.13.1 Iron & Steel 11.1 3,037 11.8 9.4 10.0 8.2 9.6 9.3 5.0

2.13.2 Other Metal & Metal Product 3.9 1,062 6.8 7.2 5.1 5.7 6.6 12.0 13.0

2.14 All Engineering 5.6 1,526 3.0 6.3 4.6 4.1 5.7 5.7 5.3

2.14.1 Electronics 1.4 379 9.5 1.2 8.9 9.6 7.3 8.2 6.3

2.14.2 Others 4.2 1,147 1.0 8.0 3.2 2.4 5.2 4.9 5.0

2.15 Vehicles, Vehicle Parts & Transport Equipment 2.5 679 1.4 -1.5 0.9 3.6 4.6 3.9 2.2

2.16 Gems & Jewellery 2.6 718 6.1 0.2 -0.3 1.3 4.5 3.5 0.8

2.17 Construction 2.7 739 0.8 3.2 3.0 1.5 0.9 1.7 17.2

2.18 Infrastructure 36.3 9,883 9.8 8.4 8.7 8.3 8.7 8.2 10.5

2.18.1 Power 22.0 5,992 9.9 10.0 10.4 10.6 12.1 10.6 14.9

2.18.2 Telecommunications 3.4 937 8.5 6.2 5.0 2.6 5.3 7.1 -1.3

2.18.3 Roads 6.6 1,789 8.3 7.9 7.5 7.2 4.6 6.3 7.7

2.18.4 Other Infrastructure 4.3 1,165 12.7 3.1 4.5 3.6 1.3 0.1 4.0

2.19 Other Industries 6.9 1,892 5.4 9.8 11.2 8.0 2.1 0.6 0.1

2 Total Industries 100.0 27,244 5.6 5.3 5.0 4.6 4.9 5.0 6.4

Chitra Katha

Currency in circulation picks up since Nov


Reserve money growth significantly up


M1 money supply growth also picks up


M2 money supply growth at 13.6%


M3 Money supply growth inches up


Money multiplier decreases sharply


Reserve money and M3 money supply growth picks up in last three months

11.2 12.1

14.2

10

11

12

13

14

15

16

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

Feb

-16

%, yo

y

Reserve Money (M0)

10.712.0

13.4

7

9

11

13

15

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

Feb

-16

%, yo

y

M1 Money Supply

11.2

11.1

11.3

10

11

11

12

12F

eb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

Feb

-16

%, yo

y

M3 Money Supply

5.765.71

5.61

5.5

5.6

5.7

5.8

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

Feb

-16

Money Multiplier

10.7

12.2

13.6

8

9

10

11

12

13

14

Feb

-15

Mar-

15

Ap

r-15

May-1

5

Jun-1

5

Jul-15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan-1

6

Feb

-16

%, yo

y

M2 Money Supply


15.3

14.8

16.3

13.0

13.5

14.0

14.5

15.0

15.5

16.0

16.5

Aug

-14

Oct-

14

Dec-1

4

Feb

-15

Ap

r-15

Jun-1

5

Aug

-15

Oct-

15

Dec-1

5

Feb

-16

Currency in Circulation (Rs tn)

Chitra Katha

Exports & imports remain weak


Non-oil imports also contract


Trade deficit remains low


Exports and imports continue to contract


Non-oil non-gold imports growth turns +ve


Gold imports down in Feb’16


Base effect starts kicking in for exports and imports growth but both remain low in absolute terms

Macro Indicators: External Sector

22.0 24.0

22.0

22.4

22.5

23.2

21.5

21.8

21.2

19.5

22.4

21.1

20.7

28.7

35.4

33.2

32.9

33.1 3

6.2

33.7

32.3

30.9

29.7

33.9

28.7

27.3

Feb-1

5

Mar-

15

Ap

r-15

May-1

5

Jun

-15

Jul-

15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan

-16

Feb-1

6

$, b

n

Exports ($, bn) Imports ($, bn)

6.1 7.4

7.5 8.6

8.7 9.5

7.4

6.7

6.9

6.5

6.7

5.0

4.8

22.6 2

8.0

25.7

24.3

24.4 26.7

26.4

25.6

24.0

23.2 2

7.3

23.7

22.5

Feb-1

5

Mar-

15

Ap

r-15

May-1

5

Jun

-15

Jul-

15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan

-16

Feb-1

6

$, bn

Oil Imports ($, bn) Non Oil Imports ($, bn)

-6.7

-11.4

-11.2

-10.4

-10.6

-12.9

-12.3 -1

0.5

-9.6

-10.2

-11.5

-7.6 -6

.5

-18

-15

-12

-9

-6

-3

0

Feb-1

5

Mar-

15

Ap

r-15

May-1

5

Jun

-15

Jul-

15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan

-16

Feb-1

6

$, bn

Trade Balance ($, bn)

-13.3

-5.7-14.7

-5.0

-35

-30

-25

-20

-15

-10

-5

0

Feb-1

5

Mar-

15

Ap

r-15

May-1

5

Jun

-15

Jul-

15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan

-16

Feb-1

6

Exports (%, yoy) Imports (%, yoy)

2.3

-25

-15

-5

5

15

25

35

15

20

25

30

May-1

3

Aug

-13

No

v-1

3

Feb-1

4

May-1

4

Aug

-14

No

v-1

4

Feb-1

5

May-1

5

Aug

-15

No

v-1

5

Feb-1

6

Non-oil non-gold imports ($, bn)(Growth, %) - RHS

2.0

5.0

3.1

2.4

2.0

3.0

5.0

2.1

1.7

3.5

3.8

2.9

1.4

Fe

b-1

5

Mar-

15

Apr-

15

May-1

5

Jun-1

5

Jul-15

Aug-1

5

Sep-1

5

Oct-

15

Nov-1

5

Dec-1

5

Jan-1

6

Fe

b-1

6

$, bn

Gold Imports ($, bn)

Chitra Katha

BoP: CAD is well below RBI’s target of 2.5% of GDP, expected to be below 1% of GDP in FY17

...on account of FII outflows during the quarter


Short term debt inches up marginally


($bn) Sep-14 Dec-14 Mar-15 Jun-15 Sep-15

CAD (I+II) = A -10.9 -7.7 -0.6 -6.1 -8.2

Merchandise balance (I) -39.7 -38.6 -31.6 -34.2 -37.4

Invisibles (i+ii+iii) = (II) 28.7 30.9 30.9 28.0 29.2

Softw are Exports (i) 16.9 17.8 18.6 17.7 18.2

Remittances (ii) 16.5 16.5 16.6 16.3 16.4

Others (iii) -4.7 -3.5 -4.3 -5.9 -5.5

Capital Account (a+b+c+d+e) = B 17.6 22.9 30.0 18.1 7.2

FDI inflow s (a) 7.5 6.9 9.3 10.1 6.6

Portfolio f low s (b) 9.8 6.3 13.7 -2.3 -6.4

ECBs (c) -0.4 -0.1 0.9 0.3 -1.2

NRI Deposits (d) 4.1 3.6 4.0 5.9 4.2

Others (e) -3.3 6.2 2.1 4.1 4.1

Errors and Omissions (C.) 0.3 -2.0 0.8 -0.5 0.1

Overall BoP (A+B+C) 6.9 13.2 30.1 11.4 -0.9

CAD (% of GDP) -2.2 -1.5 -0.1 -1.2 -1.6

BoP: CAD remains low @ 1.6% of GDP but Capital a/c surplus narrows sharply...

($bn) Sep-14 Dec-14 Mar-15 Jun-15 Sep-15

Assets (A) 488.2 491.8 522.4 534.1 528.3

Liabilities (i+ii+iii+iv) = B 849.3 848.2 887.1 897.5 886.1

Direct Investment (i) 252.7 252.8 265.5 271.1 271.0

Equity Securities (ii) 148.8 145.0 153.6 151.1 140.6

Debt Securities (iii) 67.5 70.1 79.7 85.0 82.0

Other Investment (iv) 380.3 380.3 388.2 390.4 392.5

Currency & Deposits 108.9 110.2 115.3 120.1 122.0

Loans 176.1 176.0 177.0 174.9 173.2

Trade Credits 82.5 81.1 83.7 82.2 82.6

Other Liabilities 12.8 13.0 12.2 13.3 14.7

IIP: Net (A-B) -361.1 -356.4 -364.7 -363.4 -357.8

Assets to Liability Ratio (%) 57.5 58.0 58.9 59.5 59.6

India's International Investment Position (IIP)

90.1

86.1

17.8

15

16

17

18

19

20

21

22

23

24

25

60

70

80

90

100

Jun-1

2

Sep

-12

Dec-1

2

Mar-

13

Jun-1

3

Sep

-13

Dec-1

3

Mar-

14

Jun-1

4

Sep

-14

Dec-1

4

Mar-

15

Jun-1

5

Sep

-15

Short-term debt ($bn) Short-term (% of external debt) - RHS

-10

-5

0

5

10

15

Jun-1

2

Sep

-12

Dec-1

2

Mar-

13

Jun-1

3

Sep

-13

Dec-1

3

Mar-

14

Jun-1

4

Sep

-14

Dec-1

4

Mar-

15

Jun-1

5

Sep

-15

FDI inf lows ($ bn) Portfolio flows ($ bn)


Chitra Katha

Exchange rate: Rupee depreciates against major currencies in Feb’16

Rupee vs. US dollar


Rupee vs. Euro


Rupee vs. Pound


Rupee vs. Yen


Rupee vs. Yuan


Real effective exchange rate


56.50

68.62

50

52

54

56

58

60

62

64

66

68

70

May-1

3

Aug

-13

No

v-1

3

Feb

-14

May-1

4

Aug

-14

No

v-1

4

Feb

-15

May-1

5

Aug

-15

No

v-1

5

Feb

-16

INR/USD

86.01

95.20

70

75

80

85

90

95

100

105

110

May-1

3

Aug

-13

No

v-1

3

Feb

-14

May-1

4

Aug

-14

No

v-1

4

Feb

-15

May-1

5

Aug

-15

No

v-1

5

Feb

-16

INR/GBP

73.68

75.08

60

65

70

75

80

85

90

May-1

3

Aug

-13

No

v-1

3

Feb

-14

May-1

4

Aug

-14

No

v-1

4

Feb

-15

May-1

5

Aug

-15

No

v-1

5

Feb

-16

INR/Euro

56.03

60.78

45

50

55

60

65

70

May-1

3

Aug

-13

No

v-1

3

Feb

-14

May-1

4

Aug

-14

No

v-1

4

Feb

-15

May-1

5

Aug

-15

No

v-1

5

Feb

-16

INR/100Yen

8.96

10.23

8

9

10

11

May-1

3

Aug

-13

No

v-1

3

Feb

-14

May-1

4

Aug

-14

No

v-1

4

Feb

-15

May-1

5

Aug

-15

No

v-1

5

Feb

-16

INR/Yuan

108.0

113.2

110.4

95

97

99

101

103

105

107

109

111

113

115

May-1

3

Aug

-13

No

v-1

3

Feb

-14

May-1

4

Aug

-14

No

v-1

4

Feb

-15

May-1

5

Aug

-15

No

v-1

5

Feb

-16

REER: 36 Currencies


Chitra Katha

…yet Govt remains on the path of fiscal consolidation


Non-pan expenditure is estimated to grow at 9.2%...


…led by 15% jump in plan expenditure, again the fastest growth

since FY11

Source: India Budget, Spark Capital Research

Total expenditure is estimated to increase by 10.8% to Rs. 19.8tn in

FY17BE, the fastest growth since FY11


19.8

16.9

7.3

10.8

5

10

15

20

25

0

5

10

15

20

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17B

E

Total expenditure (Rs. tn) Total expenditure (Growth, %, yoy)

14.3

8.9 9.2

5

10

15

20

25

0

5

10

15

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17B

E

Non-plan expenditure (Rs. tn) Non-Plan Expenditure (%, yoy)

4.8

5.5

0.3

3.1

15.3

-5

0

5

10

15

20

25

30

35

0

1

2

3

4

5

6

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17B

E

Plan expenditure (Rs. tn) Plan Expenditure (%, yoy)

4.1 3.9

3.5

3

FY15 FY16RE FY17BE FY18BE

Fiscal deficit target (% of GDP)

Govt maintains the fiscal target of 3.5% despite higher expenditure

Macro Indicators: Fiscal situation

Chitra Katha

Rs. bn Growth (%, yoy)

FY15 FY16BE FY16RE FY17BE FY16BE FY16RE FY17BE

Total receipt 16,637 17,775 17,854 19,781 6.8 7.3 10.8

Revenue receipt 11,015 11,416 12,061 13,770 3.6 9.5 14.2

Total tax receipt 12,449 14,495 14,596 16,309 16.4 17.2 11.7

Share of state, UT in Central taxes 3,413 5,296 5,121 5,768 55.2 50.1 12.6

Tax receipt for Centre 9,036 9,198 9,475 10,541 1.8 4.9 11.2

Direct taxes 7,075 7,980 7,520 8,471 12.8 6.3 12.6

Personal income tax 2,786 3,274 2,991 3,532 17.5 7.3 18.1

Corporate income tax 4,289 4,706 4,530 4,939 9.7 5.6 9.0

Indirect taxex 5,374 6,515 7,076 7,838 21.2 31.7 10.8

Customs duty 1,880 2,083 2,095 2,300 10.8 11.4 9.8

Excise duty 1,888 2,298 2,841 3,187 21.7 50.5 12.2

Services tax 1,680 2,098 2,100 2,310 24.9 25.0 10.0

Other tax (74) 36 39 41 -148.3 -153.3 4.4

Non-tax receipt 1,979 2,217 2,586 3,229 12.1 30.7 24.9

Interest 238 236 231 296 -0.9 -2.8 28.0

Dividend and profit 898 1,007 1,183 1,238 12.0 31.7 4.7

Other non-tax 842 975 1,172 1,695 15.7 39.1 44.7

Capital receipt 5,622 6,359 5,793 6,010 13.1 3.0 3.8

Net market borrowings 4,451 4,564 4,019 4,252 2.5 -9.7 5.8

Disinvestment of PSUs 377 695 253 565 84.2 -32.9 123.2

Receipts from small savings etc. 322 224 534 221 -30.5 65.8 -58.6

Recovery of loans 137 108 189 106 -21.7 37.6 -43.8

Other capital receipt 334 768 797 866 130.3 139.0 8.6

Total expenditure 16,637 17,775 17,854 19,781 6.8 7.3 10.8

Non-plan expenditure 12,010 13,122 13,082 14,281 9.3 8.9 9.2

Revenue expenditure 11,094 12,060 12,127 13,274 8.7 9.3 9.5

Interest payments 4,024 4,561 4,426 4,927 13.3 10.0 11.3

Defence 1,368 1,521 1,432 1,628 11.2 4.7 13.6

Explicit subsidies 2,583 2,438 2,578 2,504 -5.6 -0.2 -2.9

Others 3,119 3,539 3,690 4,215 13.5 18.3 14.2

Capital expenditure 916 1,062 955 1,006 15.9 4.2 5.4

Defence 819 946 814 863 15.5 -0.6 6.1

Others 97 116 141 143 18.9 44.9 1.2

Plan expenditure 4,626 4,653 4,772 5,500 0.6 3.1 15.3

Revenue expenditure 3,576 3,300 3,350 4,036 -7.7 -6.3 20.5

Central plan 1,001 1,397 1,332 1,761 39.6 33.2 32.1

States plan 2,575 1,904 2,018 2,276 -26.1 -21.7 12.8

Capital expenditure 1,050 1,353 1,422 1,464 28.8 35.4 2.9

Central plan 918 1,208 1,278 1,320 31.7 39.3 3.3

States plan 133 144 143 143 8.5 8 0.0

Gross fiscal deficit 5,107 5,556 5,351 5,339 8.8 4.8 -0.2

Revenue deficit 3,655 3,945 3,416 3,540 7.9 -6.5 3.6

Primary deficit 1,083 995 925 412 -8.1 -14.6 -55.4

Net market borrowings 4,469 4,564 4,019 4,252 2.1 -10.1 5.8

Gross fiscal deficit (% of GDP) 4.1 3.9 3.9 3.5 … … …

Revenue deficit (% of GDP) 2.9 2.8 2.5 2.3 … … …

Primary deficit (% of GDP) 0.9 0.7 0.7 0.3 … … …


Fiscal Arithmetic: FM has been realistic in taking tax assumptions; a little aggressive on non-tax revenue


Chitra Katha

The word “rural” regains its ground in Budget speech


MNREGA spend also increased to the highest level in five years


Plan rural spend is increased by 25% to Rs. 875bn in FY17BE


Total subsidy is estimated to decline to 1.7% of GDP in FY17BE


1.2 1.4

2.6

1.9

1.7

0.0

0.5

1.0

1.5

2.0

2.5

3.0

FY

00

FY

01

FY

02

FY

03

FY

04

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14be

FY

15

FY

16R

E

FY

17B

E

Total subsidy (% of GDP)

113 120 160

335

401 400

330 334 325 337

385

-

50

100

150

200

250

300

350

400

450

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

FY

16R

E

FY

17B

E

Central allocation for NREGA (Rs. bn)

875

700.0 697.6

611.1 662.0

766.3

852.4

678.1 672.3

376.5

FY17E FY16BE FY15 FY14 FY13 FY12 FY11 FY10 FY09 FY08

Ministry of Rural Development (Rs bn)

34

26

22 20

17

22

17 20

11

5

11

23

0

5

10

15

20

25

30

35

40

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17

Number of times the word "rural" featured in Budget Speech

Reforms on subsidy continue; Main focus remains on rural India


Chitra Katha

Ministry of Railways Total (excluding Railways & Defence) Total (excluding Defence)

(Rs. bn) FY15 FY16RE FY17BE FY15 FY16RE FY17BE FY15 FY16RE FY17BE

Pay 224 244 406 350 379 500 574 622 906

Allowances 337 369 413 465 509 520 802 878 933

Total 561 612 819 815 888 1020 1376 1500 1839

Growth (%, yoy) Growth (%, yoy) Growth (%, yoy)

Pay 8.9 66.6 8.2 32.1 8.5 45.6

Allowances 9.4 12.0 9.4 2.2 9.4 6.3

Total 9.2 33.7 8.9 14.9 9.0 22.6

Total increase w/o 7th CPC* 668 968 1635

Net Pay & Allowances provision

for 7th CPC 151 53 204

Total delta in FY17 over FY16 52 207 73 133 124 339

* Assuming 9% growth vs. FY16,

Govt has provided for the Seventh Pay Commission recommendations largely as salary hikes and allowances have been deferred

Defence

(Rs. bn) FY15 FY16RE FY17BE

Total (Rs bn) 1300 1361 1546

Growth (% yoy) ... 4.7 13.6

Total increase w/o 7th CPC** 1429

Net Pay & Allowances provision

for 7th CPC 117

Total delta in FY17 over FY16 61 185

(A)

(B)

** Assuming 5% growth vs. FY16

(C) Pension

(Rs. bn) FY15 FY16RE FY17BE

Total (Rs bn) 936 957 1234

Growth (% yoy) 2.3 28.9

Total increase w/o 7th CPC** 1043

Net Pay & Allowances provision for 7th

CPC 190

Total delta in FY17 over FY16 21 276

Net Pay, Allowances & Pensions provision for 7th CPC in FY17BE = A+B+C

i.e. Rs. 204bn + Rs. 117bn + Rs. 190 = Rs. 512bn

Excluding the normal ~9% rise, Govt has factored in

~Rs. 512bn rise in total Pay, Allowances and Pensions

of the Central Govt employees in FY17BE.

The total delta in Pay, Allowances and Pensions of

Central govt employees is Rs. 801bn in FY17BE as

compared to FY16.

Irrespective of the 7th CPC, Central govt employees would

have got a normal increase their Pay, Allowances and

Pensions in FY17.

Govt provides Rs. 512bn for the Seventh Pay Commission


Chitra Katha

…….whereas Developed markets posted negative returns

Source: Bloomberg, Spark Capital Research.

All Emerging markets barring China and India posted positive performance in CY16


Indian equity market has fallen by 6% in CY16

1311

7 6 6 30

0

-6-6 -7

-19

-25

22

12

7 82

74 2 4 4

74

-1

-30

-20

-10

0

10

20

30

Brazil Turkey Thailand Russia Indonesia Taiwan South Africa Malaysia Sensex Nifty Hang Seng Shangai Shenzen

Change YTD % Change 1M %

Macro Indicators: Market Performance

4

0

-1 -1 -2

-3 -4 -5

-6

-8

-10

-12

-5

-2 -3 -3 -2

1

-6

-3

-6 -6

-4 -5

-14

-12

-10

-8

-6

-4

-2

0

2

4

6

Canada Korea Dow Jones US S&P 500 UK Australia France NASDAQ Euro Stoxx Germany Japan Spain


Chitra Katha

8

6 6

5 4 3 3

3 2 2

0 0 -1 -1

-3

9

4

-1

1

12

6

2 1

-1

2

1

2 2 1

-1 -4

-2

0

2

4

6

8

10

12

14

Brazil Real Indo Rup JPY Malay Ringgit

Ruble AU $ Sing $ Thai Bhat Euro Turkish Lira Yuan S. Af Rand Korean Won INR GBP


All the emerging markets currencies have appreciated in last one month


Precious metals recovered this year with Gold delivering 16% return…..


……So is the case with base metals


INR remained stable in last 1 month; depreciated by just 1% in CY16


33

126 5

2 2

-2-4

-8 -8-1

3 2

-17

94

-1 -2

-14-8

-20

-10

0

10

20

30

40

Ch

ina Iro

n o

re

Zin

c

Co

pper

Bre

nt

Lead

Alu

min

ium

AU

Co

al

Ind

o C

oal

WT

I

S.A

f C

oal


16 16

11 11

7

0-1 0-2

-3

6

4

-5

0

5

10

15

20

Gold (INR/10g)

Gold ($/OZ) Silver (INR/kg) Silver ($/OZ) Platinum ($/Oz)

Palladium ($/Oz)


Chitra Katha

-0.8

-2.9 -4.5

-5.5 -6.0 -6.1 -7.0 -7.0 -7.6 -7.8 -8.1 -8.3

-9.7

-12.6 -12.9 -13.2 -13.4

6.6

2.7 2.5 3.7 4.2 4.2 3.8 4.1 3.7 3.7

1.5 2.7

6.2 6.9

2.4 2.2 2.5

-15

-10

-5

0

5

10

Metals Tech BSE TMT FMCG Sensex Nifty BSE 200 Auto BSE 500 Oil & Gas H. care BSE Midcap

Banks Realty Power Cap gds BSE Small cap

Change YTD% Change 1M%

Bank Nifty has fallen by 10% in CY16

BSE Small caps underperformed Sensex by 7% in CY16



Delivery volume increased to 46% in month of Mar 2016


2.5 2.5 2.9 2.4 2.8 2.9 2.7 2.8 2.6 2.7 3.1 2.2 3.4

3.2

5.3 5.1 4.7 3.5 4.7 3.2 4.0 4.2 4.6 4.5 4.8 4.3 4.2 3.9 4.5 4.9 3.8

3.9

3.6 4.0 4.6 4.5 4.8

43%

38%

41%

41%

37%

41%

45%

41%

37%

43%44%45% 44%

39%

42%

36%

38%39%

42%43%

44%

43%

41%40%

46%

42%

45%

41%

43%44%

38%

39%

36%

39%41%

40%

46%

30%

32%

34%

36%

38%

40%

42%

44%

46%

48%

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

Mar-

13

Ap

r-13

May-1

3

Jun

-13

Jul-

13

Aug

-13

Sep

-13

Oct-

13

No

v-1

3

Dec-1

3

Jan

-14

Feb-1

4

Mar-

14

Ap

r-14

May-1

4

Jun

-14

Jul-

14

Aug

-14

Sep

-14

Oct-

14

No

v-1

4

Dec-1

4

Jan

-15

Feb-1

5

Mar-

15

Ap

r-15

May-1

5

Jun

-15

Jul-

15

Aug

-15

Sep

-15

Oct-

15

No

v-1

5

Dec-1

5

Jan

-16

Feb-1

6

Mar-

16

Cash market Turnover (Rs. tn) Delivered volume % (RHS)

Chitra Katha

MSCI Indices: India’s Forward PB @ 2.6x


2.6 2.6 2.5

1.9

1.6

1.3 1.3 1.3 1.2 1.1

0.6

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Ind

on

esi

a

US

Ind

ia

Wo

rld

Euro

pe

AP

xJ

EM

Asia

Bra

zil

AP

AC

Ch

ina

Russia

MSCI Indices: India’s Forward PE @ 16.4x


MSCI Indices US$ performance – Brazil and Russia posted the highest positive return in last 1 month


EM countries recovered after negative performance in Jan’16

22

14

9

(1) (2) (2) (2)(3) (3)

(6) (8)

33

5

17

12 11

8 10

13

9 9

15

(10)

(5)

0

5

10

15

20

25

30

35

Brazil Indonesia Russia APAC ex JP EM Asia US World APAC Europe India China

Change YTD% Change 1M%

16.7 16.4 15.8 15.3 15.1

12.8 12.7 12.4 11.6

9.6

5.9

4

6

8

10

12

14

16

18

US

Ind

ia

Wo

rld

Ind

on

esi

a

Euro

pe

AP

AC

AP

xJ

Bra

zil

EM

Asia

Ch

ina

Russia

Macro Indicators: Market and Sector valuations

Chitra Katha

Stocks near 52 week high (BSE 200 subset)


Stock & Index 52 week H/L: Key trends

Stocks near 52 week high (BSE 200 subset)


Nifty stocks performance snapshot


0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

Supreme IndustriesJSW

Hero MotoRamco Cements

MaricoAshok Leyland

Vakrangee Soft.Asian Paints

NHPCSanofi

Bajaj FinHind. Zinc

RILInfosysTorrent

IndusIndTVS Motor

GrasimPidilite

HavellsHDFC Bank

Near 52 Week highs

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%

ICICIBosch

ACCNestle

Dr. Reddy'sNMDC

SKFSouth Indian Bank

Gujarat PipavavIOBTCS

Axis BankBHEL

Allahabad BankSBIBOIL&T

Procter & GamblePNB

CanaraNear 52 Week lows


Name Sector Price Performance (%)

Current 52W high 52W low 1m 3M YTD

Hindalco Industries Materials 84 145 59 25.2 6.2 (36.3)

Tata Steel Materials 300 385 200 21.8 23.0 (8.0)

Cairn India Energy 150 240 107 19.8 18.3 (33.6)

Adani Sez Shipping 228 375 169 19.4 (9.5) (25.5)

Vedanta Materials 88 233 58 17.5 5.1 (55.0)

Tata Motors Auto 360 574 266 13.6 (5.0) (34.8)

Hero MotoCorp Auto 2,813 2,859 2,251 12.2 9.6 7.8

IndusInd Bank Banks 918 989 784 11.5 0.0 4.9

SBI Banks 185 305 148 10.4 (18.2) (34.0)

Bosch Auto 18,129 27,990 15,736 10.2 (3.8) (31.9)

Dr Reddy's Labs Pharma 3,133 4,387 2,750 9.6 4.6 (7.2)

PNB Banks 83 181 69 8.9 (31.5) (49.8)

ICICI Bank Banks 221 342 181 8.8 (10.2) (33.0)

Reliance Industries Oil & Gas 1,021 1,090 796 7.8 4.6 20.0

Yes Bank Banks 811 898 590 7.6 17.3 0.9

Bharti Airtel Telecom 343 452 282 7.5 10.9 (14.3)

Tech Mahindra IT 460 720 407 7.0 (11.5) (34.7)

Ultratech Cement Materials 2,990 3,370 2,531 6.7 4.4 1.4

HDFC Bank Banks 1,027 1,128 928 5.5 (3.1) (1.5)

Hindustan Unilever FMCG 841 958 765 4.5 (2.1) (10.7)

ITC FMCG 317 360 268 4.2 (2.0) (6.7)

BPCL Oil & Gas 811 987 704 4.0 (8.9) 10.9

Infosys IT 1,134 1,220 933 3.9 5.3 2.2

ONGC Energy 207 343 188 3.5 (4.8) (33.9)

Ambuja Cements Materials 205 266 185 3.5 6.0 (20.0)

Asian Paints Materials 885 927 693 3.0 0.7 9.4

HDFC Banks 1,111 1,387 1,011 2.9 (7.9) (16.3)

Bank of Baroda Banks 143 216 109 2.8 (9.6) (20.0)

L&T Cap gds 1,181 1,888 1,016 2.7 (8.0) (30.2)

TCS IT 2,330 2,770 2,115 2.7 (1.9) (9.8)

Kotak Mahindra Bank Banks 640 745 586 2.3 (6.9) (4.6)

Grasim Industries Materials 3,551 3,843 3,233 2.3 (3.6) (3.2)

NTPC Power 127 160 107 2.0 (3.4) (20.2)

GAIL India Power 341 418 260 1.9 (0.0) (12.0)

Wipro IT 533 664 508 1.4 (4.6) (16.6)

Zee Entertainment Media 386 441 300 0.6 (5.4) 12.2

Axis Bank Banks 419 613 367 0.3 (4.0) (26.5)

Power Grid Power 139 156 121 0.2 7.3 (5.2)

Sun Pharma Pharma 843 1,201 704 (0.8) 9.0 (16.7)

ACC Materials 1,240 1,678 1,173 (1.3) (7.3) (23.3)

Tata Power Power 59 82 55 (1.3) (4.4) (26.3)

Maruti Suzuki Auto 3,655 4,790 3,193 (1.5) (20.9) 0.1

BHEL Cap gds 106 290 90 (1.7) (36.1) (58.3)

M&M Auto 1,205 1,442 1,091 (1.8) (6.5) (1.8)

HCL Tech IT 812 1,048 785 (1.8) (3.9) (19.3)

Cipla/India Pharma 525 748 505 (2.7) (17.8) (25.4)

Bajaj Auto Auto 2,278 2,656 1,913 (2.7) (6.5) 12.6

Lupin Pharma 1,723 2,129 1,588 (4.2) (3.9) (8.2)

Coal India Energy 296 447 287 (8.8) (6.0) (19.0)

Idea Cellular Telecom 99 204 97 (9.2) (24.9) (45.6)

Chitra Katha

BSE 200- 148 stocks trading below 200 DMA


Current price versus 200 DMA

BSE 200 stocks trading below their 200DMA



32

47

39

30

21

14 13

4 0

11 15

32

45

34

46

17

0

10

20

30

40

50

-50% to -20% -20% to -10% -10% to -5% -5% to 0% 0% to +5% +5% to 10% +10% to +20% +20% to +50%

200 DMA 100 DMA

BSE 200 stocks trading above their 200DMA


Company name Last price 200 DMA % from 200 DMA 52W High 52W Low

Hero MotoCorp Ltd 2,813 2,571 9% 2,857 2,252

SKS Microfinance Ltd 523 478 10% 590 369

Tata Elxsi Ltd 1,937 1,764 10% 2,396 978

TVS Motor Co Ltd 286 260 10% 309 201

Ramco Cements Ltd/The 391 354 10% 406 270

Ashok Leyland Ltd 96 86 11% 100 64

Kansai Nerolac Paints Ltd 278 248 12% 299 196

NHPC Ltd 21 19 13% 22 16

Marico Ltd 243 215 13% 252 179

Jubilant Life Sciences Ltd 367 325 13% 455 138

Hindustan Zinc Ltd 171 152 13% 181 116

Rajesh Exports Ltd 649 566 15% 746 181

Tata Steel Ltd 300 254 18% 384 200

Supreme Industries Ltd 774 656 18% 780 540

Petronet LNG Ltd 248 210 18% 272 160

Bajaj Finance Ltd 6,467 5,441 19% 6,838 3,919

Reliance Infrastructure Ltd 501 411 22% 622 282

JSW Steel Ltd 1,194 949 26% 1,207 801

Torrent Power Ltd 235 179 31% 253 137

Vakrangee Ltd 220 152 45% 229 87

Company name Last price 200 DMA % from 200 DMA 52W High 52W Low

Bharat Heavy Electricals Ltd 106 198 -46% 290 90

Oriental Bank of Commerce 90 142 -37% 242 75

IDFC Ltd 38 58 -35% 87 35

Suzlon Energy Ltd 14 21 -34% 31 13

Punjab National Bank 83 126 -34% 181 69

Jaiprakash Associates Ltd 7 11 -33% 28 6

Idea Cellular Ltd 99 144 -31% 204 98

Allahabad Bank 52 75 -31% 110 40

Bank of India 95 137 -30% 233 80

Rural Electrification Corp Ltd 167 239 -30% 353 153

Wockhardt Ltd 979 1,402 -30% 2,000 706

Syndicate Bank 62 87 -28% 118 49

Canara Bank 187 259 -28% 411 156

Just Dial Ltd 658 907 -27% 1,455 378

Jubilant Foodworks Ltd 1,142 1,533 -26% 1,984 897

Ipca Laboratories Ltd 535 707 -24% 888 533

Oil India Ltd 308 407 -24% 526 301

Pfizer Ltd/India 1,705 2,247 -24% 2,724 1,694

Power Finance Corp Ltd 169 220 -23% 292 140

Reliance Communications 52 67 -23% 92 46

United Spirits Ltd 2,466 3,141 -21% 4,029 2,232

Engineers India Ltd 160 204 -21% 252 143

Jindal Steel & Power Ltd 61 77 -21% 193 48

Karnataka Bank Ltd/The 97 123 -21% 158 85

Dish TV India Ltd 79 100 -21% 122 65

JSW Energy Ltd 67 84 -21% 124 59

Federal Bank Ltd 48 60 -21% 80 41

Chitra Katha

FII’s pulled out US$4bn from Indian equities in last 1 year

Source: Bloomberg

Foreign investment in Equity Instruments (net) Foreign investment in Debt Instruments (net)

US $mn 1QCY 2QCY 3QCY 4QCY Total US $mn 1QCY 2QCY 3QCY 4QCY Total

2016 -1,457 - - - -1,457 2016 -1,387 - - - -1,387

2015 6,000 184 (2,576) (334) 3,274 2015 6,903 -461 -110 1059 7390

2014 4,086 5,832 3,896 2,348 16,162 2014 6,160 4,252 9,329 6,511 26,252

2013 10,151 2,959 61 6,584 19,754 2013 2,294 -4,017 -4,750 -2,016 -8,489

2012 8,866 -350 7,617 8,414 24,548 2012 3,941 229 897 1,795 6,862

2011 -657 1,151 -644 -362 -512 2011 2,424 600 1,174 4,348 8,546

2010 4,369 2,331 12,554 10,067 29,321 2010 4,103 1,371 3,733 843 10,050

2009 -1,345 6,421 7,369 5,194 17,639 2009 -1,306 145 928 1,393 1,160

2008 -3,551 -3,322 -2,710 -3,335 -12,918 2008 907 -655 1,787 665 2,705

2007 1,534 4,207 7,462 5,315 18,518 2007 139 377 515 1,395 2,425

2006 3,930 -1,381 2,678 3,110 8,338 2006 -300 296 360 526 883

2005 3,801 891 3,864 2,345 10,901 2005 113 -261 -186 -903 -1,236

2004 3,198 305 1,471 3,653 8,627 2004 354 -409 -85 831 692

2003 361 933 1,824 3,585 6,702 2003 168 677 68 96 1,008

2002 583 -91 181 65 738 2002 126 -113 -56 54 10


FII’s sold about US$3bn from Indian Equities and Debt in CY16

Macro Indicators: Fund flows

3.7

1.2 2.8 1.8 1.9 1.1

0.9 0.1

2.3

(0.1)

2.9

1.4

1.7 1.2 (0.1)

(1.0)

0.9

(2.6) (0.9)

0.8

(1.1)

0.0

(1.7) (1.2)

1.4

1.6

(1.8)

3.4

2.7 3.8 2.8

2.7 2.8

1.9

1.8

3.7

2.2 1.0 0.5

(1.3)

0.3

(0.1)

(0.1)

0.0

2.4

(0.6) (0.6)

0.2

(1.2)

(0.4)

-4

-2

0

2

4

6

8

Mar-

14

Apr-

14

May-1

4

Jun-1

4

Jul-14

Aug-1

4

Sep-1

4

Oct-

14

Nov-1

4

Dec-1

4

Jan-1

5

Fe

b-1

5

Mar-

15

Apr-

15

May-1

5

Jun-1

5

Jul-15

Aug-1

5

Sep-1

5

Oct-

15

Nov-1

5

Dec-1

5

Jan-1

6

Fe

b-1

6

Mar-

16

FII Investments in Debt ($bn) FII Investments in Equity ($bn)

Chitra Katha

DII’s bought US$3bn in Equities which is more than to offset FII selling of US$1.5bn till date in CY16

Source: Bloomberg, Spark capital research

SBI Broader indices ETF AUM increased by 16x compared to Aug15 due to increased inflows from EPFO

Domestic mutual funds net debt investment (US$bn)


Domestic mutual funds net equity investment -(US$

12bn on YTD basis


SBI Nifty and Sensex ETF AUM- Rs 55bn as of Feb

16


Macro Indicators: Fund flows

-2.2

-1.1

-0.8 -0.8 -0.5

0.4

-0.2

0.7

-1.2

0.9

-1.3

0.4 0.0

1.8 1.3

1.9

0.1

2.5

1.6

-0.2

1.2 0.9

1.9

1.5

-0.7

-3

-2

-1

0

1

2

3

Mar-

14

Apr-

14

May-1

4

Jun-1

4

Jul-14

Aug-1

4

Sep-1

4

Oct-

14

Nov-1

4

Dec-1

4

Jan-1

5

Fe

b-1

5

Mar-

15

Apr-

15

May-1

5

Jun-1

5

Jul-15

Aug-1

5

Sep-1

5

Oct-

15

Nov-1

5

Dec-1

5

Jan-1

6

Fe

b-1

6

Mar-

16

DII Investment in Equity ($bn)

0 0

3 2

4

2

(2)

(4)

(0)

(4) (4)

7

12

-6

-4

-2

0

2

4

6

8

10

12

14

FY

04

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

YT

D

5 4 8

12 18 18

38

55

84 86 90 96

41

0

10

20

30

40

50

60

70

80

90

100

FY

04

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

YT

D

0.1 3.1

12.0

18.7

25.7

34.0

42.3

48.5

0.0 0.9 3.8

6.1 8.2 9.9 12.1 13.9

0

10

20

30

40

50

60

SBI Nifty ETF SBI Sensex ETF

Chitra Katha

BSE 200 Ownership Analysis- DII’s has increased their ownership to 12.3% whereas FII ownership decreased to 21.6%


DII’s increased the stakes in Metals, Consumer discretionary and Cement sectors


DII’s ownership of BSE 200 by market cap stood at 12.3%- Highest in last 6 years

Macro Indicators: Ownership

54.2 54.2 52.0 51.2 50.3 48.7

11.7 12.2 11.9 11.0 11.1 12.3

16.7 16.5 18.7 20.7 21.9 21.6

17.4 17.2 17.4 17.1 16.6 16.5

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15

Promoter DII FII Others

458 456

236

356 284

198 178 127 95 87 49 34 27 2

-36 -97 -97

-469

-210 -164

-317

96

-89

36

-357

24

-284

89

-120

168

-118 -65

-600

-400

-200

0

200

400

600

Metals & Mining

Consumer Disc

Cement NBFC Media Oil & Gas Auto IT Banks- Private

Power Banks- PSU

Infra & Realty

Pharma Telecom Capital Goods

FMCG

Yo

Y h

old

ing

s c

ha

ng

e (

bp

s)

DII Holding % FII Holding %

12.1 12.3

16.7

21.6

10

12

14

16

18

20

22

24

Sep-1

0

Dec-1

0

Mar-

11

Jun-1

1

Sep-1

1

Dec-1

1

Mar-

12

Jun-1

2

Sep-1

2

Dec-1

2

Mar-

13

Jun-1

3

Sep-1

3

Dec-1

3

Mar-

14

Jun-1

4

Sep-1

4

Dec-1

4

Mar-

15

Jun-1

5

Sep-1

5

Dec-1

5

DII Holding % (Market cap) FII Holding % (Market cap)

DII's activity has started

uptredning in last 2 years

STRATEGY Chitra Katha India market cap to GDP is still hovering around 10 year avg whereas Midcaps valuations are coming off peak

Sensex 12 month forward PE is trading at around 10Y average

Source: Bloomberg

Nifty 12 month forward PE is hovering around 10 year average

Source: Bloomberg

India market cap to GDP below its average since 2006- 64% (Current)


BSE Mid caps 12 month forward PE is trading above +1sd


15.0

17.1

12.9

80

120

160

200

240

280

320

8

10

12

14

16

18

20

22

Dec-0

5

Jul-

06

Feb-0

7

Sep

-07

Ap

r-08

No

v-0

8

Jun

-09

Jan

-10

Aug

-10

Mar-

11

Oct-

11

May-1

2

Dec-1

2

Jul-

13

Feb-1

4

Sep

-14

Ap

r-15

No

v-1

5

Sensex PE Avg +1sd -1sd Price (Index)

12.4

15.5

9.3

4

6

8

10

12

14

16

18

20

Dec-0

5

Jul-

06

Feb-0

7

Sep

-07

Ap

r-08

No

v-0

8

Jun

-09

Jan

-10

Aug

-10

Mar-

11

Oct-

11

May-1

2

Dec-1

2

Jul-

13

Feb-1

4

Sep

-14

Ap

r-15

No

v-1

5

BSE Midcaps PE Avg +1sd -1sd

88

147

49

98

59 49

81

64

40

60

80

100

120

140

160

Dec-0

5

Jul-

06

Feb-0

7

Sep

-07

Ap

r-08

No

v-0

8

Jun

-09

Jan

-10

Aug

-10

Mar-

11

Oct-

11

May-1

2

Dec-1

2

Jul-

13

Feb-1

4

Sep

-14

Ap

r-15

No

v-1

5

India Mkt cap to GDP Avg

14.5

16.4

12.6

80

120

160

200

240

280

320

8

10

12

14

16

18

20

22

Dec-0

5

Jul-

06

Feb-0

7

Sep

-07

Ap

r-08

No

v-0

8

Jun

-09

Jan

-10

Aug

-10

Mar-

11

Oct-

11

May-1

2

Dec-1

2

Jul-

13

Feb-1

4

Sep

-14

Ap

r-15

No

v-1

5

Nifty PE Avg +1sd -1sd Price (Index)


STRATEGY Chitra Katha

Sensex 12 month forward PB falls below average in last quarter

Source: Bloomberg

Nifty 12 month forward PB is trading below average levels

Source: Bloomberg

Nifty Expected average return chart based on 12 month forward PE


Nifty delivered 8% average annual return when trading in current range of valuations historically

Sensex 12 month forward implied ROE is below at -1sd level


2.6

3.2

2.1

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Dec-0

5

Ap

r-06

Aug

-06

Dec-0

6A

pr-

07

Aug

-07

Dec-0

7

Ap

r-08

Aug

-08

Dec-0

8

Ap

r-09

Aug

-09

Dec-0

9

Ap

r-10

Aug

-10

Dec-1

0

Ap

r-11

Aug

-11

Dec-1

1

Ap

r-12

Aug

-12

Dec-1

2

Ap

r-13

Aug

-13

Dec-1

3

Ap

r-14

Aug

-14

Dec-1

4

Ap

r-15

Aug

-15

Dec-1

5

Sensex PB Avg +1sd -1sd

2.5

3.0

2.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

Dec-0

5A

pr-

06

Aug

-06

Dec-0

6A

pr-

07

Aug

-07

Dec-0

7

Ap

r-08

Aug

-08

Dec-0

8A

pr-

09

Aug

-09

Dec-0

9A

pr-

10

Aug

-10

Dec-1

0A

pr-

11

Aug

-11

Dec-1

1

Ap

r-12

Aug

-12

Dec-1

2A

pr-

13

Aug

-13

Dec-1

3A

pr-

14

Aug

-14

Dec-1

4A

pr-

15

Aug

-15

Dec-1

5

Nifty PB Avg +1sd -1sd

17.3

19.2

15.5

14

15

16

17

18

19

20

21

22

Dec-0

5A

pr-

06

Aug

-06

Dec-0

6A

pr-

07

Aug

-07

Dec-0

7A

pr-

08

Aug

-08

Dec-0

8A

pr-

09

Aug

-09

Dec-0

9A

pr-

10

Aug

-10

Dec-1

0A

pr-

11

Aug

-11

Dec-1

1A

pr-

12

Aug

-12

Dec-1

2A

pr-

13

Aug

-13

Dec-1

3A

pr-

14

Aug

-14

Dec-1

4A

pr-

15

Aug

-15

Dec-1

5

Sensex ROE Avg +1sd -1sd

15.9

9.1 7.1

1.7

(4.1)

33.5

21.0

7.7 5.7

(8.3)(15)

(10)

(5)

0

5

10

15

20

25

30

35

40

<13x 13x -14x 14x -15.5x 15.5x -16.5x >16.5x

6M forward return 12M forward return Hit rate



BSE Bankex index saw significant derating due to persistent NPA issues for PSU banks

BSE Auto- 12 month forward PE trend

Source: Bloomberg

BSE Bankex- 12 month forward PB trend

Source: Bloomberg

BSE Cap gds- 12 month forward PE trend

Source: Bloomberg

BSE Cons durable: 12 month forward PE

Source: Bloomberg

BSE FMCG- 12 month forward PE trend

Source: Bloomberg

BSE Healthcare-12 month forward PE trend

Source: Bloomberg

12.7

15.9

9.6

5

7

9

11

13

15

17

19

21

23

Dec-0

5

Sep

-06

Jun

-07

Mar-

08

Dec-0

8

Sep

-09

Jun

-10

Mar-

11

Dec-1

1

Sep

-12

Jun

-13

Mar-

14

Dec-1

4

Sep

-15

Auto PE(x) Avg

+1sd -1sd

1.8

2.2

1.5

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

Dec-0

5

Sep

-06

Jun

-07

Mar-

08

Dec-0

8

Sep

-09

Jun

-10

Mar-

11

Dec-1

1

Sep

-12

Jun

-13

Mar-

14

Dec-1

4

Sep

-15

Bankex PB Avg

+1sd -1sd

20.1

25.6

14.5

5

10

15

20

25

30

35

40

Dec-0

5

Sep

-06

Jun

-07

Mar-

08

Dec-0

8

Sep

-09

Jun

-10

Mar-

11

Dec-1

1

Sep

-12

Jun

-13

Mar-

14

Dec-1

4

Sep

-15

Cap gds PE(x) Avg

+1sd -1sd

22.4

30.1

14.7

5

10

15

20

25

30

35

40

45

Dec-0

5

Sep

-06

Jun

-07

Mar-

08

Dec-0

8

Sep

-09

Jun

-10

Mar-

11

Dec-1

1

Sep

-12

Jun

-13

Mar-

14

Dec-1

4

Sep

-15

Cons durables PE(x)Avg+1sd-1sd

24.5

28.6

20.5

15

17

19

21

23

25

27

29

31

33

35

Dec-0

5

Sep

-06

Jun

-07

Mar-

08

Dec-0

8

Sep

-09

Jun

-10

Mar-

11

Dec-1

1

Sep

-12

Jun

-13

Mar-

14

Dec-1

4

Sep

-15

FMCG PE(x) Avg

+1sd -1sd

19.5

23.0

16.0

10

12

14

16

18

20

22

24

26

28

Dec-0

5

Sep

-06

Jun

-07

Mar-

08

Dec-0

8

Sep

-09

Jun

-10

Mar-

11

Dec-1

1

Sep

-12

Jun

-13

Mar-

14

Dec-1

4

Sep

-15

Healthcare PE(x) Avg

+1sd -1sd



BSE IT- 12 month forward PE trend

Source: Bloomberg

BSE IT trades at below its 10 year average due to muted US$ dollar revenue growth

BSE Oil & Gas- 12 month forward PE trend

Source: Bloomberg

BSE Power- 12 month forward PE trend

Source: Bloomberg

BSE Realty- 12 month forward PE trend

Source: Bloomberg

BSE PSU- 12 month forward PE trend

Source: Bloomberg

17.7

21.1

14.3

8

10

12

14

16

18

20

22

24

26

Dec

-05

Sep-

06

Jun-

07

Mar

-08

Dec

-08

Sep-

09

Jun-

10

Mar

-11

Dec

-11

Sep-

12

Jun-

13

Mar

-14

Dec

-14

Sep-

15

IT Avg +1sd -1sd

11.6

13.8

9.3

6

8

10

12

14

16

18

20

Dec

-05

Sep-

06

Jun-

07

Mar

-08

Dec

-08

Sep-

09

Jun-

10

Mar

-11

Dec

-11

Sep-

12

Jun-

13

Mar

-14

Dec

-14

Sep-

15

Oil & Gas PE(x) Avg

+1sd -1sd

15.7

20.6

10.9

10

12

14

16

18

20

22

24

26

28

30

Dec-0

7

May-0

8

Oct-

08

Mar-

09

Aug

-09

Jan

-10

Jun

-10

No

v-1

0

Ap

r-11

Sep

-11

Feb-1

2

Jul-

12

Dec-1

2

May-1

3

Oct-

13

Mar-

14

Aug

-14

Jan

-15

Jun

-15

No

v-1

5

Power PE(x) Avg+1sd -1sd

13.0

17.5

8.6

4

6

8

10

12

14

16

18

20

22

24

26

Dec-0

7

Jun

-08

Dec-0

8

Jun

-09

Dec-0

9

Jun

-10

Dec-1

0

Jun

-11

Dec-1

1

Jun

-12

Dec-1

2

Jun

-13

Dec-1

3

Jun

-14

Dec-1

4

Jun

-15

Dec-1

5

Realty PE(x) Avg+1sd -1sd

10.0

11.5

8.5

6

7

8

9

10

11

12

13

14

Dec-0

9

Ap

r-10

Aug

-10

Dec-1

0

Ap

r-11

Aug

-11

Dec-1

1

Ap

r-12

Aug

-12

Dec-1

2

Ap

r-13

Aug

-13

Dec-1

3

Ap

r-14

Aug

-14

Dec-1

4

Ap

r-15

Aug

-15

Dec-1

5

PSU PE(x) Avg+1sd -1sd


Chitra Katha

Sensex EPS trend (Index to 100)

Source: Bloomberg

Nifty EPS trend (Index to 100)

Source: Bloomberg

Sensex and Nifty FY17 EPS is downgraded by 20% in last 12 months

75

80

85

90

95

100

105

110

Ap

r-13

Jun

-13

Aug

-13

Oct-

13

Dec-1

3

Feb-1

4

Ap

r-14

Jun

-14

Aug

-14

Oct-

14

Dec-1

4

Feb-1

5

Ap

r-15

Jun

-15

Aug

-15

Oct-

15

Dec-1

5

Feb-1

6

FY15 FY16 FY17

75

80

85

90

95

100

105

110

Ap

r-13

Jun

-13

Aug

-13

Oct-

13

Dec-1

3

Feb-1

4

Ap

r-14

Jun

-14

Aug

-14

Oct-

14

Dec-1

4

Feb-1

5

Ap

r-15

Jun

-15

Aug

-15

Oct-

15

Dec-1

5

Feb-1

6

FY15 FY16 FY17

Nifty stocks EPS (FY16-17) revision

Source: Bloomberg

Macro Indicators: Earning Revisions

Average EPS revision (FY1, FY2) %

Company name Sector Mcap (Rs mn) 1M 3 M 6M

BPCL Oil & Gas 5,86,349 2.5 7.6 12.0

Reliance Industries Oil & Gas 33,06,536 0.5 1.4 2.3

Infosys IT 26,14,162 0.1 1.0 0.6

Power Grid Power 7,26,929 0.0 1.7 0.2

Tata Power Power 1,58,897 0.0 1.8 0.0

M&M Auto 7,48,447 -0.1 4.3 0.0

Zee Entertainment Media 3,71,021 0.0 -2.1 -0.1

Hero MotoCorp Auto 5,61,731 0.3 -0.4 -0.2

Adani Port and SEZ Shipping 4,72,695 -0.3 -1.7 -0.2

NTPC Power 10,49,648 -0.1 -0.2 -0.3

Asian Paints Materials 8,48,506 0.0 1.7 -0.5

ITC FMCG 25,44,109 0.0 -1.3 -0.6

Tech Mahindra IT 4,45,428 0.1 -2.0 -0.8

IndusInd Bank Banks 5,46,419 -0.1 -1.6 -1.1

Yes Bank Banks 3,40,876 -0.1 -0.9 -1.1

HDFC Bank Banks 25,93,540 0.0 -1.0 -1.2

Wipro IT 13,17,338 0.0 -1.7 -1.2

Kotak Mahindra Bank Banks 11,72,633 0.8 -3.0 -1.3

Idea Cellular Telecom 3,56,806 -0.2 -16.9 -1.7

Sun Pharma Pharma 20,29,183 0.1 1.2 -1.8

Hindustan Unilever FMCG 18,19,383 -0.1 -3.0 -1.9

Cipla/India Pharma 4,21,812 -0.3 -4.8 -2.1

HDFC Banks 17,55,188 -0.4 -2.7 -2.3

Coal India Energy 18,67,433 -0.1 -3.3 -2.3

Bharti Airtel Telecom 13,70,708 -0.1 -8.2 -2.4

TCS IT 45,90,900 0.0 -1.0 -2.4

HCL Tech IT 11,44,741 0.0 -1.0 -2.5

ICICI Bank Banks 12,86,854 -0.2 -8.8 -2.5

Axis Bank Banks 9,97,388 0.0 -4.9 -2.8

GAIL India Power 4,32,107 0.0 4.5 -3.0

Ambuja Cements Materials 3,17,984 0.0 -20.3 -3.6

Bajaj Auto Auto 6,59,308 -0.9 -3.4 -3.8

Maruti Suzuki Auto 11,03,967 8.3 -3.1 -4.1

Hindalco Industries Materials 1,73,252 -0.2 -26.6 -4.1

Lupin Pharma 7,76,267 -0.3 -3.0 -5.8

BHEL Cap gds 2,59,813 0.0 -36.4 -6.0

SBI Banks 14,38,443 0.0 -30.5 -7.5

Vedanta Materials 2,61,190 0.3 -42.3 -8.7

ONGC Energy 17,74,409 -1.5 -25.1 -8.8

Tata Motors Auto 11,75,218 -0.1 -2.7 -10.4

Cairn India Energy 2,80,854 -1.9 -46.1 -10.9

ACC Materials 2,32,823 -1.0 -6.3 -12.2

PNB Banks 1,63,568 -0.2 -46.5 -12.3

L&T Cap gds 10,99,844 -0.3 -8.9 -13.3

Grasim Industries Materials 3,31,430 0.7 0.4 -16.9

Dr Reddy's Labs Pharma 5,34,348 -0.3 -5.4 -19.1

Bank of Baroda Banks 3,29,956 -1.7 -39.8 -19.6

Tata Steel Materials 2,91,802 0.0 -25.9 -20.3

Ultratech Cement Materials 8,20,415 0.0 -14.4 -23.1

Chitra Katha

Nifty quarterly PAT growth is well below average

Source: Bloomberg

Nifty posted negative PAT growth in 3QFY16 due to Banks and Metals sector

Fundamentals Data

Nifty constituents - Quarterly sales growth excluding Fin and O&G at 5% in

Q316

Source: Bloomberg

Lowest PAT as % of GDP at 3.4% in FY15

Source: Bloomberg

3.2

3.9 4.0

4.8

5.5

4.3

4.9 4.9

4.4

4.03.8

3.4

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

BSE 500 PAT as % GDP Average

Average since 2004 : 4.3

Nifty constituents – Margins excluding Fin and O&G at 13.2% in Q316

Source: Bloomberg

24

18 19

15

7 8

7

15

18

13

17

8

5

1 1

4 5

0

5

10

15

20

25

Q3F

Y12

Q4F

Y12

Q1F

Y13

Q2F

Y13

Q3F

Y13

Q4F

Y13

Q1F

Y14

Q2F

Y14

Q3F

Y14

Q4F

Y14

Q1F

Y15

Q2F

Y15

Q3F

Y15

Q4F

Y15

Q1F

Y16

Q2F

Y16

Q3F

Y16

Sa

les

Yo

Y g

row

th %

Nifty ex fin ex O&G

18

3

(5)

14

(5) (7)

6

23

40

19

30

11

(1)

(26)

(9) (4) (6)

-30

-20

-10

0

10

20

30

40

50

Q3F

Y12

Q4F

Y12

Q1F

Y13

Q2F

Y13

Q3F

Y13

Q4F

Y13

Q1F

Y14

Q2F

Y14

Q3F

Y14

Q4F

Y14

Q1F

Y15

Q2F

Y15

Q3F

Y15

Q4F

Y15

Q1F

Y16

Q2F

Y16

Q3F

Y16

Nifty ex fin ex O&G

13.8

14.4 14.0

13.6

13.0

14.0 13.9 13.8 14.3 14.5

15.0 14.5

14.2

13.0

14.2

13.6 13.3

10

11

12

13

14

15

16

Q3F

Y12

Q4F

Y12

Q1F

Y13

Q2F

Y13

Q3F

Y13

Q4F

Y13

Q1F

Y14

Q2F

Y14

Q3F

Y14

Q4F

Y14

Q1F

Y15

Q2F

Y15

Q3F

Y15

Q4F

Y15

Q1F

Y16

Q2F

Y16

Q3F

Y16

Eb

it m

arg

ins

%

Nifty ex fin ex O&G

Chitra Katha Fundamentals Data

BSE 200- Employee cost in upward trend since FY12

Source: Bloomberg

BSE 200 ex financials- EBIT interest cover at its trough levels

Source: Bloomberg

BSE 200 ex financials- Inventory and Receivables as % of sales

Source: Bloomberg

BSE 200 ex financials- Capex to sales should pick up with government

expenditure gaining momentum

Source: Bloomberg

7.4

7.8 7.9

8.3 8.2

8.8 8.9

8.7 8.8

8.2 8.4

8.9

9.6

7.0

7.5

8.0

8.5

9.0

9.5

10.0

FY

03

FY

04

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

10.8

9.5 9.6 9.79.4

11.3

9.910.3

9.9 10.19.8 9.6

10.3

12.8

12.0 12.2

13.8

14.1

16.2 13.7

15.1

14.2

13.4 12.7

12.3 12.1

8.0

9.0

10.0

11.0

12.0

13.0

14.0

15.0

16.0

17.0

FY

03

FY

04

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

Receivables as % of sales Inventory as % of sales

3.8

5.2

8.4

9.99.1

6.8

5.6 5.5

6.7

5.6

4.44.1 3.9

2

3

4

5

6

7

8

9

10

FY

03

FY

04

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

6.5

7.2

9.19.7

13.7

14.9

12.8

12.1

13.2

10.39.8 9.7

9.3

6

7

8

9

10

11

12

13

14

15

16

FY

03

FY

04

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15

EBIT interest cover at its lowest due to increased capital cost and muted earnings

Chitra Katha

Gearing is continuously on rise while ROE’s are bottoming out

Fundamentals Data

Indian banking sector- NPA and restructured assets trend

Source: Bloomberg

BSE 200 total debt to equity stands at 75%.

Note: Ex-financials universe. Source: Bloomberg

BSE 200 ex financials- Dissecting return on equity into key drivers


10.4%

8.8%

7.2%

4.9%

3.3%

2.5% 2.3% 2.3% 2.4% 2.2% 2.8%3.2%

4.1%

4.8%2.5%

3.9%3.2%

4.2%

5.2%

5.9%

6.2%

0%

2%

4%

6%

8%

10%

12%

FY

02

FY

03

FY

04

FY

05

FY

06

FY

07

FY

08

FY

09

FY

10

FY

11

FY

12

FY

13

FY

14

FY

15P

NPA (%) Restructured Assets (%)

26.9 26.2

18.0 18.2 17.8

16.1 15.1 14.9

12.9

15.1 14.7

10.7 12.1 11.5

9.7 9.0 8.9 8.3

2.1 2.2 2.3

2.2 2.2 2.3 2.3 2.4 2.4

0.83 0.82

0.740.66

0.700.72 0.71

0.710.64

0.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1.00

1.05

1.10

0

5

10

15

20

25

30

FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

ROE PAT margin Leverage Asset turnover (RHS)

Indian companies return on equity at its trough levels due to sluggish

demand and high inflation leading to muted earnings growth

32 33 31 33 34 32 31 31 32 33

2023

3438

27 32 3944 45 42

0

10

20

30

40

50

60

70

80

90

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

Net debt to Equity Cash to Equity Total debt to Equity

Chitra Katha

March and April 2016

Macro Release Calendar


Date Time Event For the period of Survey Actual Prior Revised

Macro

Ev

en

ts S

o F

ar

02/15/2016 12:00 Wholesale Prices YoY Jan -0.13% -0.90% -0.73% -1.06%

02/15/2016 18:42 Trade Balance Jan -$9941.5m -$7638.9m -$11664.0m --

02/15/2016 18:42 Imports YoY Jan -- -11.00% -3.90% --

02/15/2016 18:42 Exports YoY Jan -- -13.60% -14.70% --

02/29/2016 17:13 Eight Infrastructure Industries Jan -- 2.90% 0.90% --

03/01/2016 10:30 Nikkei India PMI Mfg Feb -- 51.1 51.1 --

03/03/2016 10:30 Nikkei India PMI Services Feb -- 51.4 54.3 --

03/03/2016 10:30 Nikkei India PMI Composite Feb -- 51.2 53.3 --

03/10/2016 10:30 Local Car Sales Feb -- 164469 168303 --

03/11/2016 17:30 Industrial Production YoY Jan -0.50% -1.50% -1.30% -1.20%

03/14/2016 12:00 Wholesale Prices YoY Feb -0.19% -0.91% -0.90% --

03/14/2016 17:30 CPI YoY Feb 5.52% 5.18% 5.69% --

Up

co

min

g M

acro

Ev

en

ts

03/14/2016 03/31 BoP Current Account Balance 4Q -$3.00b -- -$8.21b --

03/14/2016 03/18 Trade Balance Feb -$6800.0m -- -$7638.9m --

03/14/2016 03/18 Imports YoY Feb -- -- -11.00% --

03/14/2016 03/18 Exports YoY Feb -- -- -13.60% --

03/28/2016 03/31 Eight Infrastructure Industries Feb -- -- 2.90% --

03/31/2016 Fiscal Deficit INR Crore Feb -- -- 44096 --

04/04/2016 10:30 Nikkei India PMI Mfg Mar -- -- 51.1 --

04/05/2016 11:00 RBI Cash Reserve Ratio Apr-05 -- -- 4.00% --

04/05/2016 11:00 RBI Repurchase Rate Apr-05 -- -- 6.75% --

04/05/2016 11:00 RBI Reverse Repo Rate Apr-05 -- -- 5.75% --

04/06/2016 10:30 Nikkei India PMI Services Mar -- -- 51.4 --

04/06/2016 10:30 Nikkei India PMI Composite Mar -- -- 51.2 --

04/08/2016 04/18 Trade Balance Mar -- -- -- --

04/08/2016 04/12 Local Car Sales Mar -- -- 164469 --

04/08/2016 04/18 Imports YoY Mar -- -- -- --

04/08/2016 04/18 Exports YoY Mar -- -- -- --

04/12/2016 17:30 CPI YoY Mar -- -- 5.18% --

04/12/2016 17:30 Industrial Production YoY Feb -- -- -1.50% --

04/14/2016 12:00 Wholesale Prices YoY Mar -- -- -0.91% --

Chitra Katha

Spark Disclaimer

Spark Capital Advisors (India) Private Limited (Spark Capital) and its affiliates are engaged in investment banking, investment advisory and institutional equities and

infrastructure advisory services. Spark Capital is registered with SEBI as a Stock Broker and Category 1 Merchant Banker.

We hereby declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered in the last five years. We

have not been debarred from doing business by any Stock Exchange/SEBI or any other authorities, nor has our certificate of registration been cancelled by SEBI at any point of

time.

Spark Capital has a subsidiary Spark Investment Advisors (India) Private Limited which is engaged in the services of providing investment advisory services and is registered

with SEBI as Investment Advisor. Spark Capital has also an associate company Spark Infra Advisors (India) Private Limited which is engaged in providing infrastructure

advisory services.

This document does not constitute or form part of any offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction.

This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Nothing in this document should

be construed as investment or financial advice, and nothing in this document should be construed as an advice to buy or sell or solicitation to buy or sell the securities of

companies referred to in this document.

Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies

referred to in this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. This

document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published,

copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to or use by any person or entity who is a citizen or resident of or located in

any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject Spark Capital

and/or its affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to

a certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such applicable restrictions. This

material should not be construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be illegal.

Spark Capital makes no representation or warranty, express or implied, as to the accuracy, completeness or fairness of the information and opinions contained in this

document. Spark Capital , its affiliates, and the employees of Spark Capital and its affiliates may, from time to time, effect or have effected an own account transaction in, or

deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment banking or other services for, or solicit

investment banking or other business from, any company referred to in this report.

This report has been prepared on the basis of information, which is already available in publicly accessible media or developed through an independent analysis by Spark

Capital. While we would endeavour to update the information herein on a reasonable basis, Spark Capital and its affiliates are under no obligation to update the information.

Also, there may be regulatory, compliance or other reasons that prevent Spark Capital and its affiliates from doing so. Neither Spark Capital nor its affiliates or their respective

directors, employees, agents or representatives shall be responsible or liable in any manner, directly or indirectly, for views or opinions expressed in this report or the contents

or any errors or discrepancies herein or for any decisions or actions taken in reliance on the report or the inability to use or access our service in this report or for any loss or

damages whether direct or indirect, incidental, special or consequential including without limitation loss of revenue or profits that may arise from or in connection with the use of

or reliance on this report.

Absolute

Rating

Interpretation

BUY Stock expected to provide positive returns of >15% over a 1-year horizon REDUCE Stock expected to provide returns of <5% – -10% over a 1-year

horizon

ADD Stock expected to provide positive returns of >5% – <15% over a 1-year

horizon SELL Stock expected to fall >10% over a 1-year horizon

Disclaimer

(1/2)

Chitra Katha

Spark Capital and/or its affiliates and/or employees may have interests/positions, financial or otherwise in the securities mentioned in this report. To enhance transparency,

Spark Capital has incorporated a disclosure of interest statement in this document. This should however not be treated as endorsement of views expressed in this report:

Analyst Certification of Independence

The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research

analyst’s compensations was, is or will be, directly or indirectly, related to the specific recommendation or views expressed in the report.

Additional Disclaimer for US Institutional Investors

This research report prepared by Spark Capital Advisors (India) Private Limited is distributed in the United States to US Institutional Investors (as defined in Rule 15a-6 under

the Securities Exchange Act of 1934, as amended) only by Auerbach Grayson, LLC, a broker-dealer registered in the US (registered under Section 15 of Securities Exchange

Act of 1934, as amended). Auerbach Grayson accepts responsibility on the research reports and US Institutional Investors wishing to effect transaction in the securities

discussed in the research material may do so through Auerbach Grayson. All responsibility for the distribution of this report by Auerbach Grayson, LLC in the US shall be borne

by Auerbach Grayson, LLC. All resulting transactions by a US person or entity should be effected through a registered broker-dealer in the US. This report is not directed at you

if Spark Capital Advisors (India) Private Limited or Auerbach Grayson, LLC is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available

to you. You should satisfy yourself before reading it that Auerbach Grayson, LLC and Spark Capital Advisors (India) Private Limited are permitted to provide research material

concerning investment to you under relevant legislation and regulations;

Disclosure of interest statement Yes/No

Analyst financial interest in the company No

Group/directors ownership of the subject company covered No

Investment banking relationship with the company covered No

Spark Capital’s ownership/any other financial interest in the company covered No

Associates of Spark Capital’s ownership more than 1% in the company covered No

Any other material conflict of interest at the time of publishing the research report No

Receipt of compensation by Spark Capital or its Associate Companies from the subject company covered for in the last twelve months:

Managing/co-managing public offering of securities

Investment banking/merchant banking/brokerage services

products or services other than those above

in connection with research report

No

Whether Research Analyst has served as an officer, director or employee of the subject company covered No

Whether the Research Analyst or Research Entity has been engaged in market making activity of the Subject Company; No

Disclaimer

(2/2)

spark chitra katha chitra katha - spark capitalmailers.sparkcapital.in/uploads/strategy/india chitra...

Documents