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: 333
20 MAR ,2017
Index
Company Update 2
RE-RATING OF INDIA IS EXPECTED
Around the
Economy 3 As we know that the current economic situation of India is an ideal one for any
Knowledge Corner 3 country. Almost all important parameters of economy are in healthy situation. The out-
come of current election has convinced the international fraternity that ongoing reforms
Mutual Fund 4
will be on fast track and will be dip enough to impact all the sectors of economy. For
Commodity Corner 5 capital market, the political stability is very important and the same is meaningfully
achieved in India. The socio, economic and political reforms will change the face of the
Forex Corner 6
country and lift the GDP and per capita income of the population. Under the circum-
Report Card 7 stances the international investor fraternity is likely to rerate Indian corporate sector
and meaningful inflow from FIIs is likely to come chasing Indian equities.
Short Term Call Status 8
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Outlook and valuation : We recommend BUY on the stock on account of expansion plans at Dahej plant by
FY17E. Also increased by cut of custom duty and expansion of Kochi-Mangalore pipeline. We target stock to
trade at EV/EBITDA of 8.14x in FY17E. (Target price of Rs.460)
Company Overview :
The Government of India, in July of the year 1997 approved the formation of a Joint Venture Company (JVC) for securing
competitive Liquefied Natural Gas (LNG) supply and for development of facilities for the import and utilization of LNG. The
GAIL (India) Ltd (GAIL), Oil & Natural Gas Corporation Ltd (ONGC), Indian Oil Corporation Ltd (IOCL) and Bharat Petroleum
Corporation Ltd (BPCL) formed Petronet LNG Limited as a Joint Venture company. The Company was incorporated in 2nd
April of the year 1998 to import LNG and set up LNG terminals in the country; it involves India's leading oil and natural gas
industry players. It has (LNG) receiving and regasification terminal at Dahej, Gujarat. Petronet also has a strategic partner-
ship with French-based Gas Company, GAZ De France and a LNG sale and purchase agreement with Ras Laffan Liquefied
Natural Gas Company, Qatar for the supply of LNG in India.
We expect Dahej facility to ramp up to 15mmtpa by FY18. The facility is expected to expand to 17.5mmtpa in the next phase. Addi-
tionally, work has started on the Kochi-Mangalore pipeline. Even if this is not completed, we expect Kochi refinery expansion to
raise utilization of Kochi LNG terminal to 20% in FY18.
Once the Kochi-Mangalore pipeline is completed, utilization would ramp up to 50%. For long-term growth, the company is also con-
templating on LNG terminals overseas.
Petronet completed its 5mmtpa expansion at Dahej at a cost of INR20b. Any green field LNG terminal of 5mmtpa would cost
~INR50b. This makes Dahej the cheapest alternative available to the consumers.
Cut down of LNG Custom duty from 5% to 2.5% by government and government focus on providing gas fuel to all households.
Once Vizag port has been started, Petronet will be able to supply gas to all the major steel producer located in Chhattisgarh, Odisha
& Jharkhand.
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Domestic stock markets registered strong gains in the truncated week ended Friday, 17 March 2017, on the back of thumping victory for
the Bharatiya Janata Party (BJP) in the Uttar Pradesh assembly elections. Another data showed that India's exports rose 17.48% at
$24.49 billion in February 2017 over February 2016. Imports rose 21.76% to $33.38 billion in February 2017 over February 2016.
US Federal Reserve raised interest rates by 0.25% as expected without accelerating its timeline for future tightening. The Bank of Japan
(BOJ) left policy unchanged on Thursday, 16 March 2017, sticking with its expansionary measures even though other major central
banks, including the Federal Reserve, are shifting away from years of unusually aggressive stimulus.
Shares of Avenue Supermarts may get listed on the bourses next week. The IPO received strong response from investors. The govern-
ment expects to complete the process for implementation of the Goods and Services Tax (GST) in the current session. GST is slated to be
implemented from 1 July 2017.
Among the key global events, the China's CB Leading Economic Index for February 2017 is scheduled to release on Tuesday, 21 March
2017. The minutes of the Bank of Japan's (BOJ) monetary policy meeting will be out on the same day. Eurozone Markit PMI Composite
data for the month of March 2017 is slated to release on Friday, 24 March 2017.
Knowledge Corner :
INITIAL PUBLIC OFFERING (IPO)
Initial public offering is the process by which a private company can go public by sale of its stocks to general public. It
could be a new, young company or an old company which decides to be listed on an exchange and hence goes public.
How it works?
After IPO, the company's shares are traded in an open market. Those shares can be further sold by investors through
secondary market trading.
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Medium
Small
Fund
S&P BSE 200
(Rebased to 10,000) Source : - www.valueresearchonline.com
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Commodity Corner
BULLION
FUNDAMENTAL: Bullion prices dropped as growing expectations for a March rate hike in the U.S. and a stronger U.S. dollar continued to
weigh on the precious metal. The greenback remained broadly supported after a number of Federal Reserve officials this week ex-
pressed their support for a March rate hike. The U.S. Department of Labor said initial jobless claims declined by 19,000 to 223,000 in the
week ending February 25 from the previous weeks total of 242,000. Fed Chair Janet Yellen added her influential voice, saying a hike
this month would be "appropriate" if economic data hold up. Federal Reserve policymakers who have recently signaled a pending U.S.
interest rate rise are correct given the growing confidence and aggregate demand in the economy and stock market since the U.S. elec-
tion, the Fed's vice chairman said. "If there has been a conscious effort (to raise expectations for a rate hike) I'm about to join it," Stanley
Fischer told an economists' forum, when asked about comments by other Fed officials this past week that have boosted market odds of
a March rate hike.
RECOMMENDATION : SELL GOLD @ 29500 SL 29850 TGT 29150 SELL SILVER @43100 SL 43800 TGT 42440-41800.
BASE METALS
FUNDAMENTAL: Base metals prices ended with mixed node where nickel and copper ended with gains followed by losses in zinc and
lead prices as data from China, including manufacturing and service sector activity, cast doubt over the sustained growth of the world's
second-largest economy. Nickel gained as support seen after update that the Philippines could consider banning exports of unprocessed
minerals such as nickel in an effort to promote value addition in the mining sector, a senior environment official said. "It is one of the op-
tions that has to be considered not only by the DENR (Department of Environment and Natural Resources) but by the entire govern-
ment," DENR Undersecretary Maria Paz Luna told reporters. Ms Luna spoke after a meeting with other government officials tasked to
conduct a second review of 28 mines ordered closed or suspended by the environment ministry. Prices remained supported on the po-
tential for supply disruption from the world's top nickel ore exporter, but miners said following in the foosteps of neighbouring Indonesia
wouldn't be viable without big government incentives.
RECOMMENDATION : SELL ALUMINIUM @ 129 SL 132 TGT 126.50-124 SELL COPPER @ 404 SL 412 TGT 395.5-388 SELL ZINC @ 189
SL 193 TGT 186-183 SELL NICKEL @ 745 SL 765 TGT 728-710
ENERGY
FUNDAMENTAL : Crude oil dropped as record-high U.S. crude stockpiles were seen jeopardizing OPECs efforts to drain a global sur-
plus. Also pressure seen as stung by a stronger dollar and as concerns over a record build-up in U.S. stockpiles weighed on the market,
with producers boosting shale oil production. Russia's February oil output was unchanged from January at 11.11 million barrels per day
(bpd), energy ministry data showed, with its cuts from October 2016 levels remaining at 100,000 bpd or a third of what was pledged by
Moscow under its agreement with the Organization of the Petroleum Exporting Countries (OPEC). Official U.S. data also showed that
crude inventories in the world's biggest oil consumer rose for an eighth straight week to a record 520.2 million barrels last week. But
even as U.S. oil production rose and Russian output held steady, OPEC boosted already strong compliance with the group's six-month
deal to 94 percent, cutting output for a second month in February, a survey found. Russian Energy Minister Alexander Novak said it was
too early to say if the deal to reduce oil production would be extended beyond the end of June.
RECOMMENDATION : BUY CRUDE @ 3480 SL 3350 TGT 3620-3720 SELL NAT.GAS @ 191 SL 199 TGT 182-175
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Commodity Corner
Forex Corner
Market Recap :
The USDINR On daily chart pair below all short term, medium term, and long term moving average which is 20,
100 and 200.Whereas on weekly chart pair has continually taking support at 50WMA. Which suggest short term
trend is bearish. So for trading perspective, one could sell to the level 65.80-65.50 with SL of 66.20 for target of
65.20-65.10.
USD/INR
Level S2 S1 CP R1 R2 High Low Close
USD/INR 64.70 65.13 65.75 66.18 66.80 66.36 65.31 65.57
EUR/INR
Level S2 S1 CP R1 R2 High Low Close
EUR/INR 69.08 69.79 70.32 71.03 71.56 70.85 69.61 70.50
GBP/INR
Level S2 S1 CP R1 R2 High Low Close
GBP/INR 79.11 80.10 80.75 81.74 82.39 81.35 79.75 81.10
JPY/INR
Level S2 S1 CP R1 R2 High Low Close
JPY/INR 56.82 57.40 57.73 58.31 58.64 58.05 57.14 57.99
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TA+PB 17 80.95
SL+EXIT 04 19.05
TOTAL 21 100.00
One call on daily basis is given keeping view of short term trading on closing basis.
Time frame and expected % of return is also mentioned with the suggested call.
This call are purely given on technical trading system generated by the Technical Research Desk.
Generally Expected Return on investment is 5-6 % with time horizon of 6-7 days.
Profit Booking update is considered if on an average expected return exceed 3.50-4.00 % against the
Expected return of 5-6%
Risk- Reward ratio percentage wise depends on the volatility of stock Normally it stands ( 3 : 9)
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