Index  Market View            1  Company Update          2  Around the                     Economy            3  Knowledge Corner          3  Mutual Fund             4  Commodity Corner             5   Forex Corner            6  Report Card            7             Editor & Contributor Margi  Shah    Special Contributors Ashesh Trivedi Aditya Nahar          For suggestions, feedback and queries jstreet@jhaveritrade.com 

Market View: 2016 – A Challenging Year for Global Market

Last Saturday we have discussed the historic year 2015 where global market has seen many trends and events which have not been witnessed earlier. In India we have seen the inflows and outflows of FII investment. The unprecedented and pleasant event was four times more investment by local institutes and retailers than the investment made by FII in the year 2015. It will be very interesting to know the major events in 2016 and the trend of the market. The major events to happen in India will be budget in February 2016, the development of GST Bill and its passage by the parliament, other important reforms to be rolled out in the year 2016 and the preparation for mega election in UP 2017, The RBI actions, rate cut going forward in 2016 and of course the monsoon 2016, at international level all eyes will be focused on The Fed rate hikes in 2016 with the development in Euro zone. The bond buying program by ECB, Peoples Bank of China and Bank of Japan will also be important factors at international level. The Fed has said that the decision to hike the rate will be data dependent. The economic and employment data to be released from January to March will be very important to judge the next rate hike by Fed in March / April 2016 (The data of unemployment claims released yesterday are the highest in last five months). Any rate hike by Fed in the month of March / April will have bad effects on emerging market currencies and capital market. Any rise of US Dollar versus Indian Rupee will make India as a country of investment destination less attractive but so far as emerging economies are concerned, India remains the favorite economy amongst FIIs. It will be very important for Indian market to have reasonable fund allocation by FIIs in 2016. To remain attractive, the commodity and oil prices should remain at reasonable level during 2016. This will ensure checks on inflation as well as comfortable current account situation. At the same time the growth in world market should improve to ensure rise in export from India. It is said that the corporate earnings will start improving from here on. It is also said that mega investments made by Government in Infrastructure / Railway projects will start yielding results from here on. Considering the above factors and the global events, we should remain cautiously optimistic for the market. The investment mantra for 2016 will be selection of the scripts. The investment guru Peter Lynch once said that “If you spent thirteen minutes a year on economics, you wasted ten minutes. We can never know what is going on. So we are better off investing our energy into researching individual stocks”. Peter Lynch had managed Fidelity’s Equity Fund for thirteen years and made returns of 2639% over that time. Technically, any decisive rise above 7950-7970 range will take the market beyond 8000 and up to 8200. Any fall below 7850 – 7790 will have negative impact on the market. Kamal Jhaveri MD- Jhaveri Securities

- 1 -

Vol.: 276 4th January,2016

- 2-

Company Basics

BSE Code 509557

NSE Symbol GARWALLROP

EQUITY (` in Cr.) 21.88

MKT.CAP (` in Cr.) 866.53

Financial Basics FV (`) 10.00 EPS (`) 19.17 P/E (x) 20.66 P/BV (x) 2.80 BETA 1.0730 RONW (%) 14.72

Share Holding Pattern Holder's Name % Holding Foreign 1.91 Institutions 2.26 Promoters 50.59 Non Prom. 0.00 Public & Others 39.11 Government 6.14

Company Overview

Garware-Wall Ropes Ltd. (GWRL), is one of India's leading players in Technical Textiles with customers and end-users across the world. The company provides application-focused solutions for various sectors including Deep Sea Fishing, Aquaculture, Shipping, Agriculture, Sports, Infrastructure, Defence and Transportation.

Investment rational

Strong products portfolio and has wide range of end users

GWPL is the largest domestic player in Technical Textile industry that provides application focus solutions to various traditional sectors like Fisheries, Aquaculture and also cater to new and rising sectors like Sports, Defence and Transportation with its wide range of product portfolios. End-users of Company's products include Fishermen, Shipping Companies, Oil Drillers, Agriculturists, Packers, Transporters, Construction companies, Municipalities, Government Organizations, Clubs, Universities and Manufacturing Plants. The company also provide various product and solution for Water management, Waste management, erosion control applications. Apart from being a leading player in the domestic market, GWPL has a dominant share of markets in North America, and parts of Europe and Australia for several products.

Falling crude oil prices and currency devaluation work well for GWRL

Most of the Raw Material (like High Density Polyethylene ,Polypropylene, Nylon Polyester Yarn) consumed by the GWRL is crude based derivatives which constitutes ~50% of total expenditure. RM cost as % of sales remains in the range of 45%-47% in last five years. Falling in crude oil price (Brent crude touched lowest level since 2004) leads to added advantage for GWRL in the form of margin expansion. RM cost as % of Sales fell from 47% in 6MFY15 to 43% in 6M FY16 leads to EBITDA margin expansion of 137bps to 11.80% in H2FY16 (v/s 10.43% in H2FY15). Rupee depreciation help s to maintain top line better due to exports revenue contributes ~49% of top line as company has increased its focus on USA, Canada and Europe.

Valuation : GARWALLROP is trading at `425. We recommend “Buy” with target price of `550, valuing stock

20xFY18E EPS of `27.47.The stock currently trades at 22.27x of FY16E, 18.56x of FY17E and 15.47x of

FY18E.

Company Update : Garware-Wall Ropes Ltd.

Vol.: 276 4th January,2016

 

- 3-

 

Weekly Market Recap :

• The combined index of eight core industries comprising nearly 38% of the weight of items included in the index of industrial production (IIP) fell 1.3% in November 2015 over November 2014. The data was announced by the government after market hours on Thursday, 31 December 2015.

• On the global front, China's non-manufacturing activity expanded strongly in December 2015, a monthly survey showed on Friday, 1 January 2016. The purchasing managers' index (PMI) for the non-manufacturing sector came in at 54.4 in December 2015, up from 53.6 in November 2015.

• Lupin has received final approval from the United States Food and Drug Administration (USFDA) for its Fyavolv Tablets, a generic version of Warner Chilcott's Femhrt Tablets.

Market Eye Week ahead : • On Monday, 4 January 2016, Markit Economics will release the outcome of a monthly survey on India's manufacturing sector for

December 2015. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) fell to a 25-month low of 50.3 in November 2015. The reading of 50 separates contraction from expansion.

• On Wednesday, 6 January 2016, Markit Economics will release the outcome of a monthly survey on India's services sector forDecember 2015.

• Among key global data, the Caixin China manufacturing PMI data for December 2015 is due on Monday, 4 January 2016. The CaixinChina manufacturing PMI, a private gauge, rose to 48.60 in November 2015 from 48.30 in October 2015. A reading below 50 indicates contraction.

• On Wednesday, 6 January 2016, the Caixin China services PMI data for the month of December 2015 is due. • In the United States, the crucial non-farm payrolls data for the month of December 2015 is due on Friday, 8 January 2016.

KEY EVENTS/FACTORS TO WATCH

1. Mon: PMI data for the month of December

2. Wed: monthly survey on India’s service Sector

Growth Fund

• A mutual fund whose aim is to achieve capital appreciation by investing in growth stocks. They focus on companies that are

experiencing significant earnings or revenue growth, rather than companies that pay out dividends. • In general, growth funds are more volatile than other types of funds, rising more than other funds in bull markets and falling more in

bear markets.

Around The World

Vol.: 276 4th January,2016

Knowledge Corner :

Mutual Fund Corner

- 4-

Source : - www.valueresearchonline.com

Fund Name Scheme Name Axis Long Term Equity Fund

AMC Axis Asset Management Company

Type Tax Planning

Category Open-ended and Equity

Launch Date December 2009

Fund Manager Jinesh Gopani

Net Assets (` In crore ) Rs. 6497.3 crore as on Nov 30, 2015

Top 10 Sector Break-Ups Fund (%)

Financial 30.07 Automobile 13.27 Healthcare 10.59 Technology 10.31 Chemicals 7.74 FMCG 6.5 Cons Durable 5.54 Engineering 4.01 Services 3.62 Diversified 2.26

Composition (%) Equity 98.01

Debt 2.06

Cash -0.06

Risk Analysis Volatility Measures Standard Deviation 13.30 Sharpe Ratio 1.39 Beta 0.87 R-Squared 0.78 Alpha 15.00

History 2013 2014 2015 2016 NAV (Rs) 17.26 28.69 30.61 30.78

Total Return (%) 16.51 66.18 6.70 0.54

+/-Nifty 50 9.75 34.79 10.76 0.33

+/- S&P BSE 200 12.13 30.71 8.18 0.15

Rank (Fund/Category) 1/37 6/73 19/73 47/81

52 Week High (Rs) 17.27 28.69 32.84 -

52 Week Low (Rs) 13.54 16.65 28.53 -

Net Assets (Rs.Cr) 755.32 2983.00 5949.18 -

Expense Ratio (%) 2.85 2.55 2.51 -

Fund Style

Investment Style Growth Blend Value Large

Medium

Small

Capitalization

Vol.: 276 4th January,2016

Fund Performance v/s S&P CNX Nifty

—– Fund —– CNX Nify (Rebased to 10,000)

Commodity Corner

- 5-

FUNDAMENTAL: Bullion prices dropped as the combination of a firm dollar and weak oil prices left the metal on track for its third consecutive annual loss. Largely influenced by U.S. monetary policy and dollar flows, the price of bullion dropped in 2015 as some investors sold the precious metal to buy assets that pay a yield, such as equities. Following the U.S. Federal Reserve's first interest rate rise in nearly a decade earlier this month and indications the central bank would resort to gradual increases in 2016, the outlook for gold does not look bullish. Other fundamentals were not supportive either. A report showed that the number of people who filed for unemployment assistance in the U.S. rose to the highest level since mid-July last week. The U.S. Department of Labor said the number of individuals filing for initial jobless benefits increased by 20,000 last week to 287,000. Manufacturing activity in the Chicago-area contracted at the fastest pace since July 2009 in December, dampening optimism over the U.S. economic outlook, industry data showed. Market research group Kingsbury International said its Chicago purchasing managers’ index tumbled by 5.8 points to 42.9 this month from a reading of 48.7 in November. Assets of SPDR Gold Trust, the top gold-backed exchange-traded fund, were near a seven-year low while short positions on COMEX gold contracts were close to a record high. Regional premiums for gold in India were higher because the New Year holidays were restricting imports. Buoyed by sharp fall in gold prices globally, India is likely to see a jump of 11 per cent in imports of the metal to 1,000 tonnes, says a trade body. According to the All India Gems and Jewellery Trade Federation, the world’s second-biggest gold consumer imported around 900 tonnes in 2014. According to the federation, India has already imported 850 tonnes of gold from January to September 2015 as against 650 tonnes in the first nine months of last year. The U.S. Mint sold a record amount of American Eagle silver bullion coins and saw Sales of its gold coins rise by 53 percent this year, it said, as weak metal prices unleashed a fresh wave of buying by investors and collectors. RECOMMENDATION : SELL GOLD @ 25600 SL 25900 TGT 24900.Silver SELL SILVER @ 34100 SL 34800 TGT 32800 FUNDAMENTAL: Base metals prices last week ended with gains as worries about tighter supplies to come supported the prices. China looked set for a soggy start to 2016 after activity in the manufacturing sector contracted for a fifth straight month in December, suggesting the government may have to step up policy support to avert a sharper slowdown. While China's services sector ended 2015 on a strong note, the economy still looked set to grow at its slowest pace in a quarter of a century despite a raft of policy easing steps, including repeated interest rate cuts, in the past year or so. In addition to the decision to go ahead with deeper production cuts, major Chinese copper smelters have announced to cut sales of spot copper by a minimum of 200,000 tons during the initial quarter of the next year. This is equivalent to one-tenth of the country’s refined copper production during the correspond-ing quarter in 2015. The decision is considered as an effort to counter the falling metal prices. Incidentally, copper prices have plummeted to near-6 year lows during the second half of 2015. It must be noted that the smelters had earlier agreed to cut production in 2016 by at least 350,000 tons. As part of the agreement, the smelters would hold back some refined metal in warehouses instead of selling in spot market. China will maintain proactive fiscal policy in 2016. Market liquidity will be ample at the beginning of the New Year. China is expected to raise deficit ratio and cut tax in 2016, accord-ing to the Central Economic Working Conference. Combined zinc inventories in Shanghai, Tianjin and Guangdong added 6,900 to 326,300 tonnes this past week, due to active shipments from zinc smelters. Shanghai saw decreasing inflows of imported zinc. But downstream purchases were dampened significantly due to year-end cash tightness and rising zinc prices. Zinc inventories will barely fall next week as downstream producers slash output ahead of China’s New Year holiday in 2016. In China’s spot markets, zinc smelters will sell actively on rebounding zinc prices. When combined with slower inflows of imported zinc, downstream buyers will be inclined to purchase domestic zinc. Warrants on the SHFE increased recently, meaning sluggish spot market. Market attention will focus on US December ADP and nonfarm data, speeches by three hawkish US Fed officials, as well as min-utes of the US Fed’s December policy meeting. RECOMMENDATION : BUY ALUMINIUM @ 98 SL 95 TGT 102.50. SELL LEAD @ 119 SL 122 TGT 114. BUY COPPER @ 304 SL 294 TGT 318.SELL ZINC @ 107 SL 109.50 TGT 102.50. SELL NICKEL @ 590 SL 605 TGT 560 FUNDAMENTAL: Crudeoil dropped by around two percent and also ended the year lower after a race to pump by Middle East crude producers and U.S. shale oil drillers created an unprecedented global glut that may take through 2016 to clear. Prices also seen under pressure after another year that showed the helplessness of Saudi Arabia and others in the once-powerful Organization of the Petroleum Exporting Countries (OPEC) to support oil prices. The U.S. shale industry, meanwhile, surprised the world again with its ability to survive rock-bottom crude prices, churning out more supply han thought, even as the sell-off in oil slashed by two-thirds the number of drilling rigs in the country from a year ago. The United States also took a historic move in repealing a 40-year ban on U.S. crude exports to countries outside Canada, acknowledging the industry's growth. The downturn has caused pain across the energy supply chain, including shippers, private oil drillers and oil-dependent countries from Venezuela and Russia to the Middle East. Global crude production is expected to exceeds demand by anywhere between half a million and 2 million barrels every day. Natural gas prices rose over 14% as updated weather forecasting models predicted that chilly winter conditions across the U.S. Midwest and Northeast are not expected to last for more than a week. Prices also seen supported after data showed U.S. natural gas supplies in storage fell more than expected last week. The U.S. Energy Information Administration said in its weekly report that natural gas storage in the U.S. in the week ended December 25 fell by 58 billion cubic feet, broadly in line with expectations for a decline of 57 billion. That compared with a drawdown of 32 billion cubic feet in the prior week, 26 billion cubic feet in the same week last year, while the five-year average change for the week is a drawdown of 98 billion cubic feet. Total U.S. natural gas storage stood at 3.756 trillion cubic feet, 14.2% higher than levels at this time a year ago and 12.0% above the five-year average for this time of year. Prices seen supported the whole week as updated weather forecasting models predicted that chilly winter conditions across the U.S. Midwest and Northeast are not expected to last for more than a week. RECOMMENDATION : SELL CRUDE OIL @ 2550 SL 2650 TGT 2300.SELL NAT.GAS @ 160 SL 168 TGT 142.

BULLION

BASE METALS

ENERGY

Vol.: 276 4th January,2016

- 4 -

Commodity Corner

USD/INR

- 6-

Forex Corner

EUR/INR

GBP/INR

JPY/INR

Market Eye Week ahead :

• Last week the USD INR opened at 66.10, made a high of 66.72, made a 66.06 and closed at 66.40. The Reserve Bank of India’s (RBI) continued depreciation of the INR outright will only push inflation higher, with more currency weakness to result in further corporate strain through higher import costs. We expect the US dollar to garner buying support on declines against rupee. Broad Range for pair in coming week will be 66.10-67.30

Level S2 S1 CP R1 R2 High Low Close

USD/INR 66.73 67.05 66.39 66.07 65.73 66.72 66.06 66.40

Level S2 S1 CP R1 R2 High Low Close

JPY/INR 55.62 55.88 55.20 54.94 54.52 55.47 54.79 55.35

Level S2 S1 CP R1 R2 High Low Close

GBP/INR 98.72 99.42 98.30 97.60 97.18 98.99 97.87 98.03

Level S2 S1 CP R1 R2 High Low Close EUR/INR 73.36 74.48 72.58 71.46 70.68 73.70 71.80 72.24

Market Recap :

• The Indian rupee commenced lower against the dol-lar in early trades on Monday, 04 January 2016 on increased demand for the US currency from import-ers and jump in global crude prices as tensions flared up between Iran and Saudi Arabia.

• The domestic currency opened at Rs 66.27 and

dropped to a low of 66.45 so far during the day. In the spot currency market, the Indian unit was last seen trading at 66.45.

• The U.S. dollar index, which measures the

greenback's strength against a trade-weighted basket of six major currencies, was down 0.05% to 98.75.

Vol.: 276 4th January,2016

• Nifty last week opened at 7863.20 and maintained a low at 7863. Nifty moved up to register a high at 7955.55. Nifty finally closed

at 7946.35 thereby showed a net rise of 90 point on week to week basis. Resistance is at 7979 and the same will be tested. On further breakout and close above 7979 with weekly bullish candle can set a rise towards 8036 and 8217.Traders long can maintain the stop loss at 7850. Weakness will continue below 7850 and downfall momentum can resume on break and close below 7730..

• Macroeconomic data, trend in global markets, trend in investment activity from foreign portfolio investors (FPIs) and domestic institu-tional investors (DIIs), the movement of rupee against the dollar and crude oil price movement will dictate trend on the bourses in the near term.

- 7-

J Street Recommendations Report Card

Top Fundamental Stocks

Stocks Rec. Date CMP on Rec. CMP Target Absolute Return @

CMP Status

Garware‐Wall Ropes   28/12/2015  425 418 550 -2% Buy 

Welspun syntax Ltd.  23/11/2015  121 147 223 22% Buy 

Natco Pharma  02/11/2015  509 563 636 11% Buy 

SRF Ltd.  21/09/2015  1140 1247 1374 9% Accumulate 

Ahluwalia contracts  24/08/2015  235 286 368 22% Buy 

Sun Pharma  03/07/2015  831 799 1041 -4% Buy 

Infinite Computer Sol.   20/07/2015  190 230 255 21% Buy 

Nitin Spinners Ltd.  06/07/2015  79 76 94 -4% Buy 

Bank of Baroda  01/06/2015  163 151 217 -7% Buy 

Ambika Cotton Mills  18/05/2015  880 919 1149 4% Buy 

Sadbhav Engineering Ltd. 

04/05/2015  298 339 430 14% Buy 

Omkar speciality Chemicals 

16/03/2015  152 223 251 47% Buy 

DHFL   16/02/2015  252 230 368 -9% Buy  

TV Today Network  27/01/2015  222 329 337 48% Buy  

M&M   12/1/2015  1238 1243 1452 0% Buy 

Havells India  27/10/2014  274 307 346 12% Buy  

PTC India Fin. Ser.  07/07/2014  39 40 45 2% Buy 

Adani Port  05/07/2014  280 258 347 -8% Buy 

   It's not important whether you are right or wrong, It’s about how much money you make when you're right and how        much you lose when you're wrong.” 

Vol.: 276 4th January,2016

Vol.: 276 4th January,2016