Economic Events - Watch Out for Key Economic Events of March 2020

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Key Events to Watch Out For In March 2020:

Date Country Event Forecast Previous
02-Mar-20   Australia Company Gross Operating Profits (Q.o.Q) (Q4) -3.50% -0.80%
    China Caixin Manufacturing PMI (Feb) 45.7 51.1
  Germany German Manufacturing PMI (Feb) 45.2 45.3
  Euro Zone Manufacturing PMI (Feb) 47.8 47.9
    U.K Manufacturing PMI (Feb) 49.8 50
    U.S.A Manufacturing PMI (Feb) 50.8 51.9
    U.S.A ISM Manufacturing Employment (Feb) 46.6 46.6
    U.S.A ISM Manufacturing PMI (Feb) 50.5 47.2
03-Mar-20   Australia Building Approvals (M.o.M) (Jan) 1.00% -0.20%
    Australia Current Account (Q4) 2.3 B 7.9 B
    Australia RBA Interest Rate Decision (Mar) 0.75% 0.75%
    U.K Construction PMI (Feb) 46.6 48.4
    South Africa GDP Annualized (Q.o.Q) (Q4) 0.10% -0.60%
  Euro Zone Core CPI (Y.o.Y) (Feb)   1.10% 1.10%
  Euro Zone CPI (Y.o.Y) (Feb)   1.20% 1.40%
  Euro Zone CPI (M.o.M) (Feb)   -1.00% -1.00%
  Euro Zone Unemployment Rate (Jan) 7.40% 7.40%
04-Mar-20   Australia GDP (Q.o.Q) (Q4) 0.40% 0.40%
    Australia GDP (Y.o.Y) (Q4) 2.00% 1.70%
    Japan Services PMI (Feb) 46.7 51
  Germany German Retail Sales (M.o.M) (Jan) 1.00% -3.30%
  Germany German Services PMI (Feb) 53.3 54.2
  Euro Zone Markit Composite PMI (Feb) 51.6 51.3
  Euro Zone Services PMI (Feb) 52.8 52.5
    U.K Composite PMI (Feb) 52.4 53.3
    U.K Services PMI (Feb) 53.3 53.9
  Euro Zone Retail Sales (M.o.M) (Jan) 0.70% -1.60%
    U.S.A ADP Non-farm Employment Change (Feb) 191 K 291 K
    U.S.A Markit Composite PMI (Feb) 49.6 53.3
    U.S.A Services PMI (Feb) 49.4 53.4
    U.S.A ISM Non-Manufacturing PMI (Feb) 55.5 55.5
05-Mar-20   Australia Trade Balance (Jan) 4.800 B 5.223 B
    U.S.A Non-farm Productivity (Q.o.Q) (Q4) 1.40% -0.20%
    U.S.A Unit Labor Costs (Q.o.Q) (Q4) 1.40% 2.50%
    U.S.A Factory Orders (M.o.M) (Jan) -0.30% 1.80%
06-Mar-20   Japan Household Spending (Y.o.Y) (Jan) -1.70% -4.80%
    Japan Household Spending (M.o.M) (Jan) 0.20% -1.70%
  Germany German Factory Orders (M.o.M) (Jan) 1.50% -2.10%
    Russia CPI (Y.o.Y) (Feb) 2.50% 2.40%
    Russia CPI (M.o.M) (Feb) 0.50% 0.40%
    U.S.A Average Hourly Earnings (Y.o.Y) (Y.o.Y) (Feb) 3.20% 3.10%
    U.S.A Average Hourly Earnings (M.o.M) (Feb) 0.30% 0.20%
    U.S.A Non-farm Payrolls (Feb) 178 K 225 K
    U.S.A Private Non-farm Payrolls (Feb) 160 K 206 K
    U.S.A Trade Balance (Jan) -47.20 B -48.90 B
    U.S.A Unemployment Rate (Feb) 3.60% 3.60%
09-Mar-20   Japan Current Account n.s.a. (Jan) 0.417 T 0.524 T
10-Mar-20   China CPI (M.o.M) (Feb) 0.80% 1.40%
    China CPI (Y.o.Y) (Feb) 4.90% 5.40%
    China PPI (Y.o.Y) (Feb) 0.10% 0.10%
  Euro Zone GDP (Q.o.Q) (Q4) 0.20% 0.10%
  Euro Zone GDP (Y.o.Y) (Q4) 1.20% 0.90%
11-Mar-20   U.K Manufacturing Production (M.o.M) (Jan) 0.50% 0.30%
    U.K Trade Balance (Jan) -10.00 B 0.85 B
    U.S.A Core CPI (Y.o.Y) (Feb) 2.20% 2.30%
    U.S.A Core CPI (M.o.M) (Feb) 0.20% 0.20%
    U.S.A CPI (M.o.M) (Feb) 0.20% 0.10%
    U.S.A Federal Budget Balance (Feb) -11.5 B -33.0 B
12-Mar-20   India CPI (Y.o.Y) (Feb) 7.40% 7.59%
    U.S.A Core PPI (M.o.M) (Feb) 0.10% 0.50%
  Euro Zone Deposit Facility Rate (Mar) -0.50% -0.50%
13-Mar-20 Germany German CPI (M.o.M) (Feb) -0.60% -0.60%
    U.S.A Export Price Index (M.o.M) (Feb) -0.10% 0.70%
16-Mar-20   China Fixed Asset Investment (Y.o.Y) (Feb) 5.20% 5.40%
    China Industrial Production (Y.o.Y) (Feb) 5.90% 6.90%
    India WPI Inflation (Y.o.Y) (Feb) 2.92% 3.10%
17-Mar-20   U.K Average Earnings Index +Bonus (Jan) 3.00% 2.90%
    U.K Unemployment Rate (Jan) 3.80% 3.80%
    Germany German ZEW Current Conditions (Mar) -10.3 -15.7
    U.S.A Core Retail Sales (M.o.M) (Feb) 0.30% 0.30%
    U.S.A Retail Sales (M.o.M) (Feb) 0.30% 0.30%
    U.S.A JOLTs Job Openings (Jan) 7.000 M 6.423 M
18-Mar-20   Japan Exports (Y.o.Y) (Feb) -6.90% -2.60%
    Japan Trade Balance (Feb) -1,694.9 B -1,313.2 B
    South Africa Core CPI (M.o.M) (Feb) 0.30% 0.10%
    South Africa CPI (M.o.M) (Feb) 0.30% 0.30%
    U.S.A Housing Starts (Feb) 1.425 M 1.567 M
19-Mar-20   Japan National Core CPI (Y.o.Y) (Feb) 0.80% 0.80%
    Australia Employment Change (Feb) 10.0 K 13.5 K
    South Africa Interest Rate Decision (Mar) 6.50% 6.25%

Source: Investing.com


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SBI Cards & Payment Services IPO 2020
Posted by Mehul Kothari | Published on 28-FEB-2020

SBI Cards & Payment ServicesStrong play on spends digitisation What is the frenzy about? The much talked about IPO of the second largest credit card issuer has been awaited for multiple reasons: (a) a standalone credit card issuer, which (b) turned around strongly after being in red between FY08-FY10 and has ever since delivered robust profit growth (refer Exhibit 1, pp. 2), (c) a lucrative business that churned 38% RoE/6.9% RoA in 9MFY20 (refer financial snapshot table below), (d) SBI pedigree and an ocean of potential customers to farm (~430mn SBI customers) and harvest (~16mn that passed approval filters!), (e) giving investors a large canvas to paint the earnings in sky blue. No wonder SBICARDS MD Mr Hardayal Prasad, in an interview to a media channel, said ‘cash was his biggest competitor’! How does SBICARDS compare with competitors? It is already the second largest credit card issuer and actually betters the leader HDFCB on certain metrics (refer Exhibits 2 and 3 for detailed comparative data). With some consistent and aggressive open channel acquisition strategies alongwith strong acquisition through the banca channel, SBICARDS nurses ambitions of becoming the top card issuing company in India. At the current growth rates (+30%YoY) and assuming HDFCB sustains its mid-teen card addition rate, SBICARD could likely overtake HDFCB to become the largest issuer in the next two years (FY22E). Robust earnings stack: In FY19, SBICARDS had a spread ratio (NII/avg. assets) of 14% and non-spread income of 20.7%. With outstanding credit cards increasing ~21% YTD and 9MFY20 spends nearing 1x FY19 spends, we estimate the business momentum is likely to result in a net profit of Rs15-16bn in FY20E. We expect profit to compound at 40% over FY20E-FY22E. This should result in RoE in excess of 30%. Positive rub-off for SBIN: We currently value SBICARDS at a modest Rs11/share in SBIN SOTP based on 20x FY19 net profit. However, with the changes in corporate tax rate and a strong pick-up in growth momentum for SBICARDS, the IPO value discovery implies a stronger rub-off for SBIN in SOTP. The post-issue valuation of SBICARDS is likely to add at least Rs45 to our current SBIN target price of Rs370 (29% potential upside).Valuations rich but offer upside, SUBSCRIBE: We believe the fair value of SBICARDS to be between Rs900-950 implying a P/E multiple of ~32x on the FY22E net profit Rs27.5bn (+35% CAGR FY20-FY22E). At a price of Rs900, SBICARDS would trade at Rs845bn market capitalization. That’s nearly 1/3rd the market capitalisation of its parent SBI with a fraction of its assets! Valuations, therefore do appear rich. However, for the +30%RoE/6%ROA combination, we believe the pricing of SBICARDS does offer an upside.Key earnings risk is regulatory: Changes in merchant discount rate can affect fee income and increase in regulatory capital requirement (current minimum Tier 1 requirement of 10%, minimum CAR requirement of 15%).Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.)

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1st Week of March 2020
Posted by Mehul Kothari | Published on 02-MAR-2020

Indian Markets Recap Indian Indices (% Change)  INDEX Close 1D 5D 1M 3M NIFTY 11,202 -3.85 -7.3 -3.9 -7.0 BSE500 14,628 -3.80 -7.3 -4.1 -5.9 SENSEX 38,297 -3.78 -7.0 -3.6 -6.1 MID CAP 100 16,786 -3.47 -7.3 -4.2 -1.9 NSE SMALL CAP 100 5,675 -4.18 -7.9 -6.3 -1.5 Source: Company, IndiaNivesh Research Global Markets Global Markets (% Change)           INDEX Close 1D 5D 1M 3M DJIA 25,409          -1.39 -12.4 -10.1 -8.5 NASDAQ 8,567            0.01 -10.5 -6.4 0.0 FTSE 6,581          -3.18 -11.1 -9.7 -9.7 Nikkie 21,319            0.83 -8.8 -8.1 -9.4 Hangseng 26,315            0.71 -1.9 0.0 -0.5 Source: Company, IndiaNivesh Research Nifty Outlook (SELL on RISE) Bank Nifty Outlook US 10 Year Bond Yield INDIA 10 Year Bond Yield Sectoral Movement INDEX Close 1D 5D 1M 3M Banking 29,147 -3.4 -5.8 -2.3 -8.5 IT 15,213 -5.65 -8.63 -6.6 2.4 Pharma 7,577 -3.91 -9.42 -5.5 -6.8 Fin Services 13,566 -3.7 -6.5 -1.4 -4.2 Media 1,671 -5.1 -10.7 -4.9 -8.5 NIFTY PSU BANK 1,946 -5.1 -10.3 -14.6 -26.5 Auto 6,904 -3.83 -10.31 -12.4 -13.8 FMCG 29,310 -2.24 -4.33 -2.9 -5.1 Real Estate 281 -3.4 -8.4 -8.0 -0.2 Metals 2,246 -6.8 -14.0 -9.5 -14.7 NIFTY PVT BANK 15,954 -3.1 -5.6 -2.8 -9.5 Source: BloombergSectoral Recap / Lines on performance Sectoral Outlook FII Activity: Derivatives and Cash Market (Weekly) Derivative View   LONG UNWINDING SYMBOL Close Price change % OI OI Change % SRTRANSFIN 1191.15 -3.44% 4672200 -21.70% MFSL 574.45 -3.75% 2549300 -16.84% TATACHEM 711.4 -2.75% 1991700 -14.26% CHOLAFIN 306.25 -2.70% 5480000 -8.09% MUTHOOTFIN 878.05 -5.48% 4245000 -8.00% Source: Company, IndiaNivesh Research   SHORT BUILT UP SYMBOL Close Price change % OI OI Change % VEDL 110.05 -13.72% 65030000 47.95% PFC 109.4 -12.79% 46066000 34.65% MGL 995.35 -5.84% 2604000 31.08% DIVISLAB 2108.3 -2.62% 1881200 26.09% BANKNIFTY 29053.9 -3.97% 1304240 25.87% Source: Company, IndiaNivesh Research Nifty 50 Pivot SYMBOL Close S2 S1 Pivot R1 R2 ADANIPORTS 342.20 333.90 338.05 343.35 347.50 352.80 ASIANPAINT 1797.95 1748.78 1773.37 1807.73 1832.32 1866.68 AXISBANK 697.30 670.63 683.97 704.33 717.67 738.03 BAJAJ-AUTO 2890.00 2820.60 2855.30 2885.15 2919.85 2949.70 BAJFINANCE 4465.85 4144.28 4305.07 4472.53 4633.32 4800.78 BAJAJFINSV 9050.75 8592.62 8821.68 9054.12 9283.18 9515.62 BPCL 426.35 410.18 418.27 428.58 436.67 446.98 BHARTIARTL 523.50 506.90 515.20 521.80 530.10 536.70 INFRATEL 214.45 207.68 211.07 214.53 217.92 221.38 BRITANNIA 2970.20 2866.07 2918.13 2969.07 3021.13 3072.07 CIPLA 402.10 387.13 394.62 405.53 413.02 423.93 COALINDIA 168.40 163.93 166.17 168.98 171.22 174.03 DRREDDY 2927.10 2790.37 2858.73 2973.62 3041.98 3156.87 EICHERMOT 16602.35 16058.18 16330.27 16589.13 16861.22 17120.08 GAIL 104.40 98.47 101.43 104.97 107.93 111.47 GRASIM 687.20 669.40 678.30 692.90 701.80 716.40 HCLTECH 534.35 510.38 522.37 543.18 555.17 575.98 HDFCBANK 1177.65 1162.68 1170.17 1177.58 1185.07 1192.48 HEROMOTOCO 2051.75 1989.18 2020.47 2065.23 2096.52 2141.28 HINDALCO 155.90 149.30 152.60 157.40 160.70 165.50 HINDUNILVR 2174.75 2111.98 2143.37 2186.38 2217.77 2260.78 HDFC 2175.75 2122.62 2149.18 2188.87 2215.43 2255.12 ICICIBANK 497.25 484.12 490.68 498.77 505.33 513.42 ITC 197.55 188.65 193.10 196.50 200.95 204.35 IOC 105.75 98.18 101.97 104.68 108.47 111.18 INDUSINDBK 1104.05 1069.42 1086.73 1102.37 1119.68 1135.32 INFY 731.70 702.10 716.90 736.85 751.65 771.60 JSWSTEEL 235.70 225.10 230.40 237.95 243.25 250.80 KOTAKBANK 1620.35 1585.05 1602.70 1631.40 1649.05 1677.75 LT 1187.55 1147.55 1167.55 1182.00 1202.00 1216.45 M&M 457.05 433.82 445.43 465.22 476.83 496.62 MARUTI 6283.10 5987.07 6135.08 6251.22 6399.23 6515.37 NTPC 106.55 102.52 104.53 107.37 109.38 112.22 NESTLEIND 15778.85 15413.58 15596.22 15862.63 16045.27 16311.68 ONGC 91.95 88.18 90.07 91.38 93.27 94.58 POWERGRID 181.50 175.83 178.67 181.98 184.82 188.13 RELIANCE 1328.65 1304.88 1316.77 1336.88 1348.77 1368.88 SBIN 303.00 292.70 297.85 306.25 311.40 319.80 SUNPHARMA 372.90 362.03 367.47 376.53 381.97 391.03 TCS 2000.15 1940.38 1970.27 2019.88 2049.77 2099.38 TATAMOTORS 128.95 119.32 124.13 131.87 136.68 144.42 TATASTEEL 40.80 38.27 39.53 41.27 42.53 44.27 TECHM 744.40 685.53 714.97 761.48 790.92 837.43 TITAN 1254.50 1218.57 1236.53 1253.62 1271.58 1288.67 UPL 519.70 494.17 506.93 526.77 539.53 559.37 ULTRACEMCO 4219.60 4137.10 4178.35 4241.25 4282.50 4345.40 VEDL 114.00 103.47 108.73 117.37 122.63 131.27 WIPRO 221.45 213.75 217.60 223.55 227.40 233.35 YESBANK 34.60 33.37 33.98 34.92 35.53 36.47 ZEEL 239.30 226.80 233.05 238.85 245.10 250.90 Source: Company, IndiaNivesh Research  Note: The levels for TATASTEEL are of TATASTEEL Partly Paid up Share Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing. )

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