CONVICTION BUYS ON MARKET CORRECTION

Large Cap					Mid Caps
Stocks	CMP (Rs)	TP (Rs)	Upside		Stocks	CMP (Rs)	TP  (Rs)	Upside
Axis Bank	492	660	34%		LIC Housing Fin	440	570	30%
Ultratech Cement	2,940	3,887	32%		Mindtree	1,340	UR	NA
Bharti Airtel	350	490	40%		SKS Micro Fin	463	650	40%
Maruti	4,330	4,700	9%		Cummins	1,050	UR	NA
Adani Ports	340	400	18%		Dish tv	100	127	27%
Zee Ltd	370	430	16%		Praj Industries	80	125	56%
Aurobindo	740	825	11%		Havells	256	Not Rated	NA
Tata Chem	395	560	42%		Finolex	230	Not Rated	NA

Large Cap Stocks:

Axis Bank- Best among large banks for macro recovery: 1. We estimate Axis to deliver ~18% credit growth & PAT CAGR of 16% and RoA of 1.75% over FY15-17; 2. Incremental stress in FY16 should be lower than Rs 5700cr, whereas credit-cost guidance stands at 80-90bps vs. 75bps in FY15. The outstanding contingent provision of Rs 1250cr can provide cushion to earnings from any major asset-quality shocks. 3. The bank’s exposure to steel sector is not a big concern ass 64% of its is to companies with a rating of A+. We believe that exposure to some of the lower rated corporates (~Rs 30bn) can be refinanced under the 5/25 scheme; hence, we do not see major headwinds in this sector’s portfolio near term. At the CMP, P/B of 2x FY17E maintain Buy, target of Rs 660.

+UltraTech Cement: TP Rs3,887/- (+36%):UltraTech is best placed amongst all cement majors and will benefit the most from an economic recovery. We may continue to see a delay in terms of delivery of volumes, but with its bargaining power, UltraTech should see consistent growth in earnings driven by volume growth. UltraTech has been reporting better stability in earnings compared to peers. Scale efficiencies will be a key in driving valuation multiples in the longer term

+Bharti Airtel : Holds largest spectrum and only Pan india player with 3G & 4G footprint. The planned sale of operations in four African countries is a positive should help the company to deleverage its B/s. Other business segment (i.e. DTH &  Broadband ) will enable the company to launch triple/quadruple play services to get higher wallet share of the customer.

+MARUTI: Post a sharp fall of 7% yesterday, we reiterate our BUY stance and highlight Maruti as our top pick to play a recovery in Indian automotive as: (1) the company is in the midst of a best model cycle, (2) strong new products pipeline, (3) recovery in urban demand, (4) slow and steady decline in discounts, (5) robust margin expansion, and (6) market share wins. The stock trades at 18x our FY17 earnings, reiterate BUY with a target price of Rs4,700

+Adani Ports: Virtual monopoly in the Ports sector & the best plays on macro recovery and GDP growth in India, with ports operations spanning across both the coastlines covering all major locations- ADSEZ is all set to show strong cargo growth- 24% CAGR FY13-FY17. With recently simplified group structure its easier to evaluate and recent entry into Nifty & increased MSCI weight, it will be a focus stock. We reiterate BUY with TGT of Rs400/sh; Time to add on this correction.

+ZEE: Ad revenue growth to surprise positively: Structural drivers such as (1) higher ad spend by FMCG players, (2) recovery in interest-rate sensitive sectors, and (3) continued ad-spend by e-commerce players will also aid in robust ad revenue growth in the next couple of years. : We expect domestic subscription revenue to grow at a healthy 14% for FY15-17E. Growth outlook for subscription continues to be robust on (1) strong adoption of DTH platforms and 5-6% annual uptick in ARPU, (2) digitization of phase-3 and phase-4 markets, and (3) full-fledged implementation of tiering/channel packages in phase-2 markets.

+ARBP IN: BUY with TP Rs 825 : Led by strong US sales with improving product mix, EU seeing profitable growth, we estimate 300bps expansion in margins (to23.9%) and 21% CAGR in earnings (EPS of Rs 39.2) over FY15-17. Moreover, the INR 1 depreciation vs US$ from the assumed rate of 62 (now 66+) would have a positive impact of ~5% on ARBP’s near-term earnings (implying ~20% earning surprise). Given the fact, we belive today’s price correction of ~10% is unwarranted for ARBP and we re-iterate BUY with the prefixed price target of Rs 825 (i.e 21xFY17).

+Tata Chemicals: PT Rs 560 (+40% upside): Domestic soda ash/salt/ fertilizer business earnings to improve led by fall in coal/freight costs. Soda ash prices remain protected for FY16E. As for FY17e, while concerns on fall in soda ash prices have emerged, we see freight (impacts natural soda ash) and energy (synthetic soda ash) both falling in tandem with fall in soda ash prices protecting the margins. Its intent to sell fertilizer business will help it concentrate on high-growth opportunities and reinvest capital into higher-return businesses. Improving capital discipline and better earnings mix (rising share of resilient consumer businesses) should result in higher returns; a rerating seems imminent. Its unvalued 2.5% holding in Tata Sons (worth Rs 80bn) and attractive valuations (9x FY17 PER) makes a persuasive investment case.

Mid Cap Stocks:

+SKS Micro Finance: A favorable operating environment, strong business and earnings, and a superior returns ratio warrant a premium valuation. We believe that high operating cost and regulated margin will restrict new entrants. Due to the unsecured nature of the business, only a diversified portfolio can sustain any credit risk. As SKS is an established player with a well- diversified presence, sizeable loan portfolio, and is the largest NBFC MFI, it is in a sweet spot to ride the microfinance growth cycle.  SKS’ topline growth will mirror its loan-portfolio growth (70% CAGR over FY15-17), driven by a rise in the proportion of long-term loans.  At its CMP, the stock trades at 4.42x FY16 ABVPS of Rs 100 and 3.4x FY17 ABVPS of Rs 129. We have a BUY rating with price target of Rs 650 per share (+47% upside).

+LIC Housing Finance: Correction Overdone, offers value. Likely beneficiary of softening interest rate scenario. Buy with a target of Rs 570

+Mindtree: One of the most levered name in IT to the INR-USD equation with 50bps margin recovery for every 1% USD/INR depreciation. MTCL has the right mix of emerging businesses – digital (35%) and ER&D (20). WE believe its likely to break in to the top league after Tech Mahindra. Expect revenue & Earnings CAGR of 18% over FY15-17E — highest in our coverage universe. Expect scope for earnings revision & rerating with INR below 63 lvls. Reiterate BUY

+Cummins India (TP:1048): Exports to see strong growth over the next few years as the MHP and LHP DG exports gain traction; Domestic DG industry has bottomed and is expected to see a recovery from Q3-Q416 onwards; Margins to led by higher indigenization coupled with increased volumes will drive operating leverage. We have a BUY with TP of Rs1048.

+ DishTV : Strong ARPU & Phase 3 digitalization story to continue:ARPU momentum to continue - see 6% CAGR over FY15-17. Phase-3/4 of digitization to aid momentum; Dish to add 3.1mn subscribers over two years. Stable content cost to aid strong EBITDA growth – expect EBITDA CAGE of 28% from FY15-17

+Praj Industries (Rs 78): Multiyear growth story playing out as expected. We now expect operating leverage to play out with improving return ratios and cash flow. At its CMP of Rs 78, the stock is trading at 12x FY17 earnings and P/BV of 2.2x FY15. Praj aspires to be a major player in environment, energy, and agri-process led applications. The commercial success of the second generation of bio-ethanol plants would be a game changer for the company. We maintain our valuation at 18x FY17 with a target price of Rs 125 per share.

+Havells (HAVL IN) & Finolex Cables (FNXC IN) :Strong product basket, solid balance sheet, robust cash flows. Core portfolio growing even in tough economic environment and sales volumes set to improve over FY16-17 as govt. employees incur household capex.Both stocks have corrected over 30% over the last few months without any deterioration in operating metrics. Since we don’t cover the stocks yet, we don’t have a TP, but we are extremely +ve on the prospects

F&O Cues/Market View: SgxNifty trading up ~1.5% inline with regional peer indicates underlying Nifty opening in positive after one of the most craziestMonday rout. Dow witnessed a sharp 1000 pts fall ystd at open traded with massive swing and closed 588 pts down. US markets crash is harshly reminiscent of the Wall Street crash of 1929 - as per Experts. Yest's Mayhem witnessed massive unwinding of positions in FNO segment. SSF positive nos indicates huge unwinding of rev arb position where  in one sells in Cash segment and unwind SSF sell positions. May be due to which we see high selling nos in Cash segment from Fiis funds. Hence in cash we saw normal selling coupled with FNO (SSF) unwinding. There is lot of fear in the street.. Turnaround won't be that easy. Every rise will create doubt. Be choosy, Buy (if want to) Defensive, FMCG, Cap Goods, Banks etc. INVIX was up 64% to 28.13 indicates high volatility ahead.

FII/DII Figures in "Cr"	Prev Day	MTD	CYTD
FII	-5247	-9385	18825
DII	4097	8397	35277
Sensex (%)	-5.94	-8.44	-6.42
Excluding figures of IOC OFS

Moody’s +ve outlook take on India: India to benefit from low commodity prices and its reliance on domestic factors along with tighter fiscal and monetary policy stance, will protect the economy from subdued global economic outlook.