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Published on 12/07/2019 9:40:37 AM | Source: Religare Securities Ltd

We expect the earnings season to be tepid which will lead to stock specific volatility - Religare Sec

Posted in Market Outlook| #Market Outlook #Religare Securities Ltd

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Nifty Outlook

The Indian markets staged a smart recovery in today’s session aided by supportive global cues on hopes of a rate cut by Fed in its July meet. The Nifty index opened in the green and touched a high of 11,599 before closing higher by 84 points at 11,583. Amongst the broader market indices, ‘BSE Midcap’ and ‘BSE Smallcap’ too ended higher by 0.6% and 0.4% respectively. Amongst the sectoral indices, healthy buying was seen in almost all the sectors with Realty, Metal and Auto gaining highest in the range of 1.4-1.8%.

We expect the markets to remain choppy in the near term in the backdrop of weak domestic cues. Given the economic slowdown we expect the earnings season to be tepid which will lead to stock specific volatility. Further, CPI inflation and IIP data (scheduled tomorrow) will provide direction to the markets. On the global front, on-going geo-political issues between US and Iran as well as crude oil prices and currency movement will keep the market participants on edge. 

Stock in News

* CCL Products’ Q1FY20 revenue declined by 7% YoY to Rs 273cr. On operational front, EBITDA grew by 9% YoY to Rs 69cr while margins improved by 377bps to 25.4% on account of lower material cost. However, PAT declined by 12% YoY to Rs 35cr on back of higher tax expense.

* Bharat Forge announced that Kalyani Rafael Advanced Systems (KRAS) received a US$ 100mn order from Rafael for manufacturing 1,000 BARAK-8 MRSAM missiles' kits. KRAS is a 49:51 JV between Rafael Advanced Systems and Kalyani Strategic Systems Ltd., a subsidiary of Bharat Forge.

* L&T’s construction arm bagged significant orders worth Rs 1,000-2,500cr from various domestic and international clients. Power T&D business secured orders for urban electricity distribution and construction of transmission lines in India while on international front, the company received orders from UAE, Ethiopia and Uganda. Heavy Civil Infrastructure business bagged a defense order from a PSU, while the water treatment business received an order from the Gujarat Water Infra Ltd. 

 

Religare Super Ideas

State Bank of India (SBIN)

Buy State Bank of India Ltd  @ 358-361 Stoploss 350 Target 380 CMP 363.20

Unlike other PSU banking majors, SBIN has been trading strong while holding firmly on all the time frames chart. After marginal retraced from its record high, it has swiftly rebounded of late and likely to continue the positive momentum ahead. The chart pattern combined with positioning of oscillators is also pointing towards making a new record high soon. We advise initiating fresh longs in the given range.

 

UPL Limited (UPL)​​​​​​​

SELL UPL Ltd FUTS @ 638-642 Stoploss 653 Target 608 CMP 634.30

UPL has been witnessing profit taking for last one week, after making a new record high of late. Currently, it’s trading on the verge of fresh breakdown. We advise creating fresh shorts in the mentioned range.

 

Derivative Ideas

TATAELXSI

added around 7% in open interest as short buildup was seen in it in previous session. Current chart pattern also indicates further down move in its price. We suggest buying TATAELXSI 840 PE as per below levels.

Strategy:- BUY TATAELXSI 840 PE BETWEEN 18-19, STOPLOSS AT 10, TARGET 35.

 

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