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Published on 22/09/2020 9:55:17 AM | Source: Religare Broking Ltd

Markets started the week on a feeble note and lost nearly 2.5% - Religare Broking

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

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Nifty Outlook

Markets started the week on a feeble note and lost nearly 2.5%, following weak global peers. The first half was lackluster however significant selling pressure was witnessed in the latter half and Nifty settled around the day’s low at11,228 levels. The broader markets too followed suit as both the Midcap and Smallcap index ended lower by 3.7% each. On the sector front, except IT which ended flat, all the other indices ended with sharp losses wherein Realty, Telecom and Metal were the top losers.

We feel the rising COVID-19 cases combined with the correction in the US markets spooked the investors and it may deteriorate further if Nifty slips below 11,200. The next major support would come close to 10,800 zone. Since we’re in the expiry week, traders should be more cautious and we suggest preferring hedged positions. Investors, on the other hand, should use this fall as an opportunity and gradually accumulate quality stocks.

 

News

* Steel Strip Wheels announced that it has received orders from US caravan trailer market. Steel Strips It has received export orders of nearly 10,000 wheels for US caravan trailer market, to be executed in the month of October from its Chennai plant.

* Ramco Systems announced that it has signed an agreement with CHI Aviation for delivering the full suite Ramco Aviation Software, comprising of Maintenance & Engineering, Supply Chain, MRO Sales, Flight Operations, Manufacturing, and Finance.

* HCL Tech announced that it will acquire Australian IT solutions firm DWS Ltd, a move that will help the Indian company strengthen its position in the Australia and New Zealand market.

 

Derivative Ideas

AXISBANK FUTS added 11% in open interest addition as short buildup was seen in it in till closing time. Current chart pattern also indicates further down move in its price. We suggest buying AXISBANK 410 PE as per below levels.

Strategy:- BUY AXISBANK 410 PE BETWEEN 3.50-3.70 STOPLOSS AT 0.50 TARGET 8.

 

Investment Pick - Godrej Consumer Products Ltd.

* Godrej Consumer Products Ltd (GCPL) reported better than expected numbers for Q1FY21 as compared to other peers. Its revenue de-grew by 1% YoY to Rs 2,327 cr as it witnessed mixed performance across markets. On operational front, EBITDA improved by 3.7% YoY to Rs 472cr, while EBITDA margin increased 90bps mainly due to lower advertisement cost (down by 45% YoY) and other expenses (down by 2.2%). Further PAT de-grew by 3.2% YoY to Rs 394.9cr, on account of exceptional item in this quarter and tax adjustment in Q1FY20.

* In the near term GCPL’s discretionary products would face challenges however larger part of portfolio i.e. hygiene and household insecticides products would continue to witness strong demand in the coming quarters. Thus from a medium to long-term growth prospects, we maintain a positive view on GCPL. Going forward, the company’s focus would be on expanding portfolio in both domestic and international markets by launching innovative products, cost optimising to protect margins and lastly investing more behind distribution and supply chain channels such as e-commerce platforms as well as via chemist would support growth. Hence we maintain a Buy on the stock with a revised target price of Rs 845.

 

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