Markets surrendered yesterday’s gains and settled closer to the day’s low following weak global cues. The US Fed in its policy meet raised concern over the economic recovery which triggered a weak start in our market. Though the benchmark tried to recover multiple times during the day, profit-taking on every rise not only capped the upside but also pushed the index lower. Amid all, the Nifty index finally ended the session down by 0.8% at 11,516 levels.
The broader markets too ended in the red with losses in the range of 0.2-0.5%. Barring IT, all the sectoral indices ended with negative bias wherein realty, banking and capital goods were the top losers. We reiterate our view that a directional move in the markets seems difficult unless we see alignment between the Nifty and banking index. Meanwhile, traders should maintain their focus on the sectors which are attracting buying interest and plan their trades accordingly. IT and pharma are currently leading the pack and likely to continue with the upward bias. On the flip side, apart from the banking index, we may see profit-taking in select metal and auto names ahead.
* Ashok Leyland announced it has received a large order from a logistics start-up company, Procure Box. The company has placed an order of 1400 intermediate commercial vehicles for its fuel distribution business across 750 districts, in the country and it will be executed in the next 5-6 months.
* Metallurgical and material-handling business of L&T Construction has secured an order from Northern Coalfields ltd, a subsidiary of Coal India, for a coal processing and load out package to be installed at the Dudhichua Mines located in Uttar Pradesh.
* Dr. Reddy announced the launch of Over-the-Counter Olopatadine Hydrochloride Ophthalmic Solution (USP, 0.2% and 0.1%, the store-brand equivalent of Pataday®), the Eye Allergy Drop in the U.S. Market as approved by USFDA.
PEL FUTS added 8% in open interest addition as long buildup was seen in it in till closing time. Current chart pattern also indicates further up move in its price. We suggest buying PEL as per below levels.
Strategy:- BUY PEL BETWEEN 1365-1375 STOPLOSS AT 1340 TARGET 1430.
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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