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Nifty Outlook

Markets traded under pressure and lost over half a percent, pressurised by weak global cues. After opening with a down gap, the benchmark hovered in a range and settled closer to the lower band. Consequently, the Nifty closed at 16,450 levels, down by 0.7%. The decline was broad-based as all sectors, barring FMCG, ended lower wherein the metal pack was beaten down badly. The pressure continued on the broader front and the indices lost in the range of 2-2.2%.

The possibility of the US Fed’s stimulus tapering would start as early as this year spooked the markets across the globe including ours. Besides, participants also took note of a sharp rise in global COVID cases, adding to the pressure. We may see a further slide next week and the Nifty may test level closer to 16,200. In case of a rebound, 16,550-16,700 zone would act as hurdles. Considering the scenario, we suggest maintaining positions on both sides and prefer index majors over the others.

News

* Wipro announced the launch of its @now Studio in partnership with ServiceNow to support digital transformations for customers, increase innovation, and develop unique industry solutions.

*  Zydus Pharmaceuticals Inc, USA (a 100% subsidiary of Zydus Cadila, announced that it has signed a license and supply agreement with CHEMI SpA of Italy, a subsidiary of Italfarmaco Group, to launch the generic equivalent of Sanofi Aventis’s branded product Lovenox® in seven dosage strengths in the United States.

* Steel Strips Wheel receives new orders worth ~USD 11mn from Western Hemisphere. It will complete its execution by December 2021 from its Chennai & Dappar plants.

Derivative Ideas 

NIFTY FUTS added around 2.4LKH in open interest in the Sep seriess as LONG buildup was seen in it. Current chart pattern also indicates further up move in its price. We suggest buying in NIFTY16450 STRIKE 26 AUG CE@58-65 SLOSS AT 15 TRGT 143.

Strategy:- BUY NIFTY 26 AUG 16450CE@58-65 SLOSS AT 15 TRGT 143

Investment Pick - Britannia Industries Ltd.

Britannia Industries (BRIT) posted a muted set of numbers for Q1FY22. Its revenue was down 0.5% YoY to Rs 3,403.5cr. Its EBITDA and PAT de-grew by 22.8% and 28.7%YoY. The company’s EBITDA and PAT margins too were severely impacted as it declined by 469bps and 449bps due to high expenses. In the near term, high raw material prices and slowing demand will continue to impact the performance. However, going forward, its focus would be on innovating products, improving margins via cost efficiency measures and gaining market share. Maintain Buy.

BRIT is one of the leading FMCG brands in India with a strong focus on innovation, brand building and expanding distribution reach. It is continuously gaining market share via product launches and re-launches in domestic and international markets. Besides, to manage profitability and margins, the company will drive cost efficiencies and take price increase once the demand scenario stabilizes. On the financial front, the company has a strong balance sheet and decent cash flow which is positive. From a long term perspective, we maintain “buy” rating with a target price of Rs 4,265.

Buy Britannia Industries Ltd @ 9-12 Months CMP 3,895.95 TGT 4,265

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