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Nifty Outlook

Market traded volatile and ended marginally in the green amid mixed cues. After the flat start, the benchmark inched lower and traded lackluster in the first half. However, buying in the IT, metal and pharma majors combined with a rebound in banking and financials triggered a surge as the day progressed. Consequently, the Nifty ended at 16,295 levels, up by 0.2%. Profit taking continued on broader front wherein midcap closed flat and small cap ended lower by 0.5%.

All eyes are on the RBI monetary policy review outcome which is scheduled on Friday. The decision of status quo on key rates is already priced in however their stance on inflation and commentary of growth will be in focus. We reiterate our view to focus on the selection of stocks as we’re seeing selective participation, largely led by the index majors and other heavyweights. Among the sectors, we suggest giving preference to banking, financials, metal and select IT counters for short term buying.

* Escorts posted Q1FY22 results wherein revenue grew by 57.4% YoY at Rs 1671cr. The net profit rose 101% to Rs 185cr YoY.

* Alembic Pharmaceuticals announced that it has received final approval from the USFDA for its Abbreviated New Drug Application for Clomipramine Hydrochloride Capsules USP, 25 mg, 50 mg, and 75 mg.

* Birla Corporation Q1FY22 revenue was up 43.1% YoY at Rs 1,749cr. Its net profit came in at Rs 141.5cr versus Rs 66cr YoY.

Derivative Ideas 

BANKNIFTY FUTS added around 10% in open interest as LONG buildup was seen in it. Current chart pattern also indicates further up move in its price. We suggest buying in BANKNIFTY 37000 CE as per below levels.

Strategy:- BUY BANKNIFTY 37000 CE@40-50 SLOSS AT 20, TRGT 105.

Investment Pick - CSB Bank Ltd.

Established in 1920, CSB Bank Ltd (known as The Catholic Syrian Bank) is one of the oldest private sector banks in India. It has a significant network in Kerala, Tamilnadu, Karnataka and Maharashtra. At present, 90% of the branches are in these four states and the remaining 10% is spread across other states in India. The bank operates mainly in four business areas namely SME banking, retail banking, wholesale banking and treasury operations.

We believe CSB bank is well placed as it has a strong gold loan book, prudent management team and steady financials with improved asset quality. Further, a well-planned strategy like betting on less risky businesses such as agriculture, food & service, etc. and avoiding risky unsecured loans augurs well for future growth. From a long term perspective, we are optimistic on the company’s growth prospects thus initiating a Buy on the stock with a target price of Rs 432.

Buy CSB Bank Ltd @9-12 Months CMP 341.55 TGT 432

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