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Nifty Outlook

Markets drifted further lower and lost nearly half a percent, in continuation to the prevailing corrective phase. Firm global cues triggered a gap up start in the index but it couldn’t hold for long and slipped sharply lower as the day progressed. The negative reaction was mainly in response to the recent earnings announcements which failed to impress the street. Things turned slightly in the favor of bulls with a strong surge in the banking pack in the last hour, which marginally trimmed the loss in the index. Among the benchmark indices, the Nifty index ended lower by 0.4% to close at 18,200 levels. The broader markets also traded in tandem with the benchmark and ended lower. On the sector front, a mixed trend was witnessed as banking, auto, oil & gas were the top gainers whereas IT, metal and telecom were the top losers.

The recent correction can be largely attributed to earnings season as expectations are high. Besides, news of the surge in COVID cases in various parts of the world and a continuous uptick in crude oil prices are further adding to the anxiety. We reiterate our cautious view on markets and suggest preferring hedged positions until the market stabilizes.

News

* Asian Paints reported its numbers wherein revenue was up 32.6% YoY to Rs. 7,096 cr. However, its net profit was down 29% YoY to Rs. 605 cr.

* KPIT Technologies and ZF Group announced that they will cooperate for joint development for an industry leading middleware solution for the mobility ecosystem.

* IDBI Bank reported its numbers wherein NII was up 9.4% YoY at Rs 1,853.6 cr versus Rs 1,694.2 cr. Its net profit rose 74.8% YoY at Rs 567.1 cr versus Rs 324.4 cr.

Derivative Ideas 

HCLTECH FUT has added around 9% in open interest as fresh long buildup was seen in it. Current chart pattern also indicates further up move in the stock. We suggest buying in cash market as below levels.

Strategy:- Buy HCLTECH 1200-1205, sloss at 1180, trgt 1240.

Investment Pick - The Ramco Cements Ltd

Ramco Cements Ltd (TRCL) is the fifth-largest cement producer in India and the most popular cement brand in South India. The company is six decades old and manufactures ready mix concrete, dry mortar products and various grades of cement. It has a presence across ten states of India with four integrated plants and six grinding units. Apart from South India, it is growing its presence in East India, Sri Lanka and the Maldives.

We have a positive outlook given its strong brand name, leadership position in South India and product portfolio. In addition, its focus on expanding capacity, increasing utilization levels and cost-saving initiatives would further help in improving profitability. We estimate its Revenue/EBITDA/PAT to grow at a CAGR of 12%/13.5%/15.5% respectively over FY21-24E and have initiated a Buy on the stock with a target price of Rs 1,237.

Buy - The Ramco Cements Ltd @ 9-12 Months CMP 976.85 TGT 1,237

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