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Nifty Outlook

Markets ended almost unchanged amid volatility, taking a breather after the recent fall. After the weak start, the benchmark gradually recovered as the day progressed, thanks to the rebound in index majors from across the board. However, the profit taking at higher levels capped the upside till the end. Amid all, the broader markets underperformed wherein midcap and smallcap ended lower by 1.4% and 2.7% respectively. Amongst the sectors, realty, oil & gas and pharma were the top losers while the IT index gained nearly a percent.

We expect choppiness to remain high citing the prevailing uncertainty around the new COVID variant. Besides, on the domestic front, macroeconomic data like GDP numbers, core sector data and auto sales figures will further add to the volatility. We reiterate our cautious stance and suggest preferring hedged positions.

News

* Welspun Corp has acquired the entire share capital of Mahatva Plastic Products and Building Materials, a newly incorporated company with objects of Polymer products business, from an unrelated party at a consideration of Rs 10,000 with an intention to make it a Special Purpose Vehicle for organic / inorganic growth.

* Man Industries has received new orders worth approximately Rs 325 cr. With these new orders the unexecuted order book as on date stands at approximately Rs 1650 cr to be executed in six to seven months.

* Salasar Techno Engineering has secured a purchase order worth Rs 170 crore from RITES for railway electrification of 25 kV OHE works including TSS General electrification, civil engineering works including tower wagon shed, service building, staff quarters, track works, and signaling & telecommunications works on existing track of single line section of Udaipur city - Himmatnager 210 RKM section of Ajmer division of North western railway

Derivative Ideas

NIFTY gained around 0.16% on 29th Nov. Bias should be on the Negative Side till it trades below 17250.

Strategy:- SELL NIFTY (2 Dec) 17400 CE@38-40, SLOSS AT 58, TRGT 10.

Investment Pick - Kansai Nerolac Ltd.

Kansai Nerolac Paints Ltd (KNPL) posted mixed numbers for Q2FY22. Its revenue grew by 17.1% YoY to Rs 1,619.6cr, while its EBITDA and PAT witnessed de-growth of 39% YoY and 48% YoY. Demand from decorative was steady while lower demand from the industrial segment impacted the performance.

KNPL is one of the leaders in the industrial paint segment wherein it garners 40-45% revenue from the industrial segment while remaining from decorative. Going ahead, the company’s strategy is to innovate products in both its segments, expand reach, and focus on product mix as well as gain market share from unorganized segments. Besides, focus to remain on managing cost and operating efficiency which will help in margin growth. Over the medium to long term, we have a positive view on the stock and have maintained a buy with a target price of Rs 705.

Buy - Kansai Nerolac Ltd. @ CMP :- 569.75 Recommendation Price 605 Target 705 Duration 9-12 Months.

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