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Nifty Outlook

Markets ended marginally up in a highly volatile trading session, taking a breather after the recent fall. The benchmark inched further lower after the flat start however recovery in the select index majors helped the index to recoup losses. Finally, the Nifty index closed around 17,266 levels. Amongst the sectors, a mixed trend was witnessed wherein realty, capital goods and industrials ended with losses while metal and PSU banking index posted modest gains. The broader markets remained under pressure as both midcap and smallcap ended lower by 0.8% and 1.8% respectively.

We’ve been seeing a roller coaster ride since the Union Budget and the scheduled MPC meet is likely to keep the volatility high. Besides, the global cues are also not portraying any favourable picture so participants should continue with the cautious stance and limit leveraged positions

News

* J Kumar Infra reported its numbers wherein revenue was up 18.2% YoY to Rs. 965 cr. Its Q3FY22 net profit came in at Rs. 58.7 cr as against Rs. 44.9 cr in the same quarter last year.

* HFCL has announced the signing of a distribution agreement with Ingram Micro India Private Limited (Ingram Micro), which has a distribution network having a far-reaching presence in India and SAARC countries.

* Escorts revenue was down 3% YoY to Rs. 1,958 cr. EBITDA was down 27.3% YoY to Rs. 264.6 cr. Its net profit was down 28.2% YoY to Rs. 201.5 cr.

Derivative Ideas

SBIN shed 0.36% and closed at 531.35 on 8th Feb. The stock faced the supply at exactly in 540-545 zone where it faced the resistance earlier and has seen a cut of nearly 3% after that. With SBIN trading below its 5 EMA, we believe the counter is poised to test its support at 500. We recommend to go Short in SBIN with the PE option.

Strategy:- BUY SBIN 520 PE @ 7-8, SLOSS AT 4, TRGT 15.

Religare New Year Pick -  Sudarshan Chemical Industries Ltd.

Sudarshan Chemical Industries (SCI) is one of the leading producers in India and has been serving for over 70 years in Indian and global pigment markets. It manufactures an extensive range of organic, inorganic, effect pigment and dispersions. It has two manufacturing facilities located at Roha and Mahad in Maharashtra, India and 2 dedicated R&D centre globally. In addition, it exports to 85+countries and has 10 sales offices in India, US, Europe, China, Mexico, and Japan.

We believe SCI is well placed to capitalize opportunities in the global as well as Indian pigment sector driven by positive industry growth trend, high entry barrier in the sector and wide range of products in their portfolio. Besides, they’re highly cost competitive amongst the peer group. On the financial front, the company’s track record has been decent and we have estimated its revenue and PAT to grow at a CAGR of 14.5% and 14% over FY22-24E. We have a positive view on the company and have initiated a Buy on the stock with a target price of Rs 720.

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