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Nifty Outlook

Markets extended gains and rose nearly half a percent amid mixed cues. Initially, weak global cues were weighing on the sentiment however surge in select index majors especially from the banking space gradually pushed the index higher. Consequently, the Nifty closed near day’s high at 16,340.5 levels, up by 0.4%. On the sector front, a mixed trend was seen wherein realty, auto and PSU banks were top gainers while IT, pharma and FMCG were the top losers. Meanwhile, the broader indices outperformed and ended higher in the range of 0.7-1.1%.

Markets are taking comfort from global indices and buoyancy in the banking pack, which holds considerable weight, further adding to the positivity. The recent bounce in laggards like IT and metal has further eased the pressure. We maintain our positive yet cautious stance and prefer sectors like auto, FMCG and banking for long opportunities.

News

* HUL reported Q1FY23 numbers wherein revenue grew by 19% YoY to Rs 14,624cr. Volume growth stood at 6%. EBITDA and PAT margin came in at 23.3% down by 69bps and 16.3% down by 87bps YoY, respectively.

* Ambuja Cement reported its Q2CY22 numbers wherein standalone revenue grew by 1.7% QoQ to Rs 3,993cr. Its EBITDA stood at Rs 685cr, down by 28.7% while margin came in at 17.1%, a decline of 1,133 bps.

* HDFC Life Insurance Q1FY23 value of new business grew 25% YoY at Rs 510cr. VNB margin was at 26.8% against 26.1% (YoY). Total annual premium equivalent was up 22% YoY at Rs 1,904cr. India embedded value was up 9% YoY at Rs 29,709cr.

Derivative Ideas

NIFTY gained 0.38% and closed at 16340.55 on 19th July. The index after opening negative amid weak global cues managed to trade positive and closed near day's high. The move happened on the back of the addition of Fresh Longs in its FUTS and heavy PE writing. 16300 PE added 65k odd contracts making 16200-16300 the level to watch out for support for this weekly expiry. We expect NIFTY to hold the support and trade positive in the range of 16200-16500 in the short term. We thus suggest selling PE as per the given levels.

Strategy:- SELL NIFTY 21 JUL 16100 PE@38-40, STOP LOSS 60, TARGE 5.

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