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Nifty Outlook

Markets extended rebound for the third successive session and gained over half a percent. Supportive global cues led to a firm start and the dovish stance from the RBI further aided sentiment. Consequently, the Nifty index closed around 17,605; up by 0.8%. All the sectoral indices ended in green wherein metal, banking and realty were among the top gainers. Amid all, the broader markets underperformed but ended with 0.4% and 0.2% gains.

With monetary policy meet behind us, the focus would shift to earnings as we head into the last leg. Besides, global cues will also remain on participants’ radars. In the prevailing consolidation phase, we reiterate our cautious stance and suggest focusing more on risk management.

News

* Alembic Pharma reported its Q3FY22 wherein revenue was down 3.2% YoY. EBITDA was down 30% and net profit was down 39.7% YoY.

* SML Isuzu revenue grew by 35.9% YoY to Rs. 250 cr as against Rs. 184 cr in the previous quarter. It posted a net loss of Rs. 25.8 cr as against a loss of Rs. 26.4 cr.

* Lupin has entered into a distribution agreement with Medis for Lupin's orphan drug NaMuscla (mexiletine). Medis will commercialize NaMuscla for the symptomatic treatment of myotonia in adults with non-dystrophic myotonic (NDM) disorders in Central and Eastern European countries. NaMuscla is the first and only licensed product for this indication.

Derivative Ideas

NIFTY FUTURES gained around 5% as long buildup. The index is likely to be in 17400-17800 range. Vix is likely to drop to 14% levels

Strategy:- Sell Nifty 17th Feb 17000 PE@28-30, sloss at 45, trgt 10.

Religare New Year Pick -  Sudarshan Chemical Industries Ltd.

Incorporated in 1999 and part of the INOX Group, INOX Leisure Ltd. (INOX) is the second-largest multiplex chain operator in India. The company’s screen additions have grown multi-fold over the past 10 years, from 91 screens in FY09 to 667 screens currently (Q3FY22 end) having a wide presence in ~70 cities with a seating capacity of 1,50,000+.

We like INOX in this space given its focus on enhancing the consumer experience, continued emphasis on expansion, effort on increasing spending per head, and increasing footfalls. We recommend a Buy on the stock and arrive at a target price of Rs. 495 (target EV/EBITDA multiple of 13x). Some of the key risks to our estimates include a) resurgence in COVID cases and b) slower than expected revival in footfalls.

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