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Nifty Outlook

Markets extended the prevailing up move and gained nearly a percent, tracking favorable local cues. Participants reacted positively to the macroeconomic data (IIP and CPI Inflation) in early trade which further strengthened with buying in auto, metals and energy stocks as the session progressed. Consequently, the Nifty ended with gains of 0.9% to close at 18,162 levels. A mixed trend was witnessed on the broader front wherein the midcap ended up by 1.5% while the smallcap closed flat.

Markets will first react to Infosys, Wipro and Mindtree numbers on Thursday. Besides, we’ve weekly derivative expiry which will induce volatility in the market.

We were eyeing 18,200 in Nifty and it has almost tested the same. It may see some consolidation but the bias would remain on the positive side. We recommend continuing with the “buy on dips” approach with a focus on stock selection.

News

* ABB announced that it will provide JSW its technical expertise to set up a 24 km long conveyor system saving nearly 3000 road trips and reducing carbon emissions significantly.

* Hero MotoCorp has partnered with Gilera Motors Argentina to reinvigorate and expand its operations in Argentina – one of the key markets in South America.

* UltraTech Cement announced that it has signed a non-binding memorandum of understanding with Punjab Renewable Energy Systems Pvt. Ltd. This deal will help UltraTech to significantly scale-up the use of biomass in place of fossil fuel like coal in manufacturing operations.

Derivative Ideas 

NIFTY FUT has added around 1% in open interest as fresh long build up was seen in it. Current chart pattern also indicates further upmove in its price. We suggest buying call option as per below levels.

Strategy:- Buy NIFTY 21st OCT 18200 CE@110-120, sloss at 85, trgt 150.

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 982.7 TGT 1,237

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