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Nifty Outlook

Markets extended the rebound for the second consecutive session and gained over a percent, tracking firm global markets. After a gap-up opening, the benchmark continued to trade in a range but the bias remained on the positive side. Buying in select heavyweights from banking and energy space helped the index to close around the day’s high as well. Consequently, the Nifty ended around 16,955 zone; up by 1.1%. All the sectoral indices ended in the green with realty, pharma and metals being the top gainers. The broader indices, midcap and smallcap also ended with strong gains in the range of 1.7-2.2%.

We’re seeing respite after the recent fall and participants should approach this with caution. Nifty may extend the rebound and the zone closer to 17,150 would now act as a hurdle. Importantly, the participation of the banking index is critical for any sustained move while other sectors are doing their bit. Amid all, the news related to the new COVID variant will remain on the market radar.

News

* The construction arm of L&T has secured a significant order for its buildings & factories business from a reputed developer to construct one of the largest residential townships in Bengaluru. The total built up area will be 13.43mn sq.ft. and it is to be completed in 42 months.

* Zydus Cadila has received tentative approval from the USFDA to market Pimavanserin Tablets, 10 mg which is used to treat the symptoms of a certain mental/mood disorder (psychosis) that might occur with Parkinson's disease.

* PNC Infratech announced it has received Letter of Award by NHAI for project collection of user fee at Eastern Peripheral Expressway Fee Plazas on National Highway No.NE II in the States of Haryana and Uttar Pradesh on EPC mode for a period of one year which is worth Rs. 369cr.

Derivative Ideas

IT Sector is expected to outperform the benchmark in the near term. Our pick from the IT sector is TCS . The Scrip gained 0.62% and closed at 3630.75 on 22nd Dec. It took support around 3550-3570 Levels. Now fresh Longs is being seen in TCS Futures. We recommend to go Long in TCS.

Strategy:- BUY TCS@3615-3625, SLOSS AT 3575, TRGT 3710.

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 :-  589.75 Recommendation Price 605 Target 705 Duration 9-12 Months.

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