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Nifty Outlook

Markets inched further higher and ended in the green for the third successive session, tracking firm global markets. After the initial uptick, the benchmark remained range bound till the end however movement across sectors kept the participants busy. Among the sectors, barring metals and media, all the indices ended higher with FMCG, PSU banks and realty being the top gainers. The broader indices continued their buoyancy and ended higher in the range of 0.9-1.3%. Amid all, the Nifty ended with gains of 0.7% to 17,072.60 levels.

Markets are taking comfort from their global counterparts, but it will be difficult to extend the rebound amid the updates on rising COVID cases. Participants should continue with a cautious approach and maintain their focus on stock selection. Apart from IT, we’re seeing select counters from pharma and FMCG also doing well. However, the underperformance of the banking pack remains the key concern. We believe a decisive move above 17,150 in Nifty and 35,500 in the banking index would trigger further rebound else profit taking would resume.

News

* Jindal Saw has entered into a joint venture agreement with Hunting Energy Services Pte Ltd., Singapore. A JV company will be incorporated in India with 51% shareholding to be held by the company and remaining 49% to be held by Hunting, with the object to set up a world class, state of the art precision machine shop to thread premium connections in India for Oil Country Tubular Goods including accessories for markets across the globe.

* Havells India announced its vision to bolster its Make in India strategy by showcasing its industry‐first ‘Industry 4.0’ manufacturing plant for Lloyd AC’s in Ghiloth, Rajasthan. Further, the company has also entered into production of washing machine at the same location.

* Transformers and Rectifiers announced it has been awarded orders of Transformers for total contract value of Rs 72cr from Gujarat Energy Transmission Corporation Ltd. With this order, the company’s order book as on date stands around Rs 816cr.

Derivative Ideas

CIPLA gained 2.25% and closed at 909.75 on 23rd Dec. The Scrip saw good buying in its Support zone of 880-885 Levels. We expect it to test its next resistance at 940 Level. We recommend to go Long in CIPLA.

Strategy:- BUY CIPLA@902-906, SLOSS AT 894, TRGT 925.

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

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