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Nifty Outlook

Markets managed to end higher in a volatile trading session, thanks to firm global cues. Upbeat earnings announcements from the US markets set the tone in the beginning however choppiness in the index majors, especially from the banking pack, in the middle kept the participants on their toes. Consequently, the Nifty ended higher by 0.8% at 18,268 levels. Mostly sectoral indices traded in sync with the benchmark and closed in the green. The broader indices also witnessed a breather after five days of the slide and posted decent gains.

Indications are in the favor of further rebound however a lot would depend on the earnings announcements scheduled in the following sessions. We have some prominent names like Bajaj Auto, ITC, Indusind Bank, Maruti and LT who will announce their results on October 27. Besides, global cues would also remain in focus. Participants should maintain a positive yet cautious approach and prefer hedged positions.

News

* Canara Bank Q2FY22 net interest income (NII) was at Rs 6,273.8 cr as against Rs 6,304.9cr YoY. Its net profit was at Rs 1,332.6cr versus Rs 444.4cr. Gross NPA was at 8.4% and net NPA at 3.2%, QoQ.

* Kotak Mahindra Bank net interest income (NII) was up 3.2% YoY at Rs 4,020.6 cr for Q2FY22. It posted 7% fall in its standalone net profit at Rs 2,032cr YoY.

* Hikal Q2FY22 revenue was up 26.1% YoY at Rs 469.1 cr. Its net profit was up 63.3% YoY at Rs 44.1cr.

Derivative Ideas 

NIFTY FUT has added around 10% in open interest as fresh long build up was seen in November futures. Current chart pattern also indicates further levels in Index at around 18500 levels.

Strategy:- BUY NIFTY 18400 CE@38-45, SLOSS AT 10, TRGT 80.

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 1,014.85 TGT 1,237

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