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Nifty Outlook

Markets rebound sharply after yesterday’s slide and gained nearly a percent, following firm global cues. The benchmark opened gap up and hovered in a narrow range till the end. Finally, the Nifty index ended higher by 0.8% at 17,792 levels. Amongst the sectors, except telecom, all the other indices ended in green wherein consumer durables, auto and realty were the top performers. The broader market indices also traded in tandem and gained in the range of 1.4%-1.7%.

Now, all eyes are on the outcome of the MPC’s monetary policy review meet and the result of the IT major TCS scheduled on Friday. We expect a status quo on key rates this time however commentary on inflation and growth would be actively tracked. Earnings would further add to the choppiness. Amid all, we feel it’s prudent to maintain a cautious approach and prefer hedged positions.

News

* Piramal Enterprise has approved demerger of pharma operations. For one share held in the company four shares of Piramal Pharma will be issued.

* Sobha announced that the company has achieved best-ever sales volume at sustainable price realisation.

* Électricité de France S.A. (EDF), headquartered in Paris, France, and NTPC Ltd. signed a Memorandum of Understanding to explore potential power project development opportunities in the Middle East, Asia, Europe and Africa

Derivative Ideas 

NIFTY FUT has shed around 3% in open interest as short covering was seen in it. Current chart pattern also indicates further up move in its price. We suggest buying call option as per below levels.

Strategy:- Buy NIFTY 14th OCT 18000 CE@40-45, sloss at 20, 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 1,014.55 TGT 1,237

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