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Nifty Outlook

Markets remained volatile and settled with a cut of over half a percent, in continuation to the prevailing trend. Firm global markets triggered an uptick in early trade but it couldn’t sustain for long and gradually slipped lower as the day progressed. Consequently, Nifty closed around the day’s low to settle at 16,498 levels; down by 0.65%. A mixed trend was witnessed on the sectoral front wherein energy, IT and metal witnessed decent traction while auto, banking and FMCG traded lackluster

Markets are punishing sectors/stocks which are heavily dependent on oil while metal and select energy stocks are playing savior. We’re seeing a kind of balancing act in the index however negativity in the banking space may result in a fresh fall ahead. We reiterate our cautious stance and suggest preferring a hedged approach.

News

* L&T Technology Services announced that it has been recognized as a Global Preferred Engineering Supplier for European multinational aerospace major Airbus, under its EMES3 (Engineering, Manufacturing Engineering and Services Strategic Suppliers) program and has been awarded with a multi-year contract.

* Tata Elxsi announced that it has collaborated with Renesas Electronics Corporation, a premier supplier of advanced semiconductor solutions, to develop targeted solutions for electric vehicles in a state-of-the-art design centre in Bangalore.

* Supreme Industries announced that it has received Letter of intent for supply of 7,35,186 Nos of 10 Kg. capacity composite LPG Cylinders valuing about Rs.170cr from Indian Oil Corporation.

Derivative Ideas

JSWSTEEL gained 1.57% and closed at 654.7 on 3rd Mar. The Metal Sector is seeing huge traction for last 3 consecutive sessions, JSWSTEEL is trading in sync along with its pack. Trading above its support at 630 levels and its important MAs, the counter is poised to test its resistance at 700 levels. We recommend to go Long in JSWSTEEL.

Strategy:- BUY JSWSTEEL @ 644-648, SLOSS AT 624, TRGT 690.

Religare New Year Pick - INOX Leisure Ltd.

Incorporated in 1999 and part of the INOX Group, INOX Leisure Ltd. (INOX) is the second-largest multiplex chain operator in India. The company’s screen additions have grown multi-fold over the past 10 years, from 91 screens in FY09 to 667 screens currently (Q3FY22 end) having a wide presence in ~70 cities with a seating capacity of 1,50,000+.

We like INOX in this space given its focus on enhancing the consumer experience, continued emphasis on expansion, effort on increasing spending per head, and increasing footfalls. We recommend a Buy on the stock and arrive at a target price of Rs. 495 (target EV/EBITDA multiple of 13x). Some of the key risks to our estimates include a) resurgence in COVID cases and b) slower than expected revival in footfalls.

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