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Nifty Outlook

Markets remained volatile for yet another session but managed to end marginally higher. After opening on a flat note, the benchmark traded in a narrow range for most of the session, thanks to a mixed trend among the index majors. At one end, banking, metals and auto counters were seeing selling pressure from the beginning while defensive such as IT and FMCG majors saw healthy buying interest and capped downside. Finally, Nifty ended higher by 0.3% at 16,615 levels.

The recent surge in the index lacks decisiveness due to prevailing underperformance from the banking pack, which holds considerable weightage. Besides, the continuous profit taking in the broader indices is also keeping the participants on the edge. Considering the scenario, it’s prudent to limit naked leveraged positions and maintain caution in the selection of stocks.

News

* Zydus Cadila has received tentative approval from the USFDA to market Lenalidomide Capsules in the strengths of 2.5 mg, 5 mg,10 mg, 15 mg, 20 mg, and 25 mg. The capsule is used to treat various types of cancers.

* Steel Strips Wheels informed that its board will meet on September 3 to consider sub division/split of equity shares of face value Rs 10 each.

* Dilip Buildcon announced that Dhrol Bhadra Highways Pvt ltd, wholly owned subsidiary of the company has received the financial closure letter from the National Highways Authority of India for the project in Gujarat.

Derivative Ideas 

JUBLFOOD FUTS added around 14% in open interest as LONG buildup was seen in it. Current chart pattern also indicates further up move in its price. We suggest buying in JUBLFOOD as per below levels.

Strategy:- BUY JUBLFOOD BETWEEN 3870-3875 SL 3830 TARGET 3990.

Investment Pick - Britannia Industries Ltd.

Britannia Industries (BRIT) posted a muted set of numbers for Q1FY22. Its revenue was down 0.5% YoY to Rs 3,403.5cr. Its EBITDA and PAT de-grew by 22.8% and 28.7%YoY. The company’s EBITDA and PAT margins too were severely impacted as it declined by 469bps and 449bps due to high expenses. In the near term, high raw material prices and slowing demand will continue to impact the performance. However, going forward, its focus would be on innovating products, improving margins via cost efficiency measures and gaining market share. Maintain Buy.

BRIT is one of the leading FMCG brands in India with a strong focus on innovation, brand building and expanding distribution reach. It is continuously gaining market share via product launches and re-launches in domestic and international markets. Besides, to manage profitability and margins, the company will drive cost efficiencies and take price increase once the demand scenario stabilizes. On the financial front, the company has a strong balance sheet and decent cash flow which is positive. From a long term perspective, we maintain “buy” rating with a target price of Rs 4,265.

Buy Britannia Industries Ltd @ 9-12 Months CMP 3,696.5 TGT 4,265

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