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Nifty Outlook

Markets resumed the corrective phase and shed nearly one and a half percent following weak global cues. The benchmark opened with a downtick and drifted further lower as the day progressed to close around the day’s low. Among the benchmark indices, The Nifty index ended with sharp losses of 1.6% to close at 16,970 levels. All sectors, barring IT, were feeling the heat wherein realty, banking and auto were the top losers. The broader markets too witnessed selling pressure as both midcap and smallcap ended lower by 2.6% and 2.4% respectively.

Apart from the policy tightening, a sharp rise in the COVID cases globally has renewed participants’ worries and we feel it may aggravate further in absence of any major positive. On the index front, Nifty is likely to retest the previous swing lows and the 16,900-16,700 zone would be critical. Participants should align their positions accordingly and prefer hedged bets.

News

* Hindalco acquires Hydro’s Aluminium Extrusions Business in Kuppam, Andhra Pradesh for an enterprise value of Rs 247 crore. The plant has a 15,000-ton aluminium extrusions capacity and is integrated with advanced value addition capabilities for surface finishing and fabrication. This will strengthen Hindalco’s foothold in South India, the second largest extrusions market.

* Bharti Airtel has paid Rs 15,519 cr to the Department of Telecom (Government of India) towards prepayment of the entire deferred liabilities pertaining to spectrum acquired in auction of year 2014.

* RCF received government nod to set up a plant at Thal unit Raigad District, Maharashtra at an estimated project cost of Rs 914.6 cr and the project is expected to be completed in 36 months.

Derivative Ideas

RELIANCE after shedding 2.64% closed at 2340.45 on 17th Dec. The Derivatives Data Suggests an immediate Resistance at 2360 Levels. The Scrip should test its immediate Support at 2280-2300.

Strategy:- BUY RELIANCE DEC 2340 PE@30-34, SLOSS AT 10, TRGT 70.

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

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