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Nifty Outlook

Markets retested the record-high levels but managed to settle almost flat in the end. After the flat start, the benchmark inched higher, thanks to healthy buying in index majors from banking and cement space. On the flip side, profit booking in auto, IT and pharma not only capped the upside but also dragged the markets lower in the final hour. Consequently, the Nifty ended unchanged at 15,818 levels. On the sector front, the majority of the indices ended in red, excluding banking and media. The broader markets witnessed a mixed trend wherein midcap ended flat while smallcap ended with a cut of 0.6%.

Nifty has reversed for the third time after retesting the 15,900 zone however the recent buoyancy in the banking may help in surpassing the hurdle this time. Meanwhile, investor’s focus will be on the upcoming result season and primary market activities as several IPOs are lined up. Besides, global cues and movement of crude oil fluctuation will be on the radar. We suggest continuing with a selective buying approach on dips while keeping a check on leveraged positions.

News

* TCS announced that it has entered into a strategic partnership with India’s premier OTT streaming platform, SonyLIV, to help it create an innovative business model enabled by digital technologies, enhance customer experience and pave the path to future growth.

* Tata Motors June auto sales for JLR UK were down 3.7% at 6,166 units as against 6,403 units YoY. Its Jaguar UK sales were up 38.4% at 2,369 units YoY and the Land Rover UK sales were down 19.1% YoY at 3,797 units.

* Gravita India informs that Recyclers Ghana Ltd, a step down subsidiary of the company situated at Ghana, West Africa has enhanced the production capacity of its existing Lead recycling plant from 12,000 MTPA to 16,200 MTPA.

Derivative Ideas

AMBUJACEM 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 AMBUJACEM in cash as per below levels.

Strategy:- BUY AMBUJACEM BETWEEN 347-349 STOPLOSS 342 TARGET 367.

Investment Pick - Finolex Industries Ltd.

Finolex Industries (FIL) Q4FY21 results were above our estimates. Revenue grew by 62.5% YoY to Rs 1,249cr largely driven by better volumes from resin business and realization from both businesses. Resin segment posted growth of 112% YoY to Rs 920.2cr while the company’s pipes and fitting segment grew by 43% YoY to Rs 901.7cr. EBITDA stood at Rs 410.1cr, up by 296% YoY while its margins witnessed strong improvement of 1936bps to 32.8%. Its net profit grew by 410% YoY to Rs 298.8cr with margin expansion of 1629bps.

FIL is well placed in the plastic pipe segment with a strong presence in agri pipes and manufacturing of resin. Going ahead, it has plans to grow in the non-agri segment, expand its manufacturing of PVC resin, increase distribution network and change product mix which will aid in earning better revenues as well as profits. Besides it has strong brand recall value, healthy balance and decent cash flow which bode well for the future growth of the company. So, we maintain a Buy rating on the stock with a target price of Rs 222.

Buy - Finolex Industries Ltd. @ 9-12 Months CMP 179.05 TGT 222

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