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Nifty Outlook

Markets settled almost flat in a volatile trading session, taking a breather after the recent fall. After the initial uptick, the benchmark failed to hold the gains and started drifting lower as the session progressed. However, a sharp surge in the select banking majors, thanks to encouraging earnings by the ICICI Bank, not only capped the downside but also helped the index to pare the losses. Consequently, the Nifty closed at 18,125 levels. Selling pressure continued on the broader front wherein midcap and smallcap indices lost in the range of 1.8%-2.3%.

We expect the banking pack to remain in focus as Axis Bank and Kotak Bank will report their numbers on October 26. On the index front, Nifty should hold 17,950 levels for any rebound else profit taking would resume. Needless to say, the scheduled monthly expiry will keep the choppiness high across the board. Amid all, participants should continue with a cautious approach until we see some concrete sign of trend resumption.

News

* Colgate Palmolive Q2FY22 revenue was up by 5.2% YoY at Rs 1,352cr. Its Net profit was down 1.8% YoY at Rs 269cr.

* Swaraj Engines revenue was up 17.6% YoY at Rs 343.6 cr in Q2FY22. It posted 24.7% YoY jump in its net profit to Rs 33.8cr.

* Newgen Software Technologies Q2FY22 revenue was up 16.3% QoQ at Rs 185.5 cr. It posted 73% QoQ jump in its net profit to Rs 37.4cr.

Derivative Ideas 

BANKNIFTY FUT has added around 15% in open interest as fresh long build up was seen in it. Current chart pattern also indicates further levels in Index at around 42000 levels.

Strategy:- BUY BANKNIFTY 3rd NOV 43000 CE@80-100, SLOSS AT 40, TRGT 180

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 942.75 TGT 1,237

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