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Nifty Outlook

Markets settled with a cut of nearly half a percent in a highly volatile session, taking a breather after the recent surge. The benchmark opened on a firm note following supportive global cues however continuous profit booking at higher levels dragged the benchmark indices lower. Among the benchmark indices, the Nifty index closed at 18,418 levels. Mostly sectoral indices traded under pressure and ended in the red. The broader markets too witnessed heightened selling pressure wherein both midcap and smallcap ended with losses of 2.5% and 1.8% respectively.

We may see some consolidation in the index after the recent surge and stocks usually witness erratic swings during such phases. And, the prevailing earnings season would further add to the choppiness. We thus recommend maintaining extra caution in stock selection and risk management. On the benchmark front, Nifty has immediate support at 18,300.

News

* Sonata Software has posted a 5% jump in its Q2FY22 consolidated net profit at Rs 91.2 cr as against Rs 86.7 cr and revenue was down 24.1% at Rs 963.2 cr versus Rs 1,268.5 cr QoQ.

* Heidelberg Cement reported its numbers wherein revenue was up 12.2% YoY. EBITDA was down 7.5% YoY. Its net profit de-grew by 4.5% YoY to Rs. 59.6 cr.

* HUL reported 11% YoY growth in its standalone revenues to Rs. 12,724 cr. Its net profit grew by 9% YoY to Rs. 2,187 cr.

Derivative Ideas 

NIFTY FUT has added around 2% in open interest as fresh short build up was seen in it. Current chart pattern also indicates further down move in its price. We suggest buying put options as per below levels.

Strategy:- Buy Nifty 21st Oct 18500 PE@68-75, sloss at 30, trgt 128.

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 983.45 TGT 1,237

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