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Nifty Outlook

Markets slipped further lower on Wednesday as selling pressure continued across the board. After a weak start, the benchmark gradually drifted lower as the day progressed and settled around the day’s low. Several factors like negative foreign flows combined with no so encouraging earnings announcements dented the sentiment.

Besides, caution ahead of the Union Budget and scheduled derivatives expiry also added to the pressure. On the benchmark front, the Nifty ended with a cut of nearly 2% to settle at 13,967.5 levels. In line with the benchmark, all the other indices, barring FMCG, ended with losses wherein metal, realty and auto were the top losers. We’re are not surprised with the recent fall and expect Nifty to test 13,700.

However, it’s a healthy correction before the event and investors should use it to accumulate fundamentally sound counters on dips. Traders, on the other hand, should maintain extra caution due to the expected rise in volatility ahead. We thus suggest trading through options or taking selective trades in the cash segment.

News

* Welspun reported its numbers wherein its revenue was up 29.2% YoY to Rs. 2,029 cr. Its consolidated net profit came in at Rs. 181 cr as against Rs. 73 cr in the same quarter last year.

* Jyothy Labs reported its Q3FY21 numbers wherein revenue was up 13.3% YoY to Rs. 477 cr. Its net profit rose by 18.8% YoY to Rs. 55 cr.

* Sterling & Wilson Solar (SWSL) has successfully commissioned its second project in Oman. The 25 MW solar project was awarded to the company by global energy company Shell.

Derivative Ideas

DRREDDY FEB FUT added around 25% in open interest addition as SHORT buildup was seen in it in till closing time. Current chart pattern also indicates further up move in its price. We suggest buying DRREDDY 4800 PE FEB as per below levels.

Strategy:- BUY DRREDDY 4800 PE FEB BETWEEN 140– 145 SL 110 TARGET 215.

Investment Pick - SBI Life Insurance Company Ltd.

* SBI Life Insurance Company Ltd. is a joint venture between State Bank of India and BNP Paribas Cardiff S.A. It is one of the leading life insurers in India with a healthy market share of 13.3% in terms of Individual rated premium. SBI Life offers a comprehensive range of life insurance and pension products at competitive prices, ensuring high standards of customer service and world-class operating efficiency.

* Within the industry, SBI Life is one of our preferred picks given its huge untapped client base, wide distribution reach and industry-leading cost ratios. Further, increased focus on business through digital channels and a strong distribution platform should lead to consistent market share gains for the company. We initiate with a Buy rating on the stock with a target price of Rs. 1069.

Buy SBI Life Insurance Company Ltd @ 9-12 Months CMP 935.5 TGT 1,069

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