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Nifty Outlook

Markets started the new expiry with modest gains and made a new record high as well. After witnessing a gap-up opening, the index traded in a narrow band but managed to settle around the day’s high. It was the healthy buying in heavyweights like Reliance and HDFC Bank which helped the index to maintain the positive bias. Amongst the benchmark indices, the Nifty ended with gains of 0.6% at 15,436 levels. On the flip side, sectors such as healthcare and consumer durables traded lackluster. The broader markets underperformed and ended lower in the range of 0.1-0.5%.

Markets reclaimed the record high after three months and Reliance's performance was the major highlight. Going ahead, we expect this trend to continue with intermediate corrective phases. Traders should align their positions in line with the move and avoid contrarian trades.

News

* Ipca Laboratories reported Q4FY21 revenue at Rs 1,115cr, up by 3.8% YoY. Its net profit was up 87.6% YoY at Rs 161.3cr.

* M&M reported Q4FY21 results wherein its revenue grew 48% YoY to Rs 13,338cr. Its net profit stood at Rs 163cr on account of one-time loss at Rs 840cr.

* Bajaj Healthcare announced that it has received approval from FDA Gandhi Nagar, Gujarat India, to manufacture and market “Posaconazole API” as approved medication for treating Mucormycosis (Black Fungus) infection in Covid-19 patients in India. Its commercial production will start from 1st week of June 2021.

Derivative Ideas

RECLTD FUTS added around 7% 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 RECLTD as per below levels.

Strategy:- BUY RECLTD BETWEEN 144-145 STOPLOSS 142 TARGET 150.

Investment Pick - Crompton Greaves Consumer Electricals Ltd.

Crompton Greaves Consumer Electricals (CGCE) reported strong set of numbers for Q4FY21. Its consolidated revenue grew by 48.3% YoY led by strong growth across geographies and different product categories. The net profit was boosted (+144% YoY) by a one-time tax write back and a sharp rise (+72.2% YoY) in other income. In the near term, demand would be impacted on account of on-going restrictions and expect normalcy by Q2FY22.

We like CGCE for its strong growth potential, consistent rise in market share in its key segment coupled with healthy dividend pay-out ratio, strong cash flow generation, lean working capital cycle and robust return ratios. Factoring the impact of demand uncertainty in the near term, we have lowered our estimates for FY22E. We maintain a Buy on the stock with a target price of Rs. 479.

Buy Crompton Greaves Consumer Electricals Ltd. @ 9-12 Months CMP 394.05 TGT 479

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