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Nifty Outlook

Markets started the week on a feeble note and lost over 2%, tracking subdued global cues. Among the benchmark indices, the Nifty index slipped below the crucial support zone of 14,800 and finally closed at 14,676 levels. Mostly sectoral indices, except metal, ended with losses wherein realty, auto and IT were the top losers. The broader market indices too witnessed sell-off as both midcap and smallcap ended with losses of more than 1%.

The recent spike in the COVID cases combined with subdued global cues is weighing on the sentiment. After this slide, Nifty has lost momentum and the next major support exists at 14,300. In the case of a rebound, the 14,850 zone would act as a hurdle. Going ahead, macroeconomic data i.e. GDP data and core sector data and updates on COVID-19 cases would be actively tracked.

News

* L&T announced that its Power Transmission and Distribution business has won a slew of orders across its spectrum of offerings.

* Torrent Power emerged as the highest Bidder for the sale of 51% stake in the Power Distribution Company in the UT of Dadra & Nagar Haveli and Daman & Diu.

* Dr. Reddy’s Laboratories announced the launch of Lansoprazole DR Orally Disintegrating Tablets a therapeutic equivalent generic version of Prevacid SoluTab DelayedRelease Orally Disintegrating Tablets, 15 mg and 30 mg, approved by the USFDA.

Derivative Ideas

ICICIPRULI added around 14% in open interest addition as SHORT buildup was seen in it in till closing time. Current chart pattern also indicates further down move in its price. We suggest buying ICICIPRULI 470 PE as per below levels.

Strategy:- BUY ICICIPRULI 470 PE AT 6-7 STOPLOSS AT 1 TARGET 15.

Investment Pick - Britannia Industries Ltd

Britannia Industries (BRIT) posted mixed numbers wherein revenue was below our expectation while profit grew strong. Revenue came in at Rs 3165.6cr, up by 6.1% YoY. On operational front, its EBITDA grew by 21.7% YoY to Rs 611.5cr, while margin expanded by 248bps on the back of cost efficiencies measures. The company reported healthy growth of 22.4% YoY in net profit at Rs 452.6cr with margin expansion of 190bps YoY to 14.3%. Going forward, we remain positive on the company’s long term growth as the focus would be enhancing sales, improving margins via cost efficiency measures and strengthening distribution reach. Maintain a Buy.

Going forward, BRIT strategy would be to drive strong growth by launching new and innovating products, focus on brand building and strengthening distribution reach. Besides its efforts on improving margins via cost efficiency would be its core agenda. Apart from this, strong growth momentum from rural and international businesses will continue to support and lead to market share gains. Further along with the optimistic management plan the company has strong balance and decent cash flow which would aid growth. Thus, we have a positive view on the stock for long term and have maintained a buy rating on the stock with a target price of Rs 4,265.

Buy Britannia Industries Ltd @ 9-12 Months CMP 3,341.2  TGT 4,265

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