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Nifty Outlook

Markets started the week on a feeble note and shed over 2% in continuation to the prevailing corrective phase. The bias was downbeat from the beginning citing the rising COVID cases globally due to the new variant. The benchmark remained under pressure in the first half as noticeable selling was witnessed across the board. However, rebound in the select index majors pared some losses in the latter half. Finally, Nifty settled around 16,614 levels; down by 2.18%. All sectors traded in line with the index and ended lower wherein PSU, realty, media and metal were the top losers. The broader indices also traded under pressure and lost nearly 4% each.

Markets reacted to the news of a sharp jump in the COVID cases globally which may result in a lockdown. Though the situation is under control domestically at present, any impact on the global economic recovery would dent our prospects too. Besides, the continuous outflow of the foreign fund was also weighing on the sentiment. We reiterate our cautious view on markets and suggest focusing more on risk management. Investors, on the other hand, can start accumulating quality stocks selectively from a long term investment perspective. Nifty has the next major support at 16,300 levels.

News

* Balrampur Chini Mills received an order to supply 18,000 kilo litres of ethanol to private sector OMC. Hence, the company has received a total order of 1,57,100 kilo litres for supplying ethanol to both public sector and private sector OMCs.

* TVS Motor has announced the integration of the innovative location technology, what3words into its customer app – TVS Connect. Beginning today, TVS Connect users can share and navigate to any location using three simple words.

* ITI has received a work order from Tamil Nadu Fibrenet Corp. Ltd (A Govt. of Tamil Nadu Undertaking) regarding BharatNet Phase-II in Tamil Nadu for package D. The value of the contract is Rs 432.97cr and has to be implemented within a time period of 360 days, followed by 3 years for operations & maintenance from the date of project go-live.

Derivative Ideas

HDFCBANK shed 3.22% and closed at 1425.65 on 20th Dec. The Scrip is looking weak along its peers as BANKNIFTY underperformed NIFTY for quite some time now. However going forward, we expect the same to continue. We Recommend to go short in HDFCBANK until it trades above its Resistance that lies at 1470.

Strategy:- BUY HDFCBANK 1420 PE@14-16, SLOSS AT 7, TRGT 30.

Investment Pick - Kansai Nerolac Ltd.

Kansai Nerolac Paints Ltd (KNPL) posted mixed numbers for Q2FY22. Its revenue grew by 17.1% YoY to Rs 1,619.6cr, while its EBITDA and PAT witnessed de-growth of 39% YoY and 48% YoY. Demand from decorative was steady while lower demand from the industrial segment impacted the performance.

KNPL is one of the leaders in the industrial paint segment wherein it garners 40-45% revenue from the industrial segment while remaining from decorative. Going ahead, the company’s strategy is to innovate products in both its segments, expand reach, and focus on product mix as well as gain market share from unorganized segments. Besides, focus to remain on managing cost and operating efficiency which will help in margin growth. Over the medium to long term, we have a positive view on the stock and have maintained a buy with a target price of Rs 705.

Buy - Kansai Nerolac Ltd. @ CMP :- 587.95 Recommendation Price 605 Target 705 Duration 9-12 Months.

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