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Nifty Outlook

Markets started the week on a strong note and gained nearly a percent. Encouraging domestic cues i.e. uptick in GST collection, improved auto sales boosted sentiment and triggered a firm start. However, a lack of decisiveness in the banking pack capped upside as the session progressed. Amid all, healthy buying across sectors such as realty, auto and oil & gas kept the tone positive. Consequently, the Nifty ended with strong gains of 0.8% at 15,885 levels. The broader markets too traded optimistically and ended higher in the range of 0.9-1.6%.

The strategy of selecting stocks based on themes is yielding decent results and we expect the same trend to continue citing the buoyancy in the broader market. However, traders should limit their leveraged exposure and prefer hedged positions for overnight trades.

News

* HDFC Q1FY22 net interest income was up 22% YoY at Rs 4,146.7cr. It posted 1.7% fall in net profit at Rs 3,000.7cr YoY.

* Emami’s revenue was up 37.3% at Rs 661cr YoY for Q1FY22. Its net profit jumped 96.5% to Rs 77.8cr as against Rs 39.6cr YoY.

* Eicher Motors announced sales numbers for the month of July 2021. It sold 44,038 units against 40,334 units YoY. Its unlisted subsidiary, the Volvo Eicher Commercial Vehicles, sold 4,271 vehicles, up by 95.6% as compared to 2,184 vehicles YoY.

Derivative Ideas

TRENT FUTS added around 23% 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 TRENT in cash as per below levels.

Strategy:- BUY TRENT BETWEEN 948-950 STOPLOSS 930 TARGET 990.

Investment Pick - CSB Bank Ltd.

Established in 1920, CSB Bank Ltd (known as The Catholic Syrian Bank) is one of the oldest private sector banks in India. It has a significant network in Kerala, Tamilnadu, Karnataka and Maharashtra. At present, 90% of the branches are in these four states and the remaining 10% is spread across other states in India. The bank operates mainly in four business areas namely SME banking, retail banking, wholesale banking and treasury operations.

We believe CSB bank is well placed as it has a strong gold loan book, prudent management team and steady financials with improved asset quality. Further, a well-planned strategy like betting on less risky businesses such as agriculture, food & service, etc. and avoiding risky unsecured loans augurs well for future growth. From a long term perspective, we are optimistic on the company’s growth prospects thus initiating a Buy on the stock with a target price of Rs 432.

Buy - CSB Bank Ltd @ 9-12 Months CMP 343.6 TGT 432.

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