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Nifty Outlook

Markets started the week on a strong note and settled with nearly one and a half percent gains. Firm global cues led to an upbeat start however caution ahead of the crucial event of Union Budget capped the upside. All the sectoral indices contributed to the move wherein IT, realty and PSU banks were the top gainers. Consequently, the Nifty ended higher by 1.4%. The broader indices too ended in a positive range of 1.2-1.6%.

It’s going to be a crucial day as all participants will be closely eyeing the Union Budget. The main focus would be on the GDP growth numbers, fiscal deficit target and disinvestment plans. Besides, sector-specific announcements and any relief on the taxation front will also be on participants’ radars. At the same time, corporate earnings and auto sales numbers would continue to induce stock-specific volatility. For further recovery, Nifty should decisively hold above 17,600 zone else profit taking may resume and push the index towards 16,800-17,000 zone. We recommend maintaining a cautious stance and suggest preferring hedged positions.

News

* UPL reported Q3FY22 revenue at Rs 11,297cr, up by 24% YoY. Net profit came in at 1,179cr, higher by 25% YoY.

* Sun Pharmaceutical has posted Q3FY22 revenue at Rs 9,863cr, an increase of 12% YoY. The company’s net profit stood at Rs 2,059cr, up by 11% YoY.

* Bharti Airtel announced to acquire ~25% equity stake in Bengaluru based technology start-up, Lavelle Networks. This will help in boosting Airtel’s Network-as-a-Service portfolio.

Derivative Ideas

PRAJIND gained 1.49% and closed at 422.85 on 31st Jan. After the breakout from the inverted H&S pattern at 380 levels, the counter has been consolidating in a range of 415-430 for some time now. Trading above its important Moving Averages, the stock is poised to test 450 level. We recommend to go Long in PRAJIND.

Strategy:- BUY PRAJIND @ 416-420, SLOSS AT 402, TRGT 445.

Religare New Year Pick -  Sudarshan Chemical Industries Ltd.

Sudarshan Chemical Industries (SCI) is one of the leading producers in India and has been serving for over 70 years in Indian and global pigment markets. It manufactures an extensive range of organic, inorganic, effect pigment and dispersions. It has two manufacturing facilities located at Roha and Mahad in Maharashtra, India and 2 dedicated R&D centre globally. In addition, it exports to 85+countries and has 10 sales offices in India, US, Europe, China, Mexico, and Japan.

We believe SCI is well placed to capitalize opportunities in the global as well as Indian pigment sector driven by positive industry growth trend, high entry barrier in the sector and wide range of products in their portfolio. Besides, they’re highly cost competitive amongst the peer group. On the financial front, the company’s track record has been decent and we have estimated its revenue and PAT to grow at a CAGR of 14.5% and 14% over FY22-24E. We have a positive view on the company and have initiated a Buy on the stock with a target price of Rs 720.

Buy - Sudarshan Chemical Industries Ltd. @ CMP :-  575.3 Recommendation Price 576 Target 720 Duration 9-12 Months.

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