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Nifty Outlook

Markets started the week on optimistic note and posted decent gains. The progress on the US stimulus package and stability in bond yields triggered a rebound in early trade, followed by range-bound movement till the end. Besides, participants also reacted to the GDP numbers, which showed marginal growth after seeing a contraction in the last two quarters. Healthy buying was witnessed across the board wherein auto, metals and power were among the top gainers. On the benchmark front, the Nifty index ended near day’s high with strong gains of 1.6% to close at 14,762 levels. The broader markets too ended higher, in line with the benchmark.

Markets will continue to take cues from global peers, in absence of any major domestic event. Besides, bond yields and the COVID situation in India would remain on investors’ radar. We thus suggest limiting naked leveraged positions and using further decline to add quality stocks.

News

* Maruti announced its February sales data wherein total sales for the month were up 11.8% at 1,64,469 units. Exports grew 11.9% at 11,486 units YoY while domestic sales was up 11.8% at 1,52,983 units YoY

* Bajaj Auto announced its February monthly auto sales numbers wherein company’s total sales fell 6% at 3,75,017 units. The domestic sales were down 2% at 164,811 units versus 1,68,747 units, YoY.

* KEC International secured new orders of Rs 1,140cr across its various businesses such as transmission & distribution business (order of Rs 963cr), the railway business (order of Rs 113cr) and Civil business (order of Rs 64cr).

Derivative Ideas

L&TFH FUTS added around 8% in open interest addition as LONG buildup was seen in it till closing time. Current chart pattern also indicates further up move in its price. We suggest buying L&TFH as per below levels.

Strategy:- BUY L&TFH BETWEEN 105-106 STOPLOSS AT 102 TARGET 112.

Investment Pick - Mahindra & Mahindra Ltd.

Established in 1945, Mahindra and Mahindra (M&M) is the flagship company of the Mahindra Group. It is one of the leading conglomerates which operate in various segments such as Automotive (PVs, CVs, 2W and 3W), Farm Equipment, Hospitality, Information Technology, Financial Services, Real Estate, Retail and Logistics. M&M is the market leader in Tractors and Utility Vehicles (UV) segment which is a part of its core business (Farm equipment and Auto).

Factoring the strong performance in Q3FY21, we have raised our estimates for M&M and expect revenue and PAT to grow at 12.9% and 22.5% CAGR over FY20-23E. We value the core business at 16x FY23E EPS of Rs. 51.5 and arrive at a SOTP based target price of Rs. 1,087.

Buy - Mahindra & Mahindra Ltd. @ 9-12 Months CMP 819.45  TGT 1,087

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