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Nifty Outlook

Markets traded lackluster and ended marginally lower following subdued global cues. After the flat start, the benchmark traded range-bound till the end however the bias slightly on the negative side. Consequently, the Nifty index ended lower by 0.3% at 15,680 levels. Amongst the sectors, auto, healthcare and consumer durables ended in green whereas IT, telecom and realty ended with losses. The broader markets too remained mixed as midcap ended lower by 0.2% whereas smallcap was up 0.8%.

Markets are closely eyeing the global indices for some signal as indications are mixed from the domestic front. Nifty has been hovering within the 15,450-15,900 zone for almost a month now and currently trading in the middle of the band. A breakdown below 15,650 would pave the way for a further slide towards the lower range. We feel it’s prudent to keep a check on positions and prefer defensive in the current scenario.

News

* TVS Motor Company registered a growth of 27% in June 2021 with sales of 251,886 units as against sales of 198,387 units in the month of June 2020.

* APL Apollo Tubes registered a sales volume of 373,124 Ton in Q1FY22. The Q1FY22 sales volume equals 86% of Q4FY21 sales volume, due to the second wave of COVID-19 which had hit the country in April-May 2021

* Maruti Suzuki India posted total sales of 147,368 units in June 2021. Total sales in the month include domestic sales of 126,196 units, sales to other OEM 4,152 units and exports of 17,020 units.

Derivative Ideas

BATAINDIA FUTS added around 4% 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 BATAINDIA in cash as per below levels.

Strategy:- BUY BATAINDIA BETWEEN 1595 STOPLOSS 1550 TARGET 1680.

Investment Pick - Finolex Industries Ltd.

Finolex Industries (FIL) Q4FY21 results were above our estimates. Revenue grew by 62.5% YoY to Rs 1,249cr largely driven by better volumes from resin business and realization from both businesses. Resin segment posted growth of 112% YoY to Rs 920.2cr while the company’s pipes and fitting segment grew by 43% YoY to Rs 901.7cr. EBITDA stood at Rs 410.1cr, up by 296% YoY while its margins witnessed strong improvement of 1936bps to 32.8%. Its net profit grew by 410% YoY to Rs 298.8cr with margin expansion of 1629bps.

FIL is well placed in the plastic pipe segment with a strong presence in agri pipes and manufacturing of resin. Going ahead, it has plans to grow in the non-agri segment, expand its manufacturing of PVC resin, increase distribution network and change product mix which will aid in earning better revenues as well as profits. Besides it has strong brand recall value, healthy balance and decent cash flow which bode well for the future growth of the company. So, we maintain a Buy rating on the stock with a target price of Rs 222.

Buy - Finolex Industries Ltd. @ 9-12 Months CMP 184.25 TGT 222

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