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Nifty Outlook

Markets traded under pressure and lost over one and a half percent, tracking feeble global cues. After a flat start, the benchmark inched gradually lower as the day progressed and finally settled closer to the day’s low. Among the key indices, the Nifty index closed around 17,213 levels. We saw a similar trend on the sectoral front wherein capital goods, banking, and IT were badly beaten down. The broader indices too lost in the range of 0.6%-1.1%.

Global headwinds have again started impacting the sentiment, in absence of any major positive. And, this fall ahead of the MPC meet indicates that markets are factoring in the change in stance by the committee and possibly a hint towards the beginning of liquidity tightening as well. We thus reiterate our cautious view and suggest focusing more on risk management. On the index front, Nifty has the next crucial support zone around 16,800-17,000 levels.

News

* KPR Mill reported its Q3FY22 numbers wherein revenue was up 35.5% YoY to Rs. 1,260 cr. Its EBITDA grew by 20.6% YoY to Rs. 305 cr. Its net profit was up 35.5% at Rs. 212 cr.

* Sundaram Finance Q3FY22 revenue was down 7.5% at Rs. 1,286 cr. Its net profit went down 15.6% at Rs. 289 cr.

* Minda Industries reported its numbers wherein revenue was up 7.4% YoY to Rs. 2,181 cr. Its net profit was down 12.2% YoY to Rs. 101 cr.

Derivative Ideas

CIPLA shed 1.35% and closed at 933.3 on 7th Feb. The stock has seen profit taking after finding the resistance at 955 levels. Closing below its 9 EMA with Fresh Shorts being added in its Futs, we believe CIPLA is ready to test its support at 900 levels. We recommend to go Short in CIPLA with the PE option.

Strategy:- BUY CIPLA 920 PE @ 10-12, SLOSS AT 5, TRGT 22.

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.

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