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Nifty Outlook

Markets traded upbeat and gained over half a percent, tracking favorable global cues. After the gap-up start, it hovered in a narrow range in the first half and inched marginally higher as the day progressed. Consequently, the Nifty index ended higher by 0.8% at 15,812 levels. Amongst the sectors, heavyweight i.e. banking and financials outperformed and ended higher by 1.4% followed by metal, auto and oil & gas. The broader markets performance was mixed wherein the midcap index ended flat whereas smallcap ended with gains of nearly a percent.

Global cues are upbeat however support from the banking pack is critical for any sustainable up move in the Nifty index. Besides, participants will also be eyeing the results of the IT major, Infosys Ltd, scheduled on Wednesday i.e. July 14. Amid all, we feel it’s prudent to maintain focus on the selection of stocks and managing overnight risk until we see the resumption of the uptrend.

News

* Lupin has launched Tavaborole Topical Solution in the US. Tavaborole Topical Solution is used to treat fungal toenail infections. Tavaborole Topical Solution has an estimated annual sales of USD 53 million in the US.

* Ceat announced that it has tied up with Tata Power to establish a 10MW captive solar plant at the latter's Solapur site for powering its tyre manufacturing facility in Bhandup (Mumbai).

* Mphasis has been awarded a US patent for its AI driven application and infrastructure management solution. The newly issued patent provides a solution for enterprises worldwide to optimize their technology investments through in-depth data analysis.

Derivative Ideas

GAIL FUTS added around 5% 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 GAIL in cash as per below levels.

Strategy:- BUY GAIL BETWEEN 147-148 STOPLOSS 145 TARGET 153.

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 179.45 TGT 222.

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