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Nifty Outlook

Markets traded volatile and settled with a cut of over half a percent. The benchmark opened flat amid mixed global cues however profit booking across sectors such as banking, realty and IT pushed the index lower as the day progressed. It tried to recoup losses in the last hour but failed to cover significant ground. Finally, the Nifty ended at 17,749 levels, down by 0.6%. The broader markets too witnessed heavy selling and ended lower in the range of 0.5-0.7%.

We’ve mixed indications as global cues are subdued while the domestic factors have turned favorable. Traders should maintain a positive yet cautious approach and limit naked leveraged positions. We reiterate our preference for private banking, auto and select pharma counters and suggest adding them on dips.

News

* Sun Pharmaceutical Industries announced the launch of a novel formulation in cough management - Chericof® 12 (Dextromethorphan Hydrobromide 30 mg and Chlorpheniramine Maleate 4 mg) in India.

* Larsen & Toubro Infotech has entered in a strategic partnership with eClinicalHealth Ltd to accelerate digital innovation in R&D Clinical Trials Management process for patient centric drug development.

* TCS announced that it has been selected by NORD/LB, a leading German commercial bank, as its strategic partner for its IT transformation.

Derivative Ideas 

NIFTY FUT has added around 10% in open interest combined as fresh long build up was seen in it. Current chart pattern also indicates further up move in its price. We suggest buying in NIFTY 7th OCT 18000 CE as per below levels.

Strategy:- BUY NIFTY 7th OCT 18000 CE @68-70, SLOSS AT 50, TRGT 110.

Investment Pick - Orient Electric Ltd.

Orient Electric Ltd. (OEL) is part of the diversified USD 2.4 billion Indian conglomerates CK Birla group. OEL is a 60-year-old brand in fans and has established itself as a one-stop brand for lifestyle electrical solutions which include fans, lighting, home appliances and switch gears. Orient Electric has manufacturing facilities in Kolkata, Faridabad and Noida. The company enjoys a marketing presence across 35 countries. In the domestic market, it has a robust sales/ distribution network and service network with pan-India coverage.

After a muted show in FY21 due to the pandemic, we expect OEL’s revenue to grow at 17.5% CAGR over FY21-24E led by a recovery in both ECD and lighting & switchgear segment. On the margins front, higher operational efficiencies coupled with the focus on premiumization would aid margin improvement for OEL. We estimate OEL’s Revenue/EBITDA/PAT to grow at 17.5%/18.6%/24.8% over FY21-24E. We recommend a Buy on the stock with a target price of Rs. 439.

Buy - Orient Electric Ltd @ 9-12 Months CMP 333.8 TGT 439

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