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Nifty Outlook

Markets traded volatile in a range and finally settled around the day’s high, thanks to upbeat global cues. Initially, the bias was negative in continuation to the recent fall however swift recovery in the index majors from across sectors triggered gradual recovery as the day progressed. Consequently, the Nifty index closed at 17,562; up by 0.9%.

Amongst the sectors, except Auto and Consumer Durables, all the other indices ended with gains wherein realty and IT were among the top gainers. Markets are currently dancing to the global tunes and we expect this trend to continue in absence of any major domestic event. Among the events, the FOMC meeting outcome and update on China’s “Evergrande” crisis will remain in focus. We reiterate our view to restrict naked leveraged positions and prefer hedged bets.

News

* HCL Technologies has entered a multi-year application services transformation partnership with Lendico, a brand of ING Germany, to deliver application and engineering services to help it create a state-of-the art digital platform that makes business banking faster and more convenient for small- and medium sized enterprises.

* Lincoln Pharmaceuticals is planning to launch Cephalosporin products soon. Company has acquired a facility in Mehsana, Gujarat.

*  L&T Hydrocarbon Engineering Limited, a wholly owned subsidiary of Larsen and Toubro, has bagged two orders in the Construction Services segment - one each from GAIL India and Air Products Middle East Industrial Gases LLC.

Derivative Ideas

INDIGO FUT has added around 11% in open interest in as fresh long build up was seen in it. Current chart pattern also indicates further up move in its price. We suggest buying in INDIGO as per below levels.

Strategy:- BUY INDIGO BETWEEN 2220-2225 SL 1980 TARGET 2290.

Investment Pick - Phillips Carbon Black Ltd.

Established in 1960, Phillips Carbon Black Ltd (PCBL) is an integral part of the RP-Sanjiv Goenka Group. Over the decades, they have built scale, expanded global footprint and set up world-class R&D facilities to address diverse customer requirements. At present, they are the largest carbon black manufacturer in India with 603,000 MT of annual production capacity. Also, it has four strategically located state-of-the-art plants at Durgapur (West Bengal), Palej & Mundra (Gujarat) and Kochi (Kerala) along with R&D Centre in Asia and Innovation Centre in Europe. Further, PCBL is a strong global player with a significant customer base in 45+ countries and offices in Japan, Germany, Belgium, China, South Korea and Vietnam.

PCBL is a leader in carbon black having a strong presence in India as well as globally. The company’s products, i.e. carbon black and speciality black, demand is likely to be driven by increase in global demand, the focus of the Indian government on the manufacturing sector and recovery in the automobile sector. In addition, its focus on manufacturing high-performance new grades products, improving operating efficiency and increasing specialty black portfolio across inks, coatings and paints segments will further drive growth. We have a positive outlook on the company from the long term perspective and have initiated a ‘Buy’ on the stock with a target price of Rs 306.

Buy - Phillips Carbon Black Ltd @ 9-12 Months CMP 254.45 TGT 306

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