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Nifty Outlook

Markets traded volatile on the expected lines and settled with a cut of over half a percent on monthly expiry day. After the flat start, the benchmark traded subdued initially however pressure in metal, IT and media pack dragged the index lower in the latter half. Finally, Nifty ended around the day’s low to close at 17,618 levels. On the sector front, most of the indices ended in the red except for realty, PSU bank and pharma. Importantly, the broader indices continued their outperformance and gained in the range of 0.4-0.8%.

The performance of global markets is largely dictating the trend and we may see the prevailing bias to continue in absence of any major domestic event. Indications are pointing towards further slide in Nifty and expect the index to find support around 17,450 levels. Amid all, the buoyancy in midcap and smallcap space is offering ample trading opportunities so traders should plan their positions accordingly. Meanwhile, participants will be closely eyeing the auto sales number for cues.

News

* Glenmark Pharmaceuticals announced that it has received marketing approval for its fixed-dose combination nasal spray Ryaltris® in 13 countries across the EU and UK.

* TCS announced that it has been selected by The Multi Commodity Exchange India (MCX), India’s largest commodity exchange, as the technology solution provider for its growth and transformation journey.

* JMC Projects India, a leading Civil Engineering and EPC company has secured new orders of Rs. 1,849cr. Out of it Rs 857cr was for Buildings & Factories projects in India and Rs 992cr was for Social Housing Project in Maldives.

Derivative Ideas 

NIFTY FUT has added around 12% in open interest as fresh short build up was seen in it. Current chart pattern also indicates further down move in its price. We suggest buying in NIFTY 7th OCT 17400 PE@80 and Selling 2 lots 17150 PE@33.35 each, as per below levels.

Strategy:- BUY NIFTY 7th OCT 17400 PE@80 and SELL 2*17150 PE@33.35 each spread at 13.3, stoploss at 1, trgt 40.

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 331.85 TGT 439

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