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Nifty Outlook

The benchmark indices hovered in a range before ending the session with minor losses of 0.3%. The continued weakness in banking stocks led the index to end lower. On the contrary, pharma and IT lent support to the markets. The broader markets performance was mixed as Midcap ended flat whereas Smallcap outperformed and ended higher by 0.7%.

The continued weakness in banking stocks, due to increased fear of a spike in NPAs, is limiting upside despite the strong performance from the other sectoral pack. Going ahead, the updates on COVID-19 cases, vaccination drive and state government actions would be key monitorable for the markets. Further, the earnings season starting next week would induce stock-specific volatility. Meanwhile, we suggest continuing with a cautious approach and avoid overleveraging.

News

* South Indian Bank reported its Q4 update wherein deposits slip 1% QoQ and 0.1% YoY. CASA up 5.4% QoQ and 18% YoY. CASA ratio at 29.73% against 27.93% QoQ and against 25% YoY.

* L&T’s renewables arm has secured a turnkey EPC contract, from the consortium of ACWA Power and the Water and Electricity Holding Company (a subsidiary of the Public Investments Fund of Saudi Arabia (PIF)), for Sudair Solar PV Project of 1.5 GW capacity.

* Alkem Labs announced that the Board of Directors of the company approved the commencement of commercial production/ operations at the Chakan manufacturing facility of Enzene Biosciences Limited (subsidiary of the Company) w.e.f. April 9, 2021.

Derivative Ideas

DRREDDY FUTS added around 7% in open interest as long buildup was seen in it till closing time. Current chart pattern also indicates further up move in its price. We suggest buying DRREDDY 4900 CE as per below levels.

Strategy:- BUY DRREDDY 4900 CE BETWEEN 90-95 STOP LOSS 70 TARGET 130.

Investment Pick - Crompton Greaves Consumer Electricals Ltd.

Crompton Greaves Consumer Electricals (CGCE) is engaged in manufacturing and marketing of a wide range of consumer products ranging from fans, light sources and luminaires, pumps and household appliances such as geysers, mixer grinders, toasters and irons.

We like CGCE for its strong growth potential, consistent rise in market share in its key segment coupled with healthy dividend pay-out ratio, strong cash flow generation, lean working capital cycle and robust return ratios. We recommend a Buy on the stock with a target price of Rs. 479.

Buy Crompton Greaves Consumer Electricals Ltd @ 9-12 Months CMP 392.5 TGT 479

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