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Nifty Outlook

The Indian markets opened on a flat note following subdued global cues. The IT index led the charge for the benchmark indices as it ended with gains of more than 2%. Further, recovery in the banking stocks in the second half led the Nifty to end higher by 0.3% at 15,854 levels. The broader markets too ended with decent gains of 0.2% each.

The markets would first react to Infosys numbers in early trade on Thursday. Apart from that, weekly derivatives expiry tomorrow would add to the volatility. Market participants would also keep a close watch on results from other IT majors like Wipro, L&T Tech and Tata Elxsi.

News

* ONGC is in 5-year agreement with GAIL India for sale of 90 percent of its domestic gas produce at domestic price.

* Infosys reported its numbers wherein constant currency revenue growth came in at 4.8% QoQ and reported growth of 4.7%. In rupee terms revenue was up 6%. Its net profit was up 2.3% QoQ to Rs. 5,076 cr.

* India WPI came in at 12.07% in June as compared to 12.94% in the previous month. Inflation in manufactured products, the largest component of the index, was at 10.88% in June compared with 10.83% in May.

Derivative Ideas

LTTS FUTS added around 14% 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 LTTS in cash as per below levels.

Strategy:- BUY LTTS BETWEEN 2890-2895 STOPLOSS 2850 TARGET 2990.

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 179.2 TGT 222.

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