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Investment Guru India 2020-05-21 09:53:52

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Nifty Outlook

Markets witnessed healthy buying in today’s session and managed to end with the gains of over 2 %. After the initial uptick, the benchmark hovered in a narrow range and sharp recovery in the select index majors in the last one and a half hour helped the index to inch higher. Mostly sectoral indices participated in the move and the market breadth was also inclined strongly on the advancing side. Finally, the Nifty index settled around the day’s high at 9,066.55; up by 2.11%.

We feel it’s a breather after the sharp fall and further rebound in the banking pack may extend this bounce ahead. However, sustainability would be difficult at a higher level so traders should not go overboard and continue with the stock-specific trading approach. Among the sectors, we’re seeing consistent buying interest in defensive viz. pharma, FMCG and select IT and we suggest preferring these sectors over others for long trades while the underperformance may continue from the banking, financials and metal pack.

Stock In News

* JSW Energy announced its Q4FY20 numbers wherein revenue was down 6.8% YoY to Rs. 1,793 cr. Its net profit came in at Rs. 108.4 cr as against Rs. 4 cr in the same quarter previous year.

* Ultratech Cement reported its Q4FY20 results wherein revenue was down 13% YoY to Rs. 10,746 cr as against Rs. 12,371 cr in the same quarter previous year. It consolidated net profit came in at Rs. 3,239 cr as against Rs. 1,086 cr.

* Dr Reddy’s Labs announced its Q4FY20 results wherein revenue and EBITDA was up by 10% YoY and 14% YoY, respectively. Its net profit registered a strong growth of 76% YoY to Rs. 764 cr.


Investment Pick

Buy Maruti Suzuki India Ltd 9-12 Months CMP 4,891.95 Target 5,886

* Maruti Suzuki reported weak set of numbers in Q4FY20 which were lower than our estimates. Volume decline of 16%, muted growth in realizations, and negative operating leverage impacted profitability for Maruti. 

* Factoring the COVID-19 impact, we have lowered our forecast for FY21E and FY22E but we maintain a positive view on the company’s growth prospects. Therefore, we have a Buy rating on the stock with a revised target price of Rs. 5,886.


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