Sensex ends 290 pts higher, Nifty above 17,000; pharma, financials, IT advance

Sensex ends 290 pts higher, Nifty above 17,000; pharma, financials, IT advance

Indian equities closed higher on Monday, led by gains in pharma, financial services, banks, auto, and IT stocks.

The Sensex rose 295.93 points to close the day at 57,420.24, while the Nifty was up 82.50 points or 0.49% at 17,086.25.

On the Nifty, Tech Mahindra, Cipla, Dr Reddy’s , UPL, and Kotak Mahindra were among the top gainers, while Hindalco, Britannia, ONGC, IndusInd Bank, and Maruti fell the most.

Pharma, financial services, bank, IT, and realty indices ended higher, while metal, FMCG, and media indices ended in the red.

On Sensex, only five (Reliance, Bharti Airtel, Maruti, Asian Painta, and IndusInd Bank) of the 30 stocks ended in the red.

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Market Performance: Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi Shares & Stock Brokers

“Indian markets opened in red tracking mixed Asian market cues as investors tracked omicron variant amid holiday-thinned trade. During the afternoon session the markets scaled back to green showing a steady trade with gaining momentum supported by gains in healthcare, industrials, and capital goods stocks. Traders were encouraged as a member of the Monetary Policy Committee (MPC) of the Reserve Bank expressed hope that in a few quarters from now, capital investment would begin to pick up even in the old economy, and said the next fiscal year is also expected to witness a decent growth.”

Top gainers/losers on Nifty

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BUY Trent Ltd: Axis Securities

Investment Rationale

-Accelerated Store expansion a key focus area: Trent’s fashion business reported a remarkable recovery in H1FY22 and the momentum is expected to continue in H2FY22 as well aided by a strong festive and wedding season led buying. This will lead the company to come back to profitability plane after having witnessed an adverse impact of the pandemic on its business. Management has indicated that it will continue to focus on store expansions at an accelerated pace of more than 100 stores per annum between Westside and Zudio over the next few years. Currently, Trent has ~195 Westside stores and ~160 Zudio stores that are operational with several additional stores being fitted out and ready to open once the necessary approvals are obtained. Given the focus on store expansion we believe Westside could continue to report a sustained 7-8% SSSG while revenue contribution from Zudio could increase beyond 21% in FY21 which in FY20 was less than 15%.

-Zudio’s value fashion orientation a new growth driver: Trent’s management has indicated a significant scale-up in the Zudio format which is a value fashion play targeting youth between 15-25 years. Zudio offers trendy products with sharp price points across entire product offerings at less than Rs. 999 and 2/3rd offered at less than Rs.499. This is a highly profitable format with high revenue per sq. ft of about Rs. 10,000 and ~40% gross margins. With backend processes and infrastructure aligned with Westside at store level Zudio has already become profitable.

-Margins to see a sharp improvement from Q3FY22E: Management continues to focus on reduction in rental and other related charges and expenses by engaging with property partners. Further, it is looking to variabalize certain expenditure with that to revenues including lease payments thus mitigating the downside pressure on margins. Cost-saving initiatives and increasing scale of operations, Trent could report significant improvement in margins in Q3FY22 and Q4FY22.

-We recommend BUY with a TP of ₹1,180/share.

Kotak Securities positive on GMR Infra, adds stock to its midcap portfolio

Sharing the changes to its midcap and largecap model portfolios, domestic brokerage house Kotak Securities said that it has added GMR Infrastructure to its midcap portfolio as international traffic has been quite muted and the brokerage expects this to pick up from 2HCY22.

342 stocks at a 52-week high

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Paytm users can now create their Health ID

Paytm announced that it has integrated National Health Authority’s Health ID, through which users can create their unique Health ID on its app. Users who create their IDs on Paytm will be able to pull their lab reports, book tele-consults with participating hospitals, and organize all their information with ease in a health locker, all on the Paytm App. Paytm becomes the largest consumer platform to enable the creation of Health IDs for both Android and iOS users.

Oil India to set up green hydrogen plant in Assam

Oil India Ltd, the nation’s second-largest state-owned oil explorer, is setting up a plant to manufacture green hydrogen at its Jorhat oilfield in Assam, the company said in a statement.

Broad market indices in the green

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ICICI Securities has ‘Buy’ rating on multibagger stock that has surged 157% this year

Radico Khaitan (earlier known as Rampur Distillery Company) is among the largest manufacturers of Indian made foreign liquor (IMFL) in India. Radico has the distinction of being among very few domestic players that have, over the years, entered and generated brand equity in the prestige and above liquor segment, said brokerage and research firm ICICI Securities.

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