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January 23, 2025

Navigating the Opening Bell with Sbi Securities: 6 Key Technical and Derivative Insights
Broader Market Indices crack for the second consecutive day
1. Global Market:
On Wednesday, the S&P 500 gained 0.61%, achieving a fresh all-time high while #Nasdaq 100 and the #Dow ended the day 1.33% and 0.30% higher respectively.
Going ahead, the S&P 500 is likely to test 6180-6200 zone followed by 6320 level. While on the downside, the zone of 6000-5070 is likely to act as a support.
On Wednesday, #BrentOil continued its downward streak with a 0.27% loss. Going ahead, resistance is placed at the zone of $80-81, while on the downside, support is seen at 76-75.
The U.S. Dollar Index (#DXY) stabilized on Wednesday with a gain of 0.19%. This suggests a potential scenario of the currency basket being higher for longer. The 109.60-109.80 zone is expected to act as a significant resistance going forward, while on the downside, 106.50-106 is likely to act as a support.
2. Nifty View:
On Wednesday, Nifty continued its slide before staging recovery towards the last hour of the day, ending 0.57% higher at 23,155. The index has formed an inside bar pattern on the daily chart, which suggests contraction in overall volatility.
The Midcap and Smallcap Index cracked for the second consecutive day. It is advisable to avoid bottom fishing and wait for visible signs of trend reversal. Midcap Index ended 1.34% lower at 53,114, while the Smallcap ended 1.63% lower at 17,173.
Going ahead, for Nifty, the zone of 23,000-22,900 will act as a crucial support for the index. Any sustainable move below the level of 22,900 will lead to further correction upto the 22,700 level.
On the upside, a move above the 23,300-23,400 zone could lead to a short-term pullback in the Index.
On the #derivatives front, January #futures rose by 0.41 percent, while the combined #OpenInterest for the current, next, and far series rose 0.52 percent, indicating long buildup.
Among the constituents of the #Nifty index, 20 stocks have witnessed a long build-up, and 8 of the stocks have witnessed a short covering rally. While 12 stocks have witnessed a short build-up, and 20 stocks have witnessed a long unwinding.
The 23,200 strike has significant call open interest, followed by the 23,300 strike. On the put side, 23,000 has a substantial open interest, followed by a 22,900 strike.
For the weekly series, OI PCR is at 0.81. For the January monthly series, it is at 0.88.
Bank Nifty has formed a dragon fly doji candle on the daily chart, indicating buying interest at lower levels. It ended 0.32% higher at 48,724. Going ahead, the zone of 49,000-49,100 will act as an immediate hurdle for the index. While, on the downside, the zone of 48,500-48,400 will act as crucial support for the index.
3. Sensex View:
The benchmark index #Sensex formed a small bodied candle on the daily chart and closed within its previous day range. It ended 0.75% higher at 76,405.
Going ahead, the zone of 76,100-76,000 will act as a crucial support for the index. Any sustainable move below the level of 76,000 will lead to a further correction in the Index upto the 75,700 level. On the upside, the zone of 76,700-76,800 will act as an immediate hurdle for the index.
On the #derivative front, January #futures rose by 0.41 percent, and the #OpenInterest of the current series reduced by 10.67 percent, indicating short covering.
The 76,500 strike has significant call open interest, followed by the 77,000 strike. On the put side, 76,300 has a substantial open interest, followed by a 76,000 strike.
For the weekly series, OI PCR is at 0.66.
4. Key Market Indicators:
The volatility index, India #VIX, cooled off yesterday after surging for the fourth consecutive days, giving some comfort to the bulls. It ended the day 1.66% lower at 16.77 level. Going ahead, any sustainable move above the level of 17.50 will lead to an increase in the overall market’s volatility, giving discomfort to the bulls.
The #Advance/Decline ratio was largely tilted in favor of decliners for the second consecutive day.
5. Key Sectors:
Technically, Nifty IT, Pharma, Financial services, FMCG, Auto, Metal, PSU Bank, CPSE, Media, and Realty are likely to underperform in the short term. On the other hand, Nifty Oil & Gas, Infra can outperform in the short term.
6. FII/DII Data:
#FIIs sold to the tune of 4026.25 cr. while DIIs bought to the tune of 3640.22 cr.
FIIs' Long short ratio for index futures is at 17.56 as on a net basis, they sold 351 index futures.
On the stock futures front, FIIs have bought to the tune of 24103 contracts, while on the Options Front, FIIs sold 46645 call contracts and sold 271219 Put Option contracts.
Musings on Market Correction
Interesting charts, data points and investing perspective
A data-backed thread
https://x.com/BeatTheStreet10/status/1882048797230129635
NUVOCO VISTAS Q3 CONCALL
Nuvoco witnessed strong demand across all geographies, particularly in the east and south.
The company expects price realizations to remain stable in the coming quarters.
Nuvoco is focused on cost management initiatives to mitigate the impact of rising input costs.
The company is on track to commission its new cement plant in Chhattisgarh by the end of FY24.
Nuvoco generated strong cash flows during the quarter, which were utilized for debt reduction and capital expenditure.
The company expects to maintain its growth momentum in the coming quarters, driven by robust demand, price stability, and cost efficiency measures.
HUL Q3 CONCALL
HUL expects to maintain EBITDA at the lower end of the 23-24% range.
The company will continue to focus on driving top-line growth and investing in its brands.
HUL has categorized its portfolio into core, future core, and market makers to optimize investments and drive growth.
The company continues to monitor commodity price fluctuations and take proactive pricing actions to mitigate inflationary pressures.
The slowdown in volume growth was attributed to factors like moderation in urban growth and a shift towards smaller pack sizes due to macroeconomic conditions.
HUL expects to maintain healthy margins in both personal care and foods businesses.
HUL is focused on maintaining its competitive advantage through innovation, strong brands, and effective marketing.
NIIT LEARNING Q3 HIGHLIGHTS
The company witnessed strong customer additions, a 100% renewal track record, and wallet share expansion with existing customers.
Increased focus on cost-cutting by organizations is leading to an acceleration of outsourcing opportunities, which Niit is well-positioned to capitalize on.
Niit continues to invest in AI capabilities to improve learning outcomes and operational Efficiency
Outlook: The company expects to maintain 20% growth and 20% margins in the medium to long term.
TIPS MUSIC Q3 CONCALL
The company plans to increase content acquisition costs to 25-27% of revenue in the coming year.
Company is not actively involved in the content acquisition bidding war and focuses on acquiring quality content at fair prices.
The company's existing catalog continues to perform well, with songs from various periods contributing to revenue.
Bernstein On HDFC Bank
Outperform Call, Target At `2,300/Sh
Delivered A Good Set Of Numbers, Despite EPS Growth At 2% YoY
Decent NII Growth
Net Operating Income Growth Was Weak But Core Fee Income Remained Strong
Continued Opex Moderation Was Enough To Offset Weak NOI Growth
A YoY Profit Before Tax Growth Of 12% Leaves Us More Confident
Co May See Return To Mid-teens EPS Growth Trajectory In Quarters Ahead
CLSA on HDFC Bank
Hold Call, Target At `1,785/Sh
Q3 Profit Before Tax In-line
Quarter Was More Of Same With Steady Deposit Growth
Curtailment Of Loan Growth, & Largely Stable NIM And Asset Quality
Bank Has Reduced Loan Growth To A 3% YoY & Has Brought LDR Down To 98%
Expect Loan Deposit Ratio To Reach 90% Only In FY27
NIM Moderated A Bit Sequentially, Which Is Par For Course In This Environment
On A YoY Basis, Gross Slippages Are 20 bps Higher - A Decent Performance
Investec on HDFC Bank
Maintain Hold, TP 1650
Slightly miss on NII, beat on profitability
Management continues to focus on lowering LDR ratio (LDR-Loan Deposit Ratio)
Increase in agricultural slippages due to seasonality in Q3FY25
No changes to estimates for FY25/26e
Expect it would take at least two years for the bank to get its balance sheet to a steady state on CD ratio
BoFA on HDFC Bank
Maintain Buy, TP 2020
Q3FY25-No surprises-LDR finish line likely now only 3 quarters away
Seeing good early signs of synergies in liability cross-sells
Current valuations attractive 2x P/B
One of the biggest beneficiaries of any rebound in FII flows
Investors currently underweight post MSCI upweight adjustments
MS on HDFC Bank
Maintain Overweight, TP 1975
Strong quarter amid challenging environment
Asset quality steady-strong franchise among peers
Loan growth to accelerate once LDR normalized by H1FY26
Fee income very strong, up 18% YoY
Valuations remains attractive at 14x one year forward
Macquarie on HDFC Bank
O-P, TP Rs 2300
3Q25 PAT in line: decent results in a tough macro environment
Marginal increase in credit costs because of higher agri slippages
Management expects NIM to improve once macro environment improves
HSBC on HDFC Bank
Buy, TP cut to Rs 1980 from Rs 2130
3Q in line; q-o-q NIM compression of just 3bp (HSBCe: c5bp), stable asset quality are +ves
Cut FY26-27e EPS est. by c4-5% to reflect lower loan growth, some NIM pressure; inflection in loan growth is key
MOSL on HDFC Bank
Maintain Buy, TP 2050
Reported in-line earnings while margins contracted 3bp QoQ.
Asset quality witnessed a marginal deterioration
Gradual retirement of high-cost borrowings, along with an improvement in operating leverage, will support return ratios over the coming year
Cut earnings estimate for FY26/27 by 3% each, reflecting slower loan growth and CASA moderation.
To deliver FY26E RoA/RoE of 1.8%/13.9%
Nuvama on HDFC Bank
Maintain Buy, TP 1950
Better-than expected core slippage, lower LDR and a substantial gain in deposit market share
Slippage (ex-agri) stayed flat QoQ while including agri it grew 13% QoQ
Total lagged slippage ratio at 1.4% remains lowest compared with private peers.
GS On Pidilite
Buy Call, Target At `3,560/Sh
Acceleration In Volume & Rev Growth In A Tough Consumption Environment
Gross Margin Expansion Offset By Increase In Ad Spends
Key Risks Include Weaker Than Expected Pickup In The Housing Market In India
Rising Competitive Intensity In Waterproofing Is Also One Of The Key Risks
Macquarie On Pidilite
Underperform Call, Target At `2,600/Sh
Broadly In-Line Q3FY25 EBITDA
Q3FY25 Sales Growth Was Marginally Below
Underlying Volume Growth Was Healthy
Co Optimistic On Demand Vs An Optimistic Outlook On Demand Shared In Q2.
MS on Sai Life
Initiate Overweight with TP of Rs 841
Well Positioned for Growth
Sai is one of India's largest integrated CRDMOs
Offers one stop discovery, development and manufacturing
Distinctive onshore and offshore delivery platforms should drive above industry growth
Believe its early investments in the platform will drive faster-than-peer growth with operating leverage gain
UBS On HUL
Neutral Call, Target At `2,700/Sh
Revenue Growth Broadly In-line; Weak Product Mix Impacts UVG
Volume Led Growth In Home Care; Price Hike Impacts Personal Care
Expect Near Term Demand To Remain Soft
Cut EPS Est For FY25-27 By 1-5% To Reflect Near Term Demand Weakness
CLSA On HUL
Underperform Call, Target Cut To `1,924/Sh
Weak Growth & Lower Margin In Q3
Three Of Four Segments See UVG Decline; Minimalist Acquisition Announced
FY25-27 EPS Cuts Of 4-6%
Margin To Weaken Especially For Beauty & Wellness As Growth In Focus
GS On HUL
Neutral Call, Tgt At `2,480/Sh
Q3 Below Estimates On Volume & EBITDA Growth
Urban Slowdown Has Worsened, Downtrading To Small Packs Underway
Soap Volumes Decline Driven By High Price Increases And Grammage Cuts
EBITDA Margin Lower YoY Despite Low Ad Spends
Management lowers near term outlook to moderating consumption environment from stable environment
Acquired Minimalist at 6x EV/sales; the valuation seems fair given the acquisition is large, profitable, synergistic and complementary.
After many quarters, pricing turned positive at 2%.
Nuvama on HUL
Maintain Buy, TP 3225 (FROM 3395)
Volume growth below expectations, overall inline
Given current RM inflation, we are cutting FY25E/26E/27E EPS by 3%/5%/5%
Investec on HUL
Maintain Hold, TP 2643 (FROM 2654)
No near term recovery on cards
Near-term growth outcomes remain challenging for HUL
signal weaker demand trends for the sector as a whole.
HUL’s intent to take the inorganic route with the Minimalist acquisition (likely sub 1% of FY26E sales)
Believe visible triggers for improving revenue growth will be the drivers of earnings, valuation, and stock price from current levels
HSBC On Varun Bev
Buy Call, Target Cut To `680/Sh From `770/Sh
Q4 Is Seasonally A Small Quarter In India, But Africa Expansion Is Compelling
Industry’s Competitive Landscape Is Intensifying
National Footprint & Client Reach Make Co An Able Challenger
Nomura On AB Real Estate
Buy Call, Target Cut To `2,700/Sh
Management Appears Confident Of Launching INR80bn In Projects In Q4
Co Has A Robust FY26 Pipeline To Reach `9,000-10,000 Cr In Pre-sales
Cut FY25/FY26 EPS By 30%/22% Owing To Weakness In Pulp & Paper Segment
MOSL On Tata Comm
Neutral Call, Target At `1,850/Sh
A Mixed Bag Results In Q3; Digital Recovers, Core Connectivity Weak
Adjusted EBITDA Margin Improved On Deconsolidation Of Lower-Margin
Netfoundry Business & Slightly Lower Losses In Digital Portfolio
Mgmt Indicated That Funnel Additions Remain Robust, Especially In Intl Biz
Order Booking Was Relatively Slower
Jefferies on BPCL
Maintain Buy, TP 370 (FROM 410)
Q3 Earnings Miss, Outlook Better, valuations remain favourable
Refining miss, outlook better on capacity closure
Marketing segment slightly better, LPG losses widening
LPG subsidy relief could drive earnings upgrade
Karge capital commitments with uncertain payback
Investec on BPCL
Maintain Sell, TP 250
Headline miss due to inventory loss
Operational performance remains steady
Core refining margin performance unclear as company stopped disclosing inventory gains/losses
Marketing margins improves due to recent correction crude and product cracks
Jefferies on Auto
Remain positive on Indian auto with preference for 2W and tractors
Preferred buys M&M, Eicher Motors and TVS Motor
Mahindra PV market share at new high, gaining in tractors and LCV too
TVS domestic 2W market share at 18 year high
Mahindra and Hyundai PV market share at 12-17 year low
Alert-Market share data as on 9MFY25
Macquarie On Polycab
Outperform Call, Target At `7,928/Sh
Strategic Outlook Implies Nearly 15% Revenue CAGR FY25-30
Reported Revenue In-line With Estimates
Key Positive Surprise Was Better Than Expected Cable & Wire Segment Margin
Citi On Polycab
Buy Call, Target At `8,600/Sh
Revenue Growth Of 20% YoY Was Below Estimates
Better Than Expected Margin Was Seen In Wires & Cables Segment
Lower Loss In FMEG Business, EBITDA Growth YoY & Was Ahead Of Est
Wires & Cables Margin Improvement Was Led By Normalisation Of Margin
UBS on Polycab
Buy Call, Target At `9,000/Sh
Q3 Missed Consensus Topline By 3% But EBITDA Beat Of 7%
Cable & Wire Topline Growth Of 12% Drove Miss On Topline.
Miss On Result Was Led By Slowing Government Capex
Slowing Government Capex Should Recover With Rebound In Govt Capex
FMEG Segment Saw Sequential Reduction In Loss
Jefferies on Polycab
Maintain Buy, TP 9220
Wire demand slackened due to softening of copper price
Higher channel inventory also in start of Q3
Healthy guidance for medium term
View Polycab as good play on capex and housing
FY24-27 Sales/PAT CAGR at 24%/25%
MS on Polycab
Maintain Overweight, TP 7537
Disappointing implied domestic cable and wire volume
Implied domestic volume growth in single digit
Cable demand was health but weaker in copper
Margin improves driven by wire business and exports
Citi On Persistent
Sell Call, Target Raised To `5,000/Sh
Reported Decent Q3; Revenue Was In-line, While Margin Were Better
Key Focus Areas Include 9-month CFO/EBITDA At 50%
Headcount Up 3% QoQ/ 2.5% YoY With Utilisation At Highest Ever Is Also Important
Revise FY25/FY26 EPS By 2-6% As Incorporate Earnings
Co Continues To Deliver Consistently
Valuations Are At 51x FY26 Cons EPS – Pricing In All Positives
HSBC On Persistent
Hold Call, Target At `5,650/Sh
Co Successfully Accelerating Non-Healthcare Verticals, Which Is A Positive Surprise
Well Positioned To Grow At Industry-Leading Rate In FY26 As Well
Consensus Estimates Already Factor In This Both Growth & Margin Improvement
Nomura On Persistent
Neutral Call, Target At `6,200/Sh
Resilient Growth In Q3 Driven By Strong Execution
Margin Improvement Provides Additional Comfort
Revenue Broadly In-line
Deal Wins Decent; Strong Execution Likely To Help Deliver Industry-Leading Growth
JPM on Persistent
OW, TP Raised to Rs 7200
Scaling new heights; buy on dips
Rev grew 4.6% CC QQ & Ebit margins expanded 90bps QQ to 14.9%
Co now aiming for $5bn rev by FY31& maintained its FY27 target of $2bn & continues to aim for 200-300bps margin expansion over next 2-3 yrs
Kotak Inst Eqt on Persistent
Sell TP Rs 5000
In-line Q3 on growth & margins
Persistent unveiled a new aspiration to reach US$5 bn revenue by FY2031
Expect downside risks to Co’s aim to expand margins by 200-300 bps by FY2027
CLSA on Indian Healthcare
Expect India pharma market to grow at 8-9% in 2025, slightly better than US market
Indian export oriented companies will be dependent on large on-off drugs
Expect generic price erosion in mid single-digit
Expect competition for key drugs to impact DRL, Zydus and Cipla
Prefer companies with higher domestic market exposure and hospitals
Prefer diagnostics over drug makers
Top picks Apollo Hospitals, Max Healthcare and DR Lal Pathlabs
Dr Reddy Labs - Downgrade to Underperform from Hold, TP 1090 (FROM 1140)
Aurobindo Pharma - Upgrade to Outperform from Hold, TP 1400 (FROM 1540)
Dr Lal Pathlabs -Upgrade to Outperform from Hold, TP 3240 (FROM 3110)
CLSA On Dr Lal PathLabs
Upgrade To Outperform Call, Target At `3,240/Sh
Co Has Seen Continuous Improvement In Volume Growth With Steady Pricing.
Stock Is Down 22% From Its Previous High In Oct 2024 Despite Improvement
Stock Is Down Mainly Due To A Cautious Outlook On Its Margin For H2
See Near-term Margin Outlook As Transient & Should Improve As New Labs Stabilise
Stock Correction Is Overdone As It Trades At A Discount To Its Peers
Considering Its Dominant Positioning In North & Strong Expansion Plans
CLSA on Aurobindo Pharma
Upgrade to Outperform from Hold; Cut TP to Rs 1400 from Rs 1540
Growth Drivers -
Commercialisation of Pen-G plant in 2025 and Vizag
China plant expansions
Launch of biosimilars from FY26
Stable price erosion in US generics
CLSA on Dr Reddy
Downgrade to Underperform from Hold; Cut TP to Rs 1090 from Rs 1140
See earnings to decline at 10% CAGR over FY25-27 due to decline in margin in FY27 led by gRevlimid expiry

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