BLACK MONDAY HAUNTS DALAL STREET

  • Not just financials but even rate sensitives corrected sharply as the bond market fears spread to the equity markets. With little improvement in liquidity and IL&FS making another default, the situation is surely grim.
  • Keep a watch on the debt markets. That is where most of the pressure is. Financials could come under pressure on Tuesday. This will be more pronounced in the richly valued stocks.
  • FIIs were net sellers to the tune of Rs.(-524) crores while DFIs bought Rs.1528 crore on Monday. Net figure can be misleading because FII volumes were nearly twice the normal daily volumes. Even MF volumes were relatively higher.
  • Global markets are flat to negative but the problems for the SGX Nifty could stem from internal issues like liquidity and debt market related problems. The SGX is weak but could get weaker as the day passes
  • We advise traders and investors to be extremely cautious going long on financials, especially the NBFCs and HFCs. Even short positions should be restricted to limited loss put options only. Puts on HFCs may be a good idea.
  • One can look at IT stocks like Tech Mahindra and Wipro for temporary respite in these markets. Both the stock are likely to give about 10-15% upsides from current levels and one can look at this sector for safe haven investing.
  • We expect the merger of SJVN to be positive for NTPC and we maintain our target of Rs.200 on the stock. That looks to be a safe bet also in these markets and the merger will give them reach and scale.
  • The big problems for the market could again stem from the bond markets only, with special focus on auto, realty and NBFC stocks.

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