NIFTY BOUNCES SHARPLY ON WEDNESDAY

  • The sharp bounce in the Nifty was driven by conciliation between the RBI and the Finance Ministry and the RBI decision to infuse Rs.40,000 crore into the money markets to overcome the liquidity crunch.
  • Metal stocks took a hit on Wednesday due to concerns over a China slowdown. Economists are expecting Chinese growth to come down to 6.5% and that is likely to have an impact on metal demand. Stay short on metal stocks.
  • FIIs were net sellers to the tune of Rs.(-194) crores while DFIs bought Rs.1125 crore on FIIs have sold a total of $6 billion in equity and debt through the month of October on global cues.
  • The sharp bounce in markets across the globe including the US, Europe and Asia is likely to rub off positively on the Indian markets too. The SGX Nifty is already above the 10,400 mark although the Iran sanctions will remain a hangover.
  • With Iran sanctions looming, India may end up making rupee payments to Iran for the imported oil. This will be positive for IOCL as it saves them substantial foreign currency risk. Trade long on IOCL for 25% upsides from current levels.
  • With the Kharif season over and the Rabi season also likely to benefit from higher MSP, the stock to watch out could he UPL. Buy at around 620 levels for quarterly targets of Rs.800 on the stock.
  • One can look to either buy put options or sell futures in Coal India for downside targets of Rs.250. With a lower OFS price, the additional liquidity in the market is likely to put pressure. This is more of a technical choice.
  • The big overhang at this point of time is the nature and colour of the Iran sanctions which take effect over the week end.

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