NIFTY WEAKENS CLOSER TO THE 10,300 MARK

  • The Nifty bounce on Monday was not sustained as it corrected closer to the 10,300 levels on Tuesday. The Nifty has lost nearly 13% from its peak and now downsides appear to be open till the 9700 levels.
  • The weak rupee should continue to be a big overhang for the equity markets. On Tuesday, the rupee weakened beyond the 74/$ levels and that is likely to put pressure on the markets. Pharma may outperform.
  • FIIs were net sellers to the tune of Rs.(-1242) crores while DFIs bought Rs.1526 crore on Tuesday. FIIs have sold close to Rs.15,000 crore of equity and debt in the first 6 days of October and that has been pressuring the rupee.
  • Most European markets, as well as Asian markets, have been flat to tepid on Tuesday. The trade war and the Italian crisis appear to be the big concerns for the markets. SGX Nifty is marginally up, but domestic considerations will be the key.
  • With the government reiterating that the oil subsidy will only be a temporary measure, one can look at seriously buying into stocks like IOC. There is added reason with oil companies unlikely to cut down on dividend payments.
  • One can seriously look at very specific IT stories to buy at current prices. Tech Mahindra looks a good bet with an upside target of Rs.950 over the next one quarter on the back of 5G visibility and a weak rupee.
  • NBFC stocks may get some relief today after the promised liquidity support from SBI to the tune of nearly Rs.50,000 crore. However, stick to quality names and we suggest buying Bajaj Finance and Indiabulls Finance at these levels.
  • There seems to be some respite in sharp corrections but the markets are still vulnerable. It is best to stay light and do only selective buying into markets.

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