NIFTY WEAKNESS CONTINUES ON RUPEE WOES

  • The Nifty did manage a late recovery on Thursday although it was still in negative territory as the rupee weakening to around 70.85/$ spooked the equity markets. Being the last day of the week, markets are likely to be under pressure.
  • The big story in the next few days could be the resolution of the power sector NPAs. One of the unlikely beneficiaries could be NTPC which may end up with power capacity at very reasonable rates.
  • FIIs were net buyers to the tune of Rs.958 crores while DFIs sold Rs.(-1,599) crore on Thursday. Most of the trades were executed in block deals with volumes higher than normal in both the segments.
  • Markets across the US and Asia were in negative territory losing up to 60-70 basis points in trades. Asia has also opened weak and the SGX Nifty is already in negative territory. Weekend pressure could take the Nifty closer to 11,600 marks.
  • We had recommended UPL in the past post their acquisition in the US and expect the stock to scale up gradually to the 750 mark. One can still look to buy the stock with a 1-month perspective.
  • A slightly risk but worthwhile bet in this market could Reliance Infra at around the Rs.460 mark. With the sell out of power business to Adani sealed, the stock could finally start its debt reduction. Target a short term price target of Rs.520.
  • With oil prices likely to remain elevated around the Brent level of $80/bbl, ONGC certainly looks very reasonably priced at around the Rs.175 levels. One can look to buy the stock with targets of around Rs.200 in 1 month time frame.
  • Of course, the big focus will only be on the INR with the dollar getting closer to the 71 mark. RBI intervention will be the key today.

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