RUPEE DRAGS THE NIFTY DOWN

  • The Nifty corrected over 150 points on Monday as the weak rupee at around 72.5/$ dragged the markets lower. Bond yields sharply higher at 8.16% also spooked the markets with the likelihood of a rate cut.
  • Watch out for the RBI action points today. We expect clarity from the RBI either on the rates front or on the NRI bond issue. The RBI is expected to make an announcement today to stem the fall of the rupee.
  • FIIs were net sellers to the tune of Rs.(-842) crores while DFIs sold Rs.(-290) crore on Monday. The FIIs have been gradual sellers despite the weak rupee but that is more because the INR has not really underperformed the Asian currencies.
  • While Europe has been flat to positive, there is pressure visible in Asia where EM currencies are under pressure. The SGX Nifty is also under pressure and a lot would depend on the government stand on the INR.
  • Despite the negative sentiments in the consumer space, we see positive tidings in stocks like Titan which could really benefit from the revival in organized demand for jewellery. Target the stock to get back to the Rs.1000 levels.
  • The big story to watch out for could be Yes Bank after its very strong retail focus in the next few years. The stock is already down by 20% and that should give a good entry point. Buy around Rs.320 levels for targets of Rs.380 in 1-2 months time.
  • With the delayed break even of its digital foray via Zee5, we expect further pressure on Zee stock. The stock can be sold at around the Rs.475 levels for lower targets of Rs.400 in the next one quarter.
  • While the markets are still vulnerable to major shifts in the way the rupee is handled, a clear policy could help the markets today.

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