- That remains the million dollar question; how real is the market bounce from the Nifty level of 10,276 to above the 10,500 mark. The big overhang will be the US rate action going ahead, and that does not look favourable.
- There could be the big overhang on the markets of the sharp rise in PSU banking NPAs to 12.4% in the December quarter. Attractiveness of PSU banks will depend on whether the NPA cycle bottoms out from here on.
- FIIs were net sellers to the tune of Rs.(-814) crores while DFIs bought Rs.1343 crore on Monday. Surprisingly, the impact of the ban on SGX Nifty has not been too visible although we may see a greater impact this week.
- While the markets across the globe have bounced in the last couple of days, the Nifty will return to trade on Wednesday after a trading holiday. The trend could still largely depend on the signals coming from the US Fed.
- One still needs to understand the full impact of the winding down of the SGX Nifty futures OI and that will depend on the strategy adopted by the SGX. An onshore shift looks unlikely unless it is rupee denominated and without STT charges.
- In terms of strategy, the Nifty will most likely find a bottom around the low of 10,276 that it touched on the day of high volatility. But that will still assume that the impact of the SGX Nifty trading ban will not be too huge.
- As a matter of strategy, the focus must still be on major news based beneficiaries post the Union Budget like consumption stories and the farm growth story. PSU banks and private banks may have a tougher road ahead.
- It may still make more sense to wait for the market to come down to its previous low and trade with lower VIX before buying into the market.
