- The Nifty celebrated the 25 basis points hike in the repo rate with a 100 points rally on Wednesday. The rate hike was factored in, but the markets liked the fact that the RBI did not give a hawkish view on rates and inflation.
- Rate sensitives may not have much to worry about, but the big story appears to be that growth is back and is likely to drive inflation via higher spending. Bet on sectors like FMCG, consumer durables which will benefit from higher spending.
- FIIs were net sellers to the tune of Rs.(-81) crores while DFIs bought Rs.712 crore on Wednesday. The rate hike of 25 basis points could be instrumental in stemming the debt market outflows of FIIs and that will be a positive for the INR.
- Markets across the US, Europe and Asia have been lacklustre. However, the SGX Nifty continues to exhibit strength. The trend in the coming week could be higher although the rate could be more halting.
- We expect some of the NBFCS to come under pressure if the RBI hikes rates. Expect pressure on stocks like Bajaj Finance, M&M Finance, L&T Finance and select HFCs like LIC Housing and DHFL. Trade these stocks accordingly.
- Our top picks are still the FMCG picks of Hindustan Unilever, Britannia at current levels. Despite quoting at expensive valuations, they are still the best play on rising rural and urban income levels.
- With oil prices again drifting down to around $73/bbl, the pressure on HPCL could wane away. We like the stock at Rs.317 with a price target of Rs.400 in the next 1-2 months. One can also look to buy BPCL and IOCL at current levels.
- We are not changing any of our recommendations for today and we will continue to add on these stocks.
