- The bounce in the Nifty was on the back of the MSP announcement for Kharif crops which was sharply higher than the previous hike. This is likely to give a boost to Kharif realization and help address farm distress.
- While inflation could still be a key impact of higher MSP, that could get largely neutralized by the higher demand absorption coming from higher income levels in rural and semi-urban areas that are linked to agriculture.
- FIIs were net sellers to the tune of Rs.(-285) crores while DFIs bought Rs.279 crore on Wednesday. FII selling could continue if the global trade wars threaten to worsen from current levels.
- Markets across the world have been under pressure as the trade war threatened to spiral out of control. With the major nations split over Iran sanctions, the pressure on markets could continue today
- The pressure on the rupee could continue and that will be a key factor making IT and pharma stocks attractive. However, IT does look a tad fully priced and we see more value in pharma stocks like Lupin, Aurobindo and Glenmark at these levels.
- The MSP could give a big boost to sectors that are contingent on rural and semi urban demand. Sectors like tractors, two-wheelers, FMCG products and NBFCs could be in the limelight. Watch for M&M and Hindustan Unilever for buying.
- One more major beneficiary of the MSP story could be the agri support sector which will benefit from the higher MSP. Benefitting stocks will include UPL, Rallis, Kaveri Seeds Jain Irrigation etc.
- The INR is still vulnerable and that, along with crude oil prices, will continue to drive the stock markets in the near future.
