- The Nifty reacted to the weak rupee by correcting over 100 points in the last 1 hour as the weak rupee and the bond yields at 8% spooked the market. The rupee has now settled around the 71.20 mark and shows no respite.
- The one sector that looks to be a defensive is the pharma space with a mix of dollar defensiveness and aggressive growth. This is one space to focus on apart from FMCG on every dip.
- FIIs were net sellers to the tune of Rs.(-21) crores while DFIs sold Rs.(-542) crore on Monday. FIIs are still not betting on a recovery of the rupee, which normally induces FIIs to infuse funds into the Indian equity markets.
- While Europe showed some bounce on Monday after the correction on Friday, Asia is still under pressure on currency woes. The SGX Nifty is flat but could come under selling pressure of the INR and the bond yields come under pressure.
- We do see good value in HPCL at around the current market price of Rs.255 with targets of Rs.300 on the upside. We do not expect a sharp rise in oil prices beyond $80/bbl and the government is unlikely to put any subsidy burden on OMCs.
- We have been talking about Tata Motors for quite some time. With a sharp growth in domestic auto sales numbers reported by Tata Motors in August, the company is a good bet at around the Rs.265 mark with targets of Rs.300 in one month.
- We continue to bet on the pharma space and like Lupin and Cadilla pharma as our top picks for the day. We have a 15% upside target on both the stocks over the next 3 month period.
- While the GDP numbers did give a good start, the INR and the bond yields played the spoilsport. INR fall will continue to hold the key.
