- The Nifty staged a smart recovery on the last two days of the week but it could be under pressure as the US intends to pursue its $200 billion worth of trade tariffs on China. That could gain raise the spectre of a global trade slowdown.
- There was some respite from the RBI. While the RBI weekend package may not be too significant the decision to do Open Market Operations (OMOs) worth Rs.1 trillion should really help in ensuring that bond yields do not go much higher.
- FIIs were net buyers to the tune of Rs.1091 crores while DFIs bought Rs.115 crore on Friday. The FII buying was quite surprising although a lot of arbitrage positions did get built on Friday in the midst of volatility.
- Most of Asia is under pressure on Monday as the trade war is likely to have its impact on the markets. The SGX Nifty is already quoting below the 11,500 mark and the trade war pressure is likely to rub off.
- A strong bet in this situation of a weak rupee will be the pharma space where the first green shoots of a more favourable FDA position is becoming apparent. We like Sun Pharma and Lupin for 20% upsides from current 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.
- A lot of financial stocks which are quoting at the upper band of valuations like IndusInd Bank, Bajaj Finance and Indiabulls Finance could come under pressure on Monday if the Trade points to a real slowdown in global growth.
- The rupee rescue package was too small to be relevant. A lot would depend on the OMO and the way the global trade war shapes up.
