- Nifty cracked by 181 points and the Sensex sold off by 572 points as the weak global cues and a mountain of uncertainty came down heavily on the Indian markets. Selling was almost uniform across the board.
- The selling was quite heavy across financials and auto stocks on Thursday. The A/D ratio at 4:46 clearly hinted at a large scale selling as markets could never recover from the lows of the day. It looked more like a valuation sell-off.
- FIIs were net buyers to the tune of Rs.72 crores while DFIs sold Rs. (-390) crore on Thursday. Interestingly, DFIs have been consistently selling on select major counters and the trend had started with Sun Pharma earlier this week.
- There was a virtual carnage across global markets. The Dow was down 2%, most of the Asian markets were down over 2.5% and Europe was down more than 3% as a combination of US slowdown and BREXIT fears spooked the markets.
- The negative yield worry in the US spooked metal stocks as these are the most vulnerable to a slowdown in global growth. We stay negative on Hindalco and Vedanta and estimate another 20% downside from current levels.
- With oil stabilizing, most of the downstream companies are once again looking reasonably priced. We suggest buying IOCL at Rs.135 for targets of Rs.160 on the upside in the next one quarter.
- We are not giving any fresh calls for the day and will take a view after the markets stabilize and the global markets are under check.
