- The Nifty and the Sensex spurted on Thursday but the push came more from short covering being the F&O weekly expiry day. Institutional buying was limited to only the domestic buyers. Most of the action was in the F&O segment.
- The markets are likely to be mixed for the week. While the dovish reaction will be a positive, the concern will be the geopolitical risk in the Middle East after Iran shot down an American driven over international airspace.
- FIIs were net sellers to the tune of Rs.438 crore while DFIs bought Rs.1241 crore on Thursday. While the market uptrend was driven by short covering, the FPIs were apparently not impressed by the status quo on Fed rates.
- Markets across the US and Europe did start in a robust manner but later the news of the worsening situation in the Middle East actually spooked global markets as they feared a worsening of the geopolitical situation.
- We expect most of the OMCs to react negatively to this heightened geopolitical risk in the Middle East. We suggest selling into stocks like IOCL, BPCL and HPCL for the short term with 10% downside targets on all the 3 stocks.
- With the Budget likely to focus on EVs, one area to look at will be the auto sector. We like Maruti and Eicher at current prices where there is a genuine attempt to shift to EVs. Both could have nearly 10% upside from current levels.
- We stay long on Tata Steel on the back of improved demand from China. We target Rs.600 as the target price for Tata Steel in the next one month. However, we continue to be negative to cautious on JSW Steel.
- The oil story could hurt markets on Friday. Also traders are likely to go light into the week end to avoid any surprises.
