- When the markets open on Tuesday, the relevant issue will not be Article 370 or Section 35A but the weakness of the Yuan and the global slowdown. These issues are likely to put pressure on the Indian markets on Tuesday.
- The metals pack is likely to be under pressure as the Chinese Yuan devaluation looks like an act of desperation by China to ward off slowing growth. The impact was visible and metals could again take a hit on Tuesday trades.
- FPIs were net sellers to the tune of Rs.2,017 crore while DFIs bought Rs.1,871 crore on Monday. FPIs have begun the month of August with nearly $0.80 billion worth of selling in the first three days of the month.
- Monday saw a virtual carnage across global equity markets. Most global markets were down by 2-3% with the NASDAQ down nearly 4% on Chinese currency woes. The weak Yuan is likely to continue taking its toll on global markets.
- We remain negative on the metals space and have short trades on Tata Steel, Vedanta with 15% downside targets as the Chinese growth slowdown becomes more acute. We do not see any respite for now.
- Technology stocks could be a good parking space for now with the weakness in the rupee vis-à-vis the dollar. One can look to buy stocks like Tech Mahindra for upside targets of Rs.720 in the next one month.
- We have a long/short trade on the auto sector. We suggest a long on Maruti and a short on Tata Motors which still looks the most vulnerable. We expect the Maruti stock to outperform Tata Motors going ahead.
- The markets will continue to remain a sell-on-rises market in the forthcoming future with little hopes of any secular bounce from here.
