- The pressure on financial stocks is likely to continue due to asset quality concerns of vulnerable banks and non banking finance companies. Expect Yes Bank and Indiabulls Housing to remain under pressure.
- Markets are already building in a 25 bps rate cut and that should keep larger banks in the limelight. Expect positive undertones on larger banks like HDFC Bank, Kotak Bank and SBI; wherein one can look at 8-10% upsides.
- FPIs were net sellers to the tune of Rs.469 crore while DFIs bought Rs.505 crore on Monday. FPI flows hold the key if the markets have to be able to bounce decisively from lower levels.
- The undertone is cautiously optimistic across the US and Asia although the UK markets have been sceptical about the future outlook for BREXIT. SGX Nifty is in positive territory but could be cautious ahead of trading holiday.
- With Aramco reverting to full production, we see oil prices settling lower. This is likely to be positive for downstream oil companies such as IOCL and BPCL could see nearly 10-15% upsides from current levels. Trade accordingly.
- We expect vulnerable banks and financials to continue to remain under pressure and one can look to play these stocks on the down side. These include stocks like Yes Bank, IndusInd Bank, ICICI Bank etc.
- We see Biocon having good upside potential at the current market price of Rs.225 with upside targets of Rs.280. It remains the one stock with a solid portfolio and limited exposure to the US generics segment.
- Markets could be cautious ahead of the trading holiday on Wednesday and again on the coming Tuesday.
