- The markets corrected sharply on Wednesday on the back of major growth concerns with most financial institutions pegging Q2 GDP growth at closer to 4.2%. Trump’s ambivalence also contributed to the weak sentiments in the market.
- Inflation could be the next big challenge as it has been largely driven by higher food prices, which are likely to remain sticky. It also raises questions over rate cuts and may imply that December would be the last rate cut for now.
- FPIs were net buyers to the tune of Rs.585 crore while DFIs sold Rs.890 crore on Wednesday. FPIs have had the best calendar year since Modi came to power in 2014 infusing more than Rs.85,000 crore in the current year alone.
- Most markets across the US and Europe were flat to negative. Asia has also opened weak on Thursday. The SGX Nifty is marginally in the positive but it remains to be seen how it reacts to the higher inflation numbers at 4.62%.
- Lupin is likely to be a good buy at these levels despite tepid results in this quarter. The sale of its business in Russia is likely to be value accretive for its overall valuation and one can buy around Rs.735 for targets of Rs.790 in 1 quarter.
- Another stock that could be close to bottoming out is Ashok Leyland and one can look at the stock to ride the CV and HCV trend in the medium term. Look to buy the stock at Rs.80 for targets of Rs.100 in one quarter.
- After the sound results, one can look to buy Amara Raja Batteries around the Rs.730 levels for upside targets of Rs.800 in one quarter. The niche play would be an advantage plus its expertise in emerging technologies.
- The market reaction to the inflation number is awaited as it could mean that December could be the last of the rate cuts for now.
