- As we had mentioned in the report on Thursday, the financials bore the brunt of the fall after the sharply higher inflation almost ruled out any repo rate cuts in the next two policies. Rising NPAs are also a worry in banks.
- Despite the steep valuations, it is the consumer staples space that shows a lot of promise. The strong growth in profits by Nestle clearly indicates that this sector could still be the big beneficiary of the budget and the rural spending.
- FPIs were net buyers to the tune of Rs.1061 crore while DFIs sold Rs.960 crore on Thursday. There were some large block deals in the PSU stocks like ONGC and NTPC where domestic funds were selling to the FPIs.
- The US and UK markets came under some pressure even as rest of Europe was flat. Asia has been largely mixed even as the fears of the pandemic spreading have been causing some concern in the Asian markets. SGX is trading in positive.
- We like Reddy Labs after the recent acquisition of a huge portfolio of drugs from Wockhardt. It is likely to give a boost to the domestic business of Reddy Labs. We suggest buying Reddy Labs at Rs.3320 for targets of Rs.3700 in 1 quarter.
- With the big boost to spending power of people in the budge and the sharp rise in rural spending commitment by the government, Dabur will be an obvious beneficiary. Buy Dabur at Rs.520 for targets of Rs.600 in three month frame.
- RBL Bank is likely to face pressure at bounces and we suggest selling RBL Bank in the range of 325 to 335 for lower targets of Rs.280 as the overhang of bad assets is likely to stay on for some time on the stock.
- Financials may continue to remain under pressure due to higher inflation and that trend is likely to put further pressure on the PSU and vulnerable private banks.
