- The border tensions escalated on Tuesday with Pakistan violating Indian airspace. While the IAF shot down an F-16 aircraft, it also lost a MIG in the process. The pressure on the markets could also continue on the back of higher crude.
- US crude stocks plunged which now threatens to take the crude prices higher. That could bring the downstream oil companies like HPCL, BPCL and IOCL under pressure as subsidy pressure could be loaded on these companies.
- FIIs were net buyers to the tune of Rs.423 crores while DFIs bought Rs.67 crore on Wednesday. FII buying has sustained although there have been warnings of selling if the border situation aggravates further from these levels.
- Markets across the US and Europe were largely lacklustre. Asia has been cautious in early trades and the SGX Nifty has been trading in the positive. However, any worsening border situation could mean increased volatility.
- With higher crude prices likely, the government may push some of the subsidy burden on the downstream oil companies. With elections approaching, the government may not be too keen to impact inflation. Sell HPCL and BPCL.
- L&T is the one stock to watch out for as order books have shown a distinct sign of turning around. We suggest buying L&T at Rs.1280 levels with target of Rs.1,400 in one quarter.
- Stay cautious on pharma companies like Cipla with a strong domestic sales franchise. The recent NPA order capping the price of a large number of essential drugs could be a margin negative. We stay negative on Cipla.
- The border situation remains fluid at this point of time. We expect the market to be met with selling on F&O expiry day. Use rises in the market to sell.
