- The markets almost closed flat on Tuesday after the key drivers of the rally like banks and autos came under pressure. After the 3000 point rally in the Sensex in just 2 days, there was some profit booking coming in at higher levels.
- For now the markets may be a bit cautious as there are major concerns over the solvency of industrial groups like Essel Group and the ADAG groups at the current levels. This could prove to be the overhang on Wednesday.
- FPIs were net sellers to the tune of Rs.828 crore while DFIs bought Rs.473 crore on Tuesday. After a single day of aggressive buying on Monday, the FPIs are back to their selling ways; something that should disappoint the markets.
- The Dow and the NASDAQ reversed early gains of Tuesday as Trump hardened his trade rhetoric and reiterated that they would not allow a partial trade deal. Earlier China had walked out of talks but Mnuchin had assured that all was well.
- With the trade rhetoric turning slightly tough, we prefer the safety of non-cyclical sectors like IT and FMCG. Both these sectors could be the safe bets. We like stocks like Infosys, Tech Mahindra, Colgate and Britannia at current levels.
- Among the NBFC space, we do see value in Muthoot Finance. One can look to buy the stock around the 690 levels for targets of Rs.750 on the upside. The stock is likely to benefit from better gold prices and wider loan spreads.
- We continue to remain negative on Zee Entertainment and suggest traders to use levels of around Rs.290 to again sell Zee with targets of Rrs.255-260 on the downside. Any short covering should be used to sell into the counter.
- While markets could be under pressure, expect heightened volatility as the markets are now just one day from F&O expiry.
