- It was a day when the dollar strength weighed on the rupee and the Nifty. With the Fed announcing strong growth guidance for the US economy, the hints are towards a stronger dollar and a weaker rupee. Trade wars are a worry too!
- Macros are likely to apply pressure on the markets at higher levels. The combination of higher inflation, lower IIP growth and higher trade deficit is likely to weigh on the markets quite heavily. Expect selling at higher levels.
- FIIs were net buyers to the tune of Rs.96 crores while DFIs bought Rs.111 crore on Wednesday. Most FIIs are currently observing the trajectory of US rates, Brent Crude and the INR. Clarity will emerge after the August Fed meet.
- Markets across the US and Europe were buoyed by the idea of the US growth coming back to spur global demand. For most of EMs, China slowing down will be the immediate concern right now.
- Tech Mahindra remains the one technology stock that is still available at reasonable valuation. The sector is seeing traction due to weaker rupee and the BFSI revival of TCS should also be positive for the stock. Target Rs.750.
- Oil downstream companies like HPCL, BPCL and IOC continue to be very good bets at these prices with oil prices plateauing out. ONGC could be a good short term play but purely from a trading perspective.
- We suggest traders to hedge their long positions with lower put options as the market is at an all time when the macros are extremely vulnerable. That makes the market susceptible to sudden shocks. Hedging with put options is a good idea.
- Too many macro data points have been negative and that is not great news for banks. Banks and metals will continue to be under pressure
