- The exit polls were expected to benefit the markets but the 1422 points rally in the Sensex was beyond the wildest imagination. Banks, autos, metals, and NBFCs were the key drivers of the market in hopes of the return of the NDA government.
- The sharp rally in the market combined with the sharp fall in the VIX is a clear indication that there was the aggressive covering of short positions. VIX fell 17% in a single day. That also means that at higher levels, caution is warranted.
- FIIs were net buyers to the tune of Rs.1734 crore while DFIs sold Rs. (-543) crore on Monday. The FII inflow on Monday could have been driven by a mix of equity attractiveness and also from rupee strength.
- There was heavy selling across the US and European markets on worsening trade situation in the world and the escalating Middle East crisis. Even the SGX Nifty came under pressure on global cues.
- The rally in vulnerable stocks like Yes Bank and Dewan Housing provides the perfect opportunity to sell these stocks for lower targets. We see 20% downside potential in both the stocks from current levels.
- Tata Chemicals is quoting close to it’s yearly low and should benefit from the proposed sale of its consumer division to TGBL. It should help them to monetize assets and also to focus more on soda ash. Target Rs.650-660 on the stock.
- After the solid results announced by Bajaj Auto, medium-term investors must look to buy this stock in the range of 3000 to 3020 for targets of Rs.3300 in one quarter. It is like to ride the solid export performance from here on.
- We suggest to traders to treat this rally cautiously. There could be some more upside on short covering, but not much beyond that.
