- The week is likely to see a higher degree of volatility domestic and FII positions reacting to the hawkish noises coming out of the Central Bankers’ meet at Jackson Hole. Markets could react negatively to Fed cues.
- Indian banking stocks could come under pressure today as the risk of a rate hike by the Fed and a weak rupee could make a rate hike likely by the RBI in October. Expect banks and rate sensitives to be under pressure on Monday.
- FIIs were net sellers to the tune of Rs.(-76) crores while DFIs bought Rs.904 crore on Friday. FII activity is likely to be under pressure on the debt side as the EM carry trade shows signs of unwinding in the next few weeks.
- Markets across the US and Europe were in positive territory on Friday as US growth promised to be stepped up. The SGX Nifty is trading above the 11,600 mark but Indian banking stocks need to be watched closely on Monday.
- It is time to be cautious on banks with stretched valuations considering their underlying NPA exposure. Apart from the power sector woes, higher rates by Fed could put pressure on stocks like Axis Bank and ICICI Bank.
- With close to Rs.3.8 trillion worth of loans (predominantly power loans) likely to go into NCLT on Monday, expect pressure to build up on PSU banks like SBI, PNB and BOB. The real pressure on Monday could come from banks.
- Vedanta at Rs.216 not only offers a good level to enter but also an attractive dividend yield of above 6%. One can look to buy the stock at around these levels for a price target of Rs.250 in next 1 month and eventual target of Rs.300.
- The joker in the pack could be the central banks as that will be the next trigger. Get ready for F&O week volatility in the stock markets.
