- The markets are broadly expected to react positively to the 25 bps rate cut by the US Fed largely along expected lines. On Wednesday, the aggressive short covering was already visible in the banking and auto sectors.
- The secondary effects of the Café Coffee Day episode should be felt in the coming days. With Rs.8500 crore owed to banks and mutual funds, CCD and SICAL could be the next basket cases like IL&FS and Jet Airways.
- FIIs were net sellers to the tune of Rs.1497 crore while DFIs bought Rs.2479 crore on Wednesday. FPIs have sold closer to $2.7 billion post the Union Budget on a mix of tax and growth concerns. They infused half that amount into bonds.
- Markets have been insipid across the globe ahead of the US Fed announcement. UK was in the negative on the back of a weak pound and BREXIT concerns. SGX Nifty is also in the negative as domestic cues are back to roost.
- We would advise investors to be cautious about ICICI Bank and Axis Bank. In both cases, the profit growth has been largely driven by factors that are not sustainable. Use higher levels to exit both the counters and look to enter at lower levels.
- We also advise caution on IndusInd Bank and Yes Bank and see 20% downside risk on both the stocks. Traders can look to cautiously play these stocks on the short side with strict stop losses.
- Long term investors must look to accumulate Maruti at the current price levels of Rs.5400 for bounce targets of Rs.6000 in the next one quarter. Investors can also look at Eicher Motors despite the weak quarterly results.
- The impact of CCD on banks and mutual funds could be the next important cue to watch out for.
