• Nifty lost nearly 700 points and the Sensex lost close to 2200 points in the last week as oil prices and oil subsidies spooked the markets. The selling may continue although it could be a lot more tapered.
  • The RBI decision to maintain status quo on rates is a good decision but it hit the rupee and that pulled down the markets further. From the equity point of view, this status quo is good although the change in stance is not too good.
  • FIIs were net sellers to the tune of Rs.(-3370) crores while DFIs bought Rs.1902 crore on Friday. FIIs have sold close to Rs.9300 crore of equity and debt in the first 4 days of October and that could continue in the coming week too.
  • With the markets across the US and Europe tanking on Friday, the trend on Monday is likely to be on the downside. China is down by 2.5% and one could see the Nifty getting closer to the 10,000 levels in this correction.
  • While traders need to be cautious, it is time for investors to take out their shopping basket. The focus should be on oil refiners and on consumption stories that have are now available at really low prices.
  • Shopping basket No.1 will be focused on oil refiners like IOCL and Reliance Industries that are likely to benefit from inventory valuation on the back of higher crude prices. Buy with 25% upside potential with margin of safety.
  • Shopping basket No.2 will be focused on consumption stories like Titan, Marico and Britannia. One can also look at Eicher, where there is a lot of pessimism. Play these stocks for 20-25% upside potential. Keep a 6-month view.
  • We stay cautious on trading but the market is presenting opportunities for medium to long term investors with a margin of safety.

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