- Nifty closed Monday just above the 11,000 mark. As markets return after a holiday, the Italian bond crisis will weigh on the Indian markets for now. Most EMs have taken a hit on Italian bond worries and the future of the Euro.
- We stay very cautious on financials and suggest not to get caught in the euphoria surrounding the IL&FS rescue package. It could be a lot more complicated. Better to keep off NB FCs and HFCs for the time being due to vulnerabilities.
- FIIs were net sellers to the tune of Rs.(-1842) crores while DFIs bought Rs.1805 crore on Monday. The selling by FIIs is likely to be further spurred by the dollar strengthening in the last few days. FII volumes are also much higher.
- While the Dow was in positive territory, NASDAQ was pulled down by Facebook. Europe was weak on Italian bond concerns. Asia is mixed but Indian markets could come under pressure due to vulnerability at higher levels.
- Traders should look at selectively buying quality auto companies that have corrected sharply. Eicher and Maruti may be good bets and the real boost may come if the RBI chooses to hold rates in the October policy.
- Marico will be a good pick at around the Rs.330 levels on the back of a sharp fall in copra prices. With the recent correction in the stock price of Marico, it should a good opportunity for a 20% upside from current levels.
- Bank of Baroda may be a good bet at around the Rs.100 levels for target of Rs.125 in one quarter. The stock is likely to eventually benefit from the merger with Vijaya and Dena due to more penetrative reach. Look for delivery only.
- Even as the RBI readies to announce the policy, there is a strong hope that rates may be kept steady to support growth.
