- Financials were the worst hit on Friday with stocks like Yes Bank and DHFL giving huge losses. There was heavy institutional selling and that could spill over to the coming week also.
- The real cues for the equity market on Monday will come from the debt markets. Keep an eye on other vulnerable bonds from the mid cap and NBFC/HFC space which are the most vulnerable to selling in search of liquidity.
- FIIs were net buyers to the tune of Rs.761 crores while DFIs bought Rs.497 crore on Friday. Net figure can be misleading because FII volumes were nearly 3-4 times the normal daily volumes. Even MF volumes were relatively higher.
- Markets across Europe and Asia were relatively strong on hopes that the Fed rate hike will lead to a stronger dollar. SGX Nifty is in the positive but that may not sustain if local debt problems start surfacing.
- We advise traders and investors to be extremely cautious going long on financials, especially the NBFCs and HFCs. Even short positions should be restricted to limited loss put options only. Puts on HFCs may be a good idea.
- Yes Bank could continue under pressure due to the management shift concerns and the spate of downgrades from these levels. One can look to accumulate at lower levels if a suitable alternate CEO is appointed well in advance.
- Oil stocks could be the place to hide at this point of time. One can look to buy stocks like IOCL in the downstream space and Oil India in the upstream space for 10-15% upsides from current levels.
- Keep a watch on the rupee but keep a close watch on what happens in the bond markets. That is where most of the cues will come from.
