- Nifty at 12,000 and Sensex at 40,000 are likely to be very important psychological levels and it will require a mix of domestic reforms and helpful global environment to be able to breach these levels decisively.
- The next big trigger will be the cabinet formation. While the markets will be interested in the allocation of portfolios like finance, commerce, industry and oil, the power equations in the cabinet will also be closely watched.
- FIIs were net buyers to the tune of Rs.1215 crore while DFIs sold Rs.(-328) crore on Monday. FPIs have been consistent buyers since the exit poll outcome and that has helped the market to get closer to new highs.
- The US and UK markets are shut for the day but the Chinese markets were sharply higher on prospects of an end to the trade war. The SGX Nifty is trading in negative territory and the psychological levels could be critical for the markets.
- After the stellar results, we again reiterate our buy call on NTPC. At Rs.133, the stock has an upside till Rs.170 in the next one quarter as it could be the big beneficiary of the next round of power sector restructuring.
- We continued to remain cautious on stocks like IndusInd Bank, Yes Bank and Zee TV as these could again come under bear attack once the short covering on these counters is over and done. Use every bounce to short these stocks.
- IT companies could come under pressure as the H1-B situation starts getting more stringent and expensive for IT companies. A rise in cost could hit margins at Wipro and TCS. One can look to buy put options on both these stocks.
- While we expect the short covering to continue, the F&O expiry volatility may be the key determinant of the trend on Tuesday.
