- Markets enter a tentative week with the NBFC crisis still looming. This week we could see bigger write offs from DHFL lenders. This could keep the Nifty and the Sensex under pressure with selling at higher levels.
- Crude oil has tapered but there are a series of data flows in this week including IIP data, CPI data, WPI inflation, trade data and quarterly current account deficit. These will have an important bearing on the rupee and the indices.
- FIIs were net sellers to the tune of Rs.479 crore while DFIs bought Rs.180 crore on Friday. In the month of June till date, the FPI inflows into debt have been thrice the inflow into the equities, which is normally a good sign of confidence.
- Markets across the US and Europe showed a sharp bounce on Friday after there were indications that the trade war would eventually get sorted out with China offering concessions to the US. There is no confirmation as yet.
- We stay positive on Sun Pharma due to the decision to exit the NBFC and the group pharma retail model. We suggest buying Sun Pharma at prices of Rs.400 for targets of Rs.460, notwithstanding any hiccups in the next 3 months.
- We continue to stay positive on the specialty chemicals space on the back of growth and a huge export market opening up. We like specific companies like Aarti Industries, Vinati Organics and Himadri from a 1 year perspective.
- A lot of NBFCs and select banks could become vulnerable in the coming week. We stay short on stocks like Indiabulls Housing Finance, IndusInd Bank, Yes Bank and L&T Finance, which can be good options for buying put options.
- The 12,000 on Nifty and 40,000 on Sensex will remain the resistance for this week and the next big trigger could be the Union Budget on July 05th.
