- As the IAF struck targets across the LOC in the early hours of 26th January, the markets reacted in panic before recovering most of its losses. However, the markets did close weak on Tuesday, although the damage may be over.
- Banks and rate sensitives are likely to be under pressure after the fiscal deficit crossed 122% of the full year target. It basically hints at the pressure on rates. Traders may have to be cautious on the financials.
- FIIs were net buyers to the tune of Rs.1674 crores while DFIs sold Rs. (-721) crore on Tuesday. Again these were large block trades resulting in the transfer of shares and there was little by way of any panic selling in the markets.
- Markets across the US, Europe, and Asia have been relatively subdued. The SGX Nifty is showing signs of bouncing from lower levels and that could be the key metrics to watch out for. Advice caution on banks and financials.
- The GST cut on reality will separate the realty sector on quality with only the customer-focused outfits being able to deliver value. DLF and Sobha continue to be our top picks with their North and South franchises respectively.
- Look for safe havens in this market and Coal India could be a good bet considering the higher coal output and also the attractive dividend yield. Buy at around Rs.220 with targets of Rs.260 in one quarter on the stock.
- We stay cautious on all PSU banks and private banks in the short term as the higher fiscal deficit is likely to put pressure on numbers. We see shorting opportunities in stocks like ICICI Bank and IndusInd Bank.
- Markets may see a bounce today but cues from the border could be more important from a market stability point of view.
