- The markets lost steam after higher crude prices and a weaker rupee put pressure on the markets leading to losing over 400 points from higher levels. The A/D ratio was sharply unfavorable in the ratio of 16:34.
- The Brent prices have gotten closer to $71/bbl on Monday after unrest in Libya threatened to disrupt supply in addition to the pressures coming from OPEC supply cuts and the sanctions on Iran and Venezuela.
- FIIs were net buyers to the tune of Rs.330 crores while DFIs sold Rs. (-624) crore on Monday. The pressure of selling from domestic investors continues and is coming from mutual funds and from insurance companies.
- Markets have been largely lackluster on Monday with the limited directional market in any of the global markets. Global markets have been observing oil and the dollar closely. Even the SGX Nifty has been large without direction.
- We believe that the proposed merger of LVB and Indiabulls Housing will be positive for Indiabulls. It gives them access to a banking license and also to the strong southern franchise. We see Indiabulls Housing crossing the Rs.1200 mark this quarter.
- With the rupee weakening and likely to be under pressure due to the dollar swap auctions, the IT stocks could once again be in favor. We are positive on Infosys around the 765 levels for quarterly targets of Rs.850.
- We recommend accumulating Bajaj Finance around the Rs.3000 levels for targets of Rs.3500 in one quarter as it is likely to be the best play on the fast-expanding consumer finance market in India.
- For the day, oil and rupee would be the two key macros that will continue to weigh on the market sentiments in a big way.
