- In a way, the pre-election rally is already on and the sharp re-rating in the markets is already there for all to see. But the A/D ratio of the market as a whole has been turning negative and that could imply caution for markets.
- The week is expected to be a busy week in terms of data flows. Positive trade deficit numbers will keep the rupee strong. Oil prices and the Fed meet during the week will also be critical data points for investors.
- FIIs were net buyers to the tune of Rs.4323 crores while DFIs sold Rs. (-2130) crore on Friday. FIIs have now infused over Rs.20,000 crore in the month of March and over Rs.30,000 crore since the last week of February.
- Markets were extremely buoyant across Asia, Europe, and the US on Friday on hopes that the trade war and the BREXIT impasse should get sorted. The SGX Nifty is also in positive territory and spot is likely to cross 11,500 this week.
- We suggest to traders and investors to unwind part of their FMCG portfolio at higher levels. With HUVR warning of weak growth in the fourth quarter, frothy valuations may be hard to sustain. Exit at least 30% of FMCG holdings.
- It may be time to pick tech stocks after a brief correction in the last few days. The $5 billion dollar swap by the RBI will keep the lid on the rupee appreciating too much. With the dollar regaining strength, time to pick Infosys / TECHM for 20%.
- There is sustained buying from institutions on Bharat Electronics on hopes of solid defense order flows in the coming months as India steps up its defense ante. One can look to accumulate with targets of Rs.125 in one quarter.
- Long traders must be cautious around the 11,500 levels of the Nifty. We suggest caution on FMCG and banking space where the froth has been aggressive.
