• Crude oil got dearer as a G-20 truce combined with supply cut talks took the price of oil up. That also resulted in a sharp correction in the INR as it fell 1.26% in a single day and closed beyond the 70/$ mark.
  • The positive PMI manufacturing of 54 is the first sign of a manufacturing revival. The growth in the top line was evident from the 22% growth in sale reported by companies in the second quarter. That is good news for manufacturing.
  • FIIs were net buyers to the tune of Rs.293 crores while DFIs sold Rs. (-807) crore on Monday. There was a lot of domestic selling in Sun Pharma counter after the SEBI letter and also on HDFC Bank that may be more of a one-time affair.
  • There was a strong positive reaction to talks of a trade war truce over the weekend. The markets across the US, Europe, and Asia were up by nearly 1.5 to 2%, although India was more subdued. SGX Nifty is marginally in the negative.
  • We continue to be negative on Sun Pharma on its recent corporate governance issues with allegations of insider trading around the Ranbaxy acquisition. At Rs490, Sun Pharma looks set to breach its low and go below Rs.400. One can play short.
  • The sharp rise in the PMI manufacturing is a clear indication of the revival in the capital cycle. Long-term investors can pick L&T at the price of Rs.1420 with targets of Rs.1600 in one quarter.
  • We have been repeating that the combined support of the RBI and the PSU banks will be a big plus for NBFCs. One can look to buy Dewan Housing at Rs.210 for targets of Rs.300 in one quarter on maturity clean up.
  • Markets are likely to be a tad cautious ahead of the monetary policy on 05th and the OPEC meeting on the 06th. Avoid taking heavy positions.