NIFTY CLOSES NEAR THE 10,900 MARK

  • Nifty on Friday closed just shy of the 10,900 mark as big expectations were built up ahead of the G-20 Summit. The 90-day truce between the US and China on trade tariffs will be a sentimental boost for the EMs including India.
  • The RBI is expected to maintain status quo in rates in its December 05th policy on the back of a dovish Fed approach as well as falling inflation and weak GDP growth in India. Rate cuts may not happen this time around.
  • FIIs were net sellers to the tune of Rs.(-333) crores while DFIs bought Rs.1490 crore on Friday. November saw nearly $1 billion come into equities and a little less than that into debt. Fed dovishness may help the FPI inflows in December.
  • Most markets were flat to negative on Friday ahead of the G-20 Summit but the 90-day freeze on tariffs should give some breathing space for all markets across Asia. Europe may be under stress due to BREXIT uncertainty.
  • We are 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 get back to its low off around Rs.435. One can play short.
  • With the latest report by ICRA on the huge capital shortfall of aviation companies, we could see Jet outperforming Indigo due to its Etihad advantage. One can look at buying Jet and exiting Indigo to play on the outperformance.
  • We expect Tata Motors and Maruti to come under pressure on weak numbers. Traders can play long on M&M and short on Maruti to play the relative outperformance of M&M. It will be better than a directional bet.
  • Sentimentally, we believe that the trade truce combined with the dovish Fed language could take the Nifty past 11,000 during the week.

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