• A sharp rally ahead of the RBI monetary policy led to the Nifty decisively settling above the 11,000 mark. There was selective buying and short covering in the rate sensitive sectors like banking and autos, which fuelled this rally.
  • While the markets are expecting a 25 basis points cut in repo rates, event the SBI chairperson does not anticipate a rate cut but expects the stance of the policy to be shifted to neutral. That would still be a positive cue for the market.
  • FIIs were net buyers to the tune of Rs.695 crores while DFIs bought Rs.525 crore on Wednesday. FIIs and domestic funds have been building expectations of a dovish stance in the policy, if not a sharp rate cut.
  • Markets across the globe showed some negative reaction to the improvement in the US trade deficit as it clearly showed that the trade war was compressing trade. SGX Nifty is also in negative but would largely predicate on the RBI policy today.
  • We expect this budget to be a game changer for the consumer facing auto stocks. We like Maruti, Eicher Motors and Hero Moto at the current levels from an urban and rural demand accretion perspective. Play for 20% upsides.
  • Traders must again use higher levels in Zee Entertainment to either sell in futures or to accumulate put options. The undertone continues to be very brittle as the infrastructure investments are unlikely to come back in a hurry.
  • One must look at accumulating Tata Steel at current prices after the sharp correction and the expectation of the government likely to support with import duties. Buy around Rs.480 for targets of Rs.550 in one quarter.
  • With the 11,000 mark decisively cleared, a lot will depend on the stance of the monetary policy to drive future direction of the markets.