- After a smart opening on Tuesday, the markets literally crumbled with the Sensex losing over 2500 points from the peak. The domestic pressures and the absence of any stimulus from the government are beginning to tell.
- Banks are likely to remain under pressure after the government decided to not announce any monetary stimulus measure apart from the routine LTRO. Markets were expecting a rate cut and liquidity infusion, which did not come through.
- FPIs were net sellers to the tune of Rs.4045 crore while DFIs bought Rs.3422 crore on Tuesday. FIIs have been virtually relentless in their selling in the last one month and have sold off more than Rs.56,000 crore in equity and debt put together.
- Markets across the world showed a bounce. US markets were up by 4-5% while the European markets were also up by 2-3% on stimulus hopes across the globe. Asia is flat to positive as is SGX Nifty, but such gains have been frittered quickly.
- If you are a long term investor it is time to start picking up the defensives. Hindustan Unilever can be picked up around Rs.2000 for targets of Rs.2200 in one quarter. This is the best de-risked play on the consumer story.
- We have been warning about other private banks for some time now. We expect stocks like ICICI Bank, Axis Bank, Bandhan, RBL Bank and IndusInd to remain under pressure till the time the Yes Bank issue is fully fixed.
- Tata Motors at Rs.77 can be a good long term accumulation story with limited downside risk. One can look to adopt a phased approach to buying into this stock. With Chinese demand likely to revive, it may be the biggest beneficiary.
- While the bounce in the Nifty SGX is a good sign, the more important cue would be the ability to sustain at higher levels.
