- Despite the strength in the banking stocks on Friday, the pressure on FMCG and IT stocks was a tad too strong for the markets to endure. In fact, had it not been for banking, the cuts could have been a lot deeper on Friday.
- FMCG and IT will continue to be under pressure due to weak top-line numbers for FMCG and the weak guidance given by Cognizant. A strong dollar is also likely to put pressure on the IT stock prices.
- FIIs were net sellers to the tune of Rs. (-401) crore while DFIs bought Rs.57 crore on Friday. FIIs have sold nearly Rs.1300 crore in equity and debt in the first two days of May and could be indicative of election jitters.
- The global markets were marked by a sharp rise in the NASDAQ led by most of the FANG stocks. While most of Asia remained subdued on China uncertainty, SGX Nifty is showing some positive traction.
- With ICRA downgrading the debt of Yes Bank combined with the equity downgrade by Macquarie, we expect the problems at Yes Bank stock to deepen. Get prepared for prices of below Rs.130 and trade accordingly.
- With SEBI likely to come down hard on FMPs, one of the early casualties could be the Essel Group which may unravel quite rapidly. We expect the stock price to unravel and correct by at least 30-35% from current levels.
- With Bharat Forge bottoming around the Rs.480 levels, one can look to ride the bounce in the stock to price targets of Rs.550 in the next one or two quarters. Could benefit from defense and turnaround in the US trucks business.
- While trading commences in a data-heavy week, the real focus will now shift to the more critical remaining rounds of elections and the outcome.
