• After the deceptive bounce on Wednesday, Thursday saw the Nifty again going into losses in a big way. This time it was all about global cues as US Treasury yields and Italian bonds came back to haunt the global markets.
  • The weak rupee continues to be the worry with the rupee still staying above 74/$. While there is some relief in the form of a promised NRI deposit support and NFBC support, the problem of dollar strength is likely to remain.
  • FIIs were net sellers to the tune of Rs.(-2869) crores while DFIs bought Rs.1888 crore on Thursday. FIIs have sold close to $3 billion worth of equity and debt in about 8 trading sessions in October.
  • Despite the sharp 2% correction in Europe on Italian worries, the Asian markets are showing some bounce from lower levels. The SGX Nifty is in positive territory but could come under pressure being the last trading of the week.
  • With the government reiterating that the oil subsidy will only be a temporary measure, one can look at seriously buying into stocks like IOC. There is added reason with oil companies unlikely to cut down on dividend payments.
  • The TCS results were strong with a 1.50% expansion of margins. We see TCS as the best play on the IT sector in India despite valuation concerns. One can look to buy the stock for a 10% upside targets from current levels.
  • The willingness of SBI and the other banks to fund NBFCs could result in selective in quality NBFCs at lower levels. We like stocks like Bajaj Finance and Indiabulls Housing which look attractive with 20% potential upside in a quarter.
  • While markets could give a bounce today, be cautious about the weekend effect as traders will prefer to stay light.

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