- The sharp correction in the Nifty on Tuesday marked the 8th successive corrective session making it the longest spell in over 5 years. The markets were spooked by higher crude prices and domestic liquidity and profit concerns.
- The weak profit growth in the third quarter on the back of rising input costs remained a major overhang for the Indian equity markets. Input costs of metals and oil continue to be a challenge in the current quarter also.
- FIIs were net sellers to the tune of Rs. (-1240) crores while DFIs bought Rs.2337 crore on Monday. Since the corrective phase began in the markets, FIIs have been consistent sellers despite starting February with aggressive inflows.
- Markets were largely lackluster even as it touched a near 3 month high on the MSCI Global Index. Markets have been positive on hopes of a smooth BREXIT and fructification of trade talks.
- We expect steel companies to come under pressure due to the sharp rise in imports of finished steel. JSW Steel looks the most vulnerable and one can trade short for downside risks of another 10% from current levels.
- We believe that Zee may be once again ready to be sold in the range of Rs.440-450 as the larger group related problems and the infrastructure funds locked up is an overhang. One can target for the stock to go below the Rs.400 mark.
- Traders can look at buying ONGC as a crude play. The stock is being priced for a much lower average crude realization. One can look to buy ONGC around Rs.135 with targets of Rs.160 in one quarter.
- The consistent sell-off spree should worry about the markets. A bounce should be on the cards on the back of short covering after 350 points wiped out on Nifty.
