- The Nifty fell sharply to the 10,737 levels on Monday after it became evident that China was facing a real trade slowdown. Exports were down by 4.5% while imports were down by 7.6% in a clear sign of the effects of the trade war.
- Early results have been mixed. While TCS and Infosys were largely neutral, IndusInd disappointed on the disclosure front while Avenue Supermart disappointed on the growth trajectory. The current quarter could see pressure on margins.
- FIIs were net sellers to the tune of (Rs.-732) crores while DFIs bought Rs.527 crore on Monday. FPIs are again likely to get cautious on emerging markets as the Yuan shows signs of weakening. EM currencies, including the INR, are vulnerable.
- The slowdown in China trade led the NASDAQ down by nearly 1% even as European markets also came under pressure. Asia is strong on China stimulus hopes and the SGX Nifty is also 50 bps up in early trade.
- We continue to be negative on IndusInd Bank and we have been selling the stock from Rs.1550 onwards. We see the stock getting closer to the Rs.1300 mark as the corporate governance issues continue to hover.
- The huge layoffs at JLR UK of nearly 10% of the workforce will be positive for Tata Motors as it will result in the much-needed cost cutting. We expect the stock to cross the Rs.200 mark during the month of January.
- We have been talking about accumulating Yes Bank and with the top management change likely to happen soon, the bank still offers the only genuine private bank available at single digit valuations. Target Rs.250 on the stock.
- While the China trade factor will still weigh on the stocks, the immediate trigger for the Indian markets will be the likely stimulus from China.
