- The liquidity crunch in the system finally took its toll on the markets as the Sensex lost nearly 320 points after 3 days of rally. The FM confirmation that FPIs will be taxed like the super rich also did not go down well with the markets.
- The FPIs have been consistently selling and that has reflected in rupee weakness. In fact, the rupee weakened to near the Rs.69/$ mark as dollar strength combined with a higher rate cut expectation by RBI weakened the rupee.
- FIIs were net sellers to the tune of Rs.1405 crore while DFIs bought Rs.329 crore on Thursday. After being ambivalent, the FPI sales have picked up momentum after the FM clarified that super rich tax will be levied on FPIs too.
- Even as Europe remained under pressure, the US markets and the Asian markets have remained strong. SGX Nifty is also strongly in the positive and the Asian sentiments are likely to hold the markets up.
- We reiterate our buy call on Indiabulls, a stock where we have been positive with a target of Rs.750. A stock with good growth and dividend yields, Indiabulls Housing is expected to take support around the current levels.
- Take profits of the table in Wipro as the stock has gotten into the expensive zone of P/E above 21 times earnings. One can instead look to switch to Infosys for traction in the next few quarters with targets of Rs.825 on Infy.
- We reiterate our buy call on Britannia as the most defensive bet on the FMCG space with the least impact of any spending slowdown. Suggest buying the stock around Rs.2800 for targets of Rs.3100 in one quarter.
- While global cues are positive, the domestic issues like liquidity and the FPI tax will continue to rule the markets. Play carefully over the week end.
