NIFTY HIGHER; BUT BEWARE THE IDES OF MARCH

  • The Nifty closed at a 6-month high as did the Sensex with the Sensex gaining over 1100 points in the last 3 trading sessions. The story of Wednesday was all about banks and financials making a run for new highs.
  • There is still a lot of short covering pressure left in most of the banks and that could take banks further up. We expect banks like Yes Bank and IndusInd bank to benefit the most from this short covering.
  • FIIs were net buyers to the tune of Rs.2722 crores while DFIs sold Rs. (-1508) crore on Wednesday. While FIIs have infused over $3.5 billion since the third week of February, domestic institutions are being hit by fall in equity inflows.
  • Markets across the US and Europe showed some bounce on Wednesday after a bout of selling on BREXIT concerns. The markets are pinning a lot of hopes on the outcome of the US-China trade deal over the next couple of weeks.
  • Apart from the short covering story, we reiterate our buy on Yes Bank. We have been long on this stock since Rs.190 levels and have now enhanced our targets for the stock from Rs.250 to Rs.320 in the next quarter.
  • We believe that it is once again time to get cautious on ICICI Bank. Traders can look to accumulate put options and sell futures in the 390-395 range for downside targets of Rs.360 and 340. Undertone remains weak.
  • We have been highlighting concerns over Zee corporate governance issues and the higher prices give a good opportunity to sell out of the stock. We expect the stock come back and hit the Rs.360 / 370 levels during the next 1 quarters.
  • At higher levels, most traders are advised to tread with caution and ideally carry hedged positions on their long portfolios. Use Nifty puts or Bank Nifty puts.

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