- The Nifty lost momentum after stocks like RIL and IndusInd Bank took the markets sharply lower to close below the 10,250 mark. The IL&FS saga continues to be a major overhang on the stock markets.
- The rupee weakened on Monday but the bond yields remained static around the 7.9% mark during the day after the MPC minutes clearly hinted at a delay in further rate hikes unless inflation also kept pace.
- FIIs were net sellers to the tune of Rs.(-512) crores while DFIs sold Rs.(-303) crore on Monday. While the momentum of FII selling has come down, markets still look very vulnerable with the VIX at 3 year high levels.
- While Europe was flat to negative on Monday, most Asian markets are deep in the red on trade war and China concerns. The SGX Nifty is already trading 1% down and the pressure of Asia is like to spill over.
- One needs to be selective in buying NBFC stocks. Look to buy sound consumer businesses like Bajaj Finance but be cautious on HFCs where there is a risk of maturity mismatch. Bajaj Finance at Rs.2100 is a good bet with Rs.2500 target.
- We suggest staying invested in the downstream oil companies like HPCL, BPCL and IOCL at current levels to make the best of stabilization of oil prices. The subsidy burden may not really hit them and hold another 25% upsides from here.
- In the private banking space, one can look to buy Kotak Bank at around the 1150 levels for targets of Rs.1300. The stock is down after the promoter stake dilution issue but could get a deferral considering the current state of banking sector.
- Markets are a little worried as is evident from the rising VIX levels to a 3-year high. Higher levels in the Nifty are likely to met by consistent selling. Be cautious.
