NIFTY MAINTAINS MOMENTUM AHEAD OF EXPIRY

  • The Nifty maintained its momentum ahead of the year end expiry with most mutual funds trying to keep their closing NAVS at attractive levels. Markets are likely to expire around these levels of 10,150-10,200
  • The sharp fall in bond yields on Tuesday should be a welcome relief for banks and mutual funds as it will mean that provisions will have to be made at much lower rates for the notional losses on the bond portfolio.
  • FIIs were net buyers to the tune of Rs.1063 crores while DFIs bought Rs.2173 crore on Tuesday. That almost looked largely like buying ahead of the year end to keep portfolio NAVs at attractive levels for the annual close.
  • The Dow and the NASDAQ were up by nearly 1% even as markets across Europe were sharply higher as was the Nikkei. The SGX Nifty is likely to close around these levels and that is visible in the SGX Nifty trading levels.
  • Even after the surge in metal stocks, we stay cautious. In fact, for those looking to buy put options, this will be a very good opportunity to buy higher strike puts at lower prices. We expect metals to be the worst hit by any trade war.
  • Apart from RBL Bank, one can also look at Bandhan Bank at lower levels. If you get the stock close to 420-430 levels, it could offer a good value proposition considering its very strong micro finance business franchise.
  • One can look to buy SBI, which could benefit substantially if the yield trends a little lower after the 20 bps fall on Tuesday. One can keep a stop loss on the stock below 250 and target around 275 on the stock from a 1 month perspective.
  • Being the last trading day of the week, it would be better not to get stuck in positions ahead of a long week. Over to the new financial year.

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