NIFTY SCALES HIGHER; BREXIT COULD BE OVERHANG

  • The Nifty closed above the 11,300 marks even as Sensex gained 870 points in two days. But Theresa May losing the BREXIT vote by a huge margin will weigh on the markets as the uncertainty over BREXIT continues.
  • Bharti has been rallying sharply on the back of news that it will be monetizing its holding in Bharti Infratel. However, upsides may be limited considering that the core telecom business continues to be under pressure.
  • FIIs were net buyers to the tune of Rs.2478 crores while DFIs sold Rs. (-991) crore on Tuesday. FIIs have now infused over $3.50 billion since the third week of February giving a clear indication of FII interest in Indian stocks.
  • There was not much of an impact on the US markets, but Asia is under pressure after Theresa May lost the BREXIT vote. Japan is down nearly 1.5% and most of Asia, including the SGX Nifty, is in negative territory.
  • Within the power space, we like NTPC which may end up buying substantial capacity of distressed power plants at fairly reasonable rates. Even on a standalone basis, the company does look reasonably value with targets of Rs.200.
  • 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 had earlier recommended DLF at around 160 levels. At current levels of Rs.185, it would make sense to accumulate more of DLF considering the change in sentiments of the real estate sector.
  • The pre-election rally may be done and dusted for now. Traders are advised to be cautious on long positions for now.

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