NIFTY SHOWS A BOUNCE ON FRIDAY

  • There was some short covering on Friday on expectations that the trade deal could go through soon. But the worries over slowing Chinese growth still remain. The focus will continue to be on the domestic consumption plays.
  • The market calls for caution on the financials, especially considering that the bond yields have started showing hardness once again on the back of fears that the fiscal deficit could widen due to the proposed $35 billion farm rescue program.
  • FIIs were net sellers to the tune of Rs.(-158) crores while DFIs bought Rs.240 crore) on Friday. FPIs have been a tad wary in January after selling over $12 billion of equities and debt in the previous calendar year.
  • US markets led the action on Friday with the Dow up 3.2% and the NASDAQ up by 4.2%. European markets were also up by over 2% on hopes that the US China trade war should get resolved. SGX Nifty is more than 1% higher in late trades.
  • While IT may show good results in the third quarter, we expect pressure on prices from a sharply stronger rupee. We stay positive on Infosys with a target of 750 but neutral on TCS, Wipro and Tech Mahindra on valuation concerns.
  • We have been trailing our SBI long call all the way up to Rs.300 and suggesting holding on to the stock up toRs.370. The stock is likely to immensely benefit from the loan recoveries and the pick-up in credit post the capital support.
  • We reiterate our buy call on Bank of Baroda and expect the bank to benefit substantially from the synergies of the merger with Vijaya Bank and Dena. It creates the 3rd largest bank with scale. Target Rs.160 on BOB in 1 quarter.
  • Monday is likely to be positive for the Nifty on the back of the sharp bounce in world markets. Look out for Nifty 11,000 which will be the next resistance.

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