NIFTY STARTS STRONG BUT GIVES UP GAINS

  • Nifty started Monday more than 100 points in the positive but failed to sustain the gains as hints of the RBI paying $5.8 billion as a special dividend to the government again raised concerns over the government pressure on finances.
  • Most PSU banks came under pressure on worries over rising bond yields even as the IT sector did well ahead of the results of TCS and Infosys. Both are expected to benefit from a stronger dollar in this quarter.
  • FIIs were net buyers to the tune of Rs.736 crores while DFIs sold (Rs.-142) crore on Monday. Institutional activity takes off typically from the second half of January and that is where the direction will be clearer.
  • US markets were up over 1% on Monday (both the Dow Jones and the NASDAQ) but European markets were rather subdued after concerns of the March 29th deadline for BREXIT drawing closer. SGX Nifty is flat in early 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.
  • With the China growth issue likely to be sorted out with a likely rapprochement on the trade war front, Tata Motors could benefit from its JLR subsidiary. Buy Tata Motors with targets of Rs.220 in one quarter.
  • With expectations of lower GST on real estate projects, one can buy DLF at current levels for a price target of Rs.215 in one quarter. The stock looks the best bet in reality after its deleveraging process is completed.
  • Indian markets are likely to be cautious on macro concerns after the big giveaways announced by the RBI and the government.

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