- The market did close in positive on the back of short covering ahead of the monetary policy later this week. The short covering was visible in the banking and auto space, which are also likely to benefit from the budget focus.
- A lot could predicate on the stance of the monetary policy on 07th A shift in stance to neutral is already factored in but a rate cut of 25 bps could be the big positive trigger for the stock markets.
- FIIs were net buyers to the tune of Rs.421 crores while DFIs bought Rs.194 crore on Tuesday. FIIs are expected to react positively if the RBI gives a dovish signal and also goes ahead and cuts rates by 25 bps.
- There was a sharp rally in European markets as it now looks increasingly likely that both UK and the EU may pitch for a BREXIT deal before March this year. SGX Nifty is hovering around the 11,000 marks and tomorrow could be critical.
- We expect this budget to be a game changer for the consumer-facing auto stocks. We like Maruti, Eicher Motors and Hero Moto at the current levels from an urban and rural demand accretion perspective. Play for 20% upsides.
- We reiterate to stay clear of the corporate governance stories like Reliance Capital, RCOM, RPOWER, Yes Bank, Infibeam, Zee are all best avoided. Use any bounce in these stocks to just keep selling for lower levels.
- Among the pharma plays, Biocon looks a good bet at around the Rs.650 mark on the back of better traction on their core business as well as the SOTP benefit of its stake in Syngenta. One can target Rs.750 on the stock.
- The Nifty may make an attempt to test 11,000 on Monday and a lot will depend on the global cues in the form of dollar strength and crude prices.
