- With the INR moving within a whisker of 72/$ before closing at 71.77/$, the stock markets saw a sense of panic and long and leveraged positions were getting unwound. The consumer sector was the worst hit in the market correction.
- The big question is whether the undertone of the market has shifted to the negative. Wednesday was the 6th consecutive day of correction in the Sensex and this marks the longest streak in 4 months. A lot will depend on INR and yields.
- FIIs were net sellers to the tune of Rs.(-384) crores while DFIs bought Rs. 177 crore on Wednesday. Global funds will be looking to buy when rupee weakens but they may prefer to wait till there is stability in the rupee levels.
- While the Dow was flat on Wednesday, the NASDAQ and European markets were down by nearly 1.5%. Indonesian markets cracked nearly 4% on currency woes. While the SGX Nifty is in positive territory, it looks extremely vulnerable.
- The metal space appears to still have room on the upside with potential in stocks like Vedanta and Hindalco in the industrial metals space. Steel stocks may also be in the limelight with specific focus on JSW Steel. Play for 20% upsides.
- Within the mid cap software space, one look to buy stocks like Persistent Systems which look the best positioned to capitalize on the weak rupee. One can look to buy the stock with a 15% upside target in one quarter.
- Zee looks very vulnerable with its Zee5 investments unlikely to yield anything positive in the next 4-5 years. This will add to cash flow problems among media companies. Look for downside targets of Rs.400 on the stock.
- The focus will be on the INR again, especially after Djakarta Index fell 4% yesterday on currency woes. Currency could be the key factor to watch for.
