- The Nifty and the Sensex were highly volatile during the day but closed almost flat as markets showed a sharp recovery from lower levels. The government has agreed to evaluate if any clarification is necessary on the FPI tax issue.
- As we had said yesterday, the stocks like Bajaj Finance bounced back sharply as the new DRR norms will benefit them. One can look at targets of Rs.4,000 on this stock in the next one quarter.
- FIIs were net sellers to the tune of Rs.674 crore while DFIs bought Rs.711 crore on Tuesday. In the current volatile scenario, many FIIs are choosing to stick to a risk-off strategy rather than taking on Emerging Market Risk.
- Even as the Dow and the NASDAQ remained flat to positive, the European markets were weak on Tuesday. SGX Nifty is almost flat in late trades but the real cues may only come from domestic cues on Wednesday.
- Biocon continues to trade substantially lower than its peak price. At current price of Rs.240, the valuation concerns are largely addressed and one can look to ride on its bio-similar business for targets of Rs.300.
- We suggest buying Bharat Electronics (BEL) as a solid play on the defence sector, where the government is looking to increasingly in-source. One can look to buy at round Rs.105 for targets of Rs.125 on the stock in one quarter.
- The one set of stocks we find still underpriced and with good potential are select PSU banking stocks. We like BOB at current prices with upside targets of 25% from current levels as the NPA cycle tapers out.
- The markets will be awaiting a clarification on the applicability of tax surcharge on the FPIs and that is very likely to come on Wednesday.
