- Markets saw some unwinding of positions on Wednesday after the short covering in rate sensitives started tapering. The trade war position only appears to be getting worse and UK appears to be moving towards a no-deal BREXIT.
- Brokers are estimated to have nearly Rs.3500 crores of unfunded positions of clients which will have to be offloaded in the market before August 30th. Markets are expected to be under pressure at every bounce.
- FPIs were net sellers to the tune of Rs.935 crore while DFIs bought Rs.359 crore on Wednesday. FPI selling has continued through the week result in more than $2.5 billion in equities sold through the month of August.
- The pressure off the BREXIT discussion decision by Boris Johnson appears to have hit EU more than the UK markets. Asia has been weak overall with the SGX Nifty already under pressure in early trades on Thursday; the F&O expiry day.
- Vulnerable banks like RBL Bank and Yes Bank could be under pressure due to larger asset quality issues. Both stocks appear to have further downsides especially after the recent junk rating assigned to Yes Bank by Moody’s.
- With the price of gold moving up steadily, we suggest looking at proxies for gold prices like Titan and Muthoot Finance. We expect both these companies to rally 15% from current market price levels.
- Downstream oil is likely to benefit from improved refining margins and also from the likely recovery of capital BS-VI costs from diesel and petrol prices. Buy BPCL at Rs.350 for targets of Rs.390 in one month time frame.
- As we said yesterday, most of the short covering in already done in the market and the broker offloading of Rs.3000 crore of shares may put pressure on markets.
