- Even as the markets celebrated the massive transfer of funds from the RBI to the government, the market did pare its gains on global concerns. The trade war is just get worse and Iran has refused to sit on the negotiating table with the US.
- The continuing rally in gold in the global markets and in India is clear indication of the fear existing in the markets over the trade war and the upcoming BREXIT on October 31st. That is likely to keep the pressure on the equity markets.
- FPIs were net sellers to the tune of Rs.924 crore while DFIs bought Rs.1163 crore on Tuesday. The sustained FPI selling on Tuesday and even on Monday is clear indication that the rally was largely driven by short covering in markets.
- Markets across the US and Europe have cautiously optimistic on Tuesday. Even Asia opening has been extremely tepid on Wednesday. While the SGX Nifty is in the positive, the trend could largely be predicated on Asian cues.
- Banks and financials could remain in the limelight as the RBI move to transfer Rs.1.76 trillion to the government could push down the yields. Look for stocks like HDFC Bank, Bajaj Finance and LIC Housing Finance to buy in this market.
- 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.
- ICICI Bank again looks overpriced at current levels and it is time to start selling the stock at the range of Rs.415 to Rs.420 with downside targets of Rs.380 and second target of Rs.350. Keep stop loss around Rs.445 for the trade.
- After the Sensex gained over 1000 points in 2 days, most of the short covering may be done. The market could be driven more by Asian cues on Wednesday.
