- The ongoing trade war could be the big overhang this week as the US has gone ahead and imposed the punitive tariffs on Chinese imports. This is likely to negatively impact markets across the globe.
- The IIP came in negative and the Monday inflation is also expected to be higher. So even domestic cues are likely to be under pressure on Monday. Weak manufacturing may not be good news for capital goods companies.
- FIIs were net sellers to the tune of Rs. (-1245) crore while DFIs bought Rs.1057 crore on Friday. FIIs have been net sellers in May and this is more due to the uncertainty ahead of the election outcome.
- Friday the market was flat across the global but Asia may be misleading as the trade war escalation came in the latter half. We could see the actual impact on Monday although the SGX Nifty is almost flat.
- We suggest being negative on most of the vulnerable companies ahead of counting for elections. We suggest short positions in Zee Entertainment, IndusInd Bank, Yes Bank and on Maruti.
- We remain short on Tata Steel after the breakdown of its talks on the Thyssen Krupp joint venture talks. This is not good news as its deleveraging will now take more time. Prepare for 10% downsides on the stock from here.
- Notwithstanding the downgrade, RIL has corrected 12% in less than a week and that opens up a good buying opportunity for buyers. One must accumulate RIL in the range of 1200 to 1250 for targets of Rs.1450 in a quarter.
- Keep an eye on the US yield curve and the spreads between 3 months and 10 years could be the key to the direction of equity markets.
