- As we had cautioned yesterday, the trade war fears led to the Nifty tanking by nearly 100 points on Monday. Asian markets continue to be tentative although Europe and the US saw some buying interest at lower levels.
- It is perhaps time to be a tad cautious on steel and aluminium shares for now. That also explains why metal stocks came under pressure today. It may be time to buy put options on Vedanta, Tata Steel and Hindalco for now.
- FIIs were net sellers to the tune of Rs.(-367) crores while DFIs sold Rs.(-154) crore on Monday. We expect the sales by domestic players to accentuate if the redemption pressure from MF investors starts building up.
- Markets across faced pressure of the trade war, although Europe did some buying at lower levels. Hang Seng was the worst hit on Chinese export concerns. SGX Nifty may remain under pressure in the week due to trade war fears.
- We suggest a long short on Sun Pharma versus Aurobindo Pharma. One can look to buy Sun Pharma futures and sell Aurobindo futures against that. The bet will be more on outperformance rather than actual price movement.
- As we said yesterday, the time may be ripe top start picking banks like PNB and SBI at lower levels as the downside risk appears to be limited and the higher MCLR should benefit these stocks.
- With the rural demand story still intact, it may be the time to selectively look at two-wheeler stocks at current valuations. Hero Moto and TVS Motors could be good and de-risked plays in the market at the current levels.
- We believe that the undertone of the market has shifted from buy-on-dips to sell-on rises. Any buying has to be done only with 6-9 months perspective.
