- The Nifty corrected close to 70 basis points on Monday as the Turkish Lira led the INR down precariously close to the 70/$ mark. Banks and oil companies will continue to be under pressure on Tuesday.
- The key to watch will be the Indian rupee. The 69/$ level was breached easily and the 1.6% correction took the INR close to the 70/$ mark. It looks unlikely that the RBI will try to support the INR at these levels, leaving it open to beyond 70 levels.
- FIIs were net sellers to the tune of Rs.(-972) crores while DFIs bought Rs.216 crore on Monday. In fact FIIs have been selling across emerging markets on currency worries and that is likely to continue.
- Markets were flat to weak on Monday with Asia showing some signs of flattening out after the Monday carnage. For India, a sharp bounce in the rupee will be the key to a bounce in the Nifty. Expect pressure during the day.
- As the INR weakens, the tech space may be a good place to park your bets. We recommend buying Tech Mahindra and HCL Tech for 15% upsides targets in 1 quarter as they still have valuation comfort in their favour.
- The big story could still be one of domestic consumption and Britannia and Havells may be the two best plays on the consumption space. Despite rich valuations, they offer the best alpha on a growing consumer market with 20% upsides.
- Hindalco announced robust quarterly performance with aluminium realizations at all-time highs and copper benefiting from the Tuticorin shutdown. Target buying Hindalco for targets of Rs.270 in one quarter.
- The Nifty is likely to remain under pressure on Tuesday in the light of the global cues. One needs to watch the Turkish Lira closely.
