- The Nifty showed little respite on Tuesday with the IT and Pharma pack coming under pressure. The global trade war and the Italian crisis also weighed on the Indian markets as Nifty fell below the 10,150 mark.
- The sharp fall in Brent Crude by 5% should come as a ray of hope for the Indian economy in terms of rupee value. The only worry is that if it is being driven by weak demand and economic growth, then that is not good news.
- FIIs were net sellers to the tune of Rs.(-340) crores while DFIs bought Rs.116 crore on Tuesday. The momentum of FII selling has tapered although FII volumes still continue to be high showing high degree of portfolio churn.
- World markets are a sea of red with Europe being the worst hit. European markets took a hit on the back of the EU rejecting the Italian budget. Any Italian intransigence at this point could really spook the global markets.
- One needs to be selective in buying NBFC stocks. Look to buy sound consumer businesses like Bajaj Finance but be cautious on HFCs where there is a risk of maturity mismatch. Bajaj Finance at Rs.2100 is a good bet with Rs.2500 target.
- In the pharma space, one can look at buying stocks like Strides (STAR) with its very strong Australian franchise. The stock is also available at a reasonable valuation and can give upsides of 25-30% in the next six months time.
- Many of the NBFCs like Dewan Housing and Indiabulls Housing are already quoting at single digit valuations. However, we advise caution till the time these stocks actually see clarity on their asset liability mismatch (ALM) challenges.
- VIX has been rising and that has been pressuring markets. Global cues continue to be weak and that will weigh against the markets during the day.
