India's equity market took a negative turn on Monday post ratings agency Standard & Poor's warning that India could become the first BRIC nation to lose the investment grade status.
The Sensex ended 51 points or 0.30 per cent lower at 16,668, while the broader Nifty index declined 14 points to 5,054. The rupee fell to a near one-week low; it closed at 55.74-75 per dollar.
On our show Tips for Tomorrow, Gaurang Shah, Assistant Vice President, Geojit BNP Paribas Financial Services and Mehrab Irani, General Manager, Tata Investments Corporation, discuss the market performance of the day.
MARKET OUTLOOK
In Gaurang Shah view, domestic events can trigger more downside. “IIP data, Inflation, RBI's policy meet are key events to watch out for,” he said.
“Some sell-off could be there but not much,” said Mehrab Irani adding that the valuations for the Indian markets are attractive.
IIP & WPI DATA
Shah said that flat-to-negative numbers are expected on the IIP and WPI front.
Irani said that previous IIP and GDP numbers were not good. “The IIP numbers maybe better than last time but expect them to be subdued,” he clarified.
RBI POLICY PREVIEW
Shah doesn't expect a rate cut in this policy meet. “The market is expecting a 0.25 per cent rate cut by the RBI, which is already factored in,” he added.
Irani is, however, expecting the central bank to cut rates. He advises investors to buy rate sensitives.
VIEW ON THE RUPEE
Shah expects the rupee to trade in a rangebound manner. “In the short-term, the currency is expected to trade in the 54.8-56.3 per dollar range,” he added.
“Major depreciation in the rupee is behind us,” warns Irani.
VIEW ON DEFENSIVES
‘Valuations of these counters were very high. Expect these stocks to correct going forward,” said Shah. He advises buying ITC, HUL, DRL, Glenmark, Divi's Lab at lower levels.
Irani, on the other hand, said that valuations are expensive for defensive stocks.
BETS
Shah recommends buying Tata Motors, Cairn India, Oberoi Realty, Yes Bank, Axis Bank, ICICI Bank. He feels that the stocks may appreciate 15-20 per cent in the time period of 12-16 months.
Irani bets on banks, autos, engineering and capital goods stocks.
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