Markets are clearly exhibiting strong bullishness on the back of return of conviction, future expectations and fund flows by the foreign investors. Investors are buying cyclicals like banks and capital goods and are selling defensives like, FMCG, pharma & IT With rupee clearly showing strength, exporters would continue to be under pressure.
On Tuesday, we saw continued ETF buying, which countered the weak global cues. The trend may continue today. Also, market grapevine has it that a large & influential foreign broking house that was negative in banks has turned very strong buyer. As a result, banks led from the front & may continue to do so. The weakness in China can only spell good news for India as commodity weakness helps lower inflation.
The trade for today would be buying banks & capital goods, with counter selling in IT, pharma & FMCG. However, buying is in blue chip names & not high beta as markets could surprise with a mild correction as consensus bullishness rules the street.
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