InvestorQ : How do you see trading panning out in the markets on Tuesday, August 16th 2022, as markets reopen after a gap of 3 days?
rhea Babu made post

How do you see trading panning out in the markets on Tuesday, August 16th 2022, as markets reopen after a gap of 3 days?

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diksha shah answered.
2 months ago
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You are right that markets will open on Tuesday after a 3 day hiatus. While the stock markets will function on Tuesday, it is a banking and clearing holiday so the market will still be tad cautious. China data came in weak and while the US and European markets reacted negatively to this news, these markets picked up in the second half on Monday.

The China macro data for growth and bank credit was lower than expected. This is likely to hit the metal stocks, since global metal prices on the LME are extremely dependent on Chinese demand. However, on the positive side, the decision by the People’s Bank of China (PBOC) to cut rates for a second time could just provide the required impetus.

On Friday, FPIs were net buyers in equities to the tune of Rs.3,040 crore as domestic funds and LIC sold Rs.839 crore. FPIs have infused nearly $2.8 billion in the first half of August. Global markets bounced after a weak start as Dow was up 151 points while NASDAQ closed 81 points on Monday. The SGX Nifty is trading about 29 bps higher in early trades.

In terms of the strategy for Tuesday, the idea is to keep off metal stocks due to the likely pressure from Chinese demand. PBOC rate cut not only changes sentiments but shows that not all central banks are hawkish. The rally from here would be led by the rate sensitives like the banks, large NBFCs and the automobile stocks as inflation and hawkishness fears recede. Mid-caps in select sectors like specialty chemicals and defence can be a good option.

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