Profit taking likely on Fed outlook on rates: Sanjeev Bhasin

Indian stock markets are likely to open cautious as overnight US cues turned negative. The reduction in bond buying was as per market expectation, but US Federal Reserve's hawkish outlook on interest saw yields rise on the 10 year treasury bond.

The higher yields resulted in strengthening of the US dollar and may lead to redemption of money from emerging market bonds, currencies & equities as cost of leverage will rise.

Profit booking is likely today as markets may react negatively to global cues. Nifty has seen strong support at 6,500 and any breach could see the selling get exaggerated.

Buy defensives like cement which is outperforming, select FMCG & gas, while sell high beta capital goods, banks, metals & auto.

Trading calls for today:

Longs:

1. Buy Petronet LNG: 134, stop loss 126, target 155

2. Buy ACC: 1275, stop loss 1235, target 1342

3. Buy Cummins: 580, stop loss 562, target 622

4. Buy ITC: 357, stop loss 347, target 376

Shorts:

1. Sell State Bank of India: 1708, stop loss 1730, target 1660

2. Sell Hindalco: 120, stop loss 125, target 115

3. Sell Bhel: 190, stop loss 196, target 174

4. Sell Tata Motors: 385, stop loss 392, target 370

Investment call:

Buy SKF 800, 3-month target 1100 (Why: Market leader in bearings market & now diversifying portfolio. Will be best proxy buy to revival in capex spending & pick up in industrial growth)