Post Market views - Feb 25, 2021 - Mr. Binod Modi, Head Strategy at Reliance Securities
(Time Zone: Arizona, USA)
Domestic equities rebounded for the third consecutive day with Nifty crossing 15,000 levels again. A strong cue from global equities followed by favourable comments from Fed Chairman Powell in his second day testimony supported market rally. Barring FMCG, all key sectoral indices ended in green with Metal index remaining an outlier. Financials, Auto and Pharma indices recorded gains to the tune of ~1%. Notably, midcap and smallcap stocks outperformed broader indices sharply today as improved visibility of earnings recovery attracted investors to this space. Coal India, UPL, Adani Ports and BPCL were among top gainers, while ICICI Bank, Nestle India, Titan and L&T were laggards.
While recent rise in bond yields globally and concerns of rise in commodity prices weighed on investors sentiments in the last couple of days, Powell's testimony this week offered comfort to global equities. Undoubtedly, the budget succeeded to offer clarity about the sustainability of ongoing corporate earnings rebound in subsequent fiscals. Huge capital expenditure programs and reforms announced in the budget to expedite infrastructure activities in the country are likely to support many ancillary industries and job creation. Notably, FIIs turning net sellers in recent days and surge in commodity prices could pose a near term challenge to the market. However, any meaningful correction in the market should be an opportunity to buy as India continues to offer superior growth prospects. In our views, infrastructure, industrials, engineering, building materials, banks and select auto stocks are likely to outperform in the medium to long term perspective as these are the key beneficiary of higher capital expenditures.