Post Market views - June 17, 2021 - Mr. Vikas Jain, Senior Research Analyst at Reliance Securities
(Time Zone: UTC)
Domestic equities traded weak today on account of weak global cues led from the FOMC meeting outcome as investors focused more on the U.S. Federal Reserve raising the country's economic growth forecast while noting its projection to hike interest rates sooner than expected. The Fed raised the U.S. growth forecast to 7% this year, while officials moved their first projected rate increases from 2024 into 2023 and opened talks about when to pull back on the $120 billion in monthly bond purchase program.
Financial stocks weighed on the Nifty 50, with HDFC Bank Ltd, HDFC Ltd and ICICI Bank Ltd shedding between 1% -3% and weekly derivatives expiry also pulled the markets to close near the low point of the day with NIFTY50 down by 76 points and Bank Nifty down by 398 points.
SBI is expected to meet on June 21 to consider fund raising plan for FY22. SBI looks to raise additional tier-1 capital through issuance of Basel III compliant debt securities to be raised through public offer or private placement. As a part of semi-annual re-constitution of Sensex 30, Tata Steel will be included and ONGC will get excluded. Adjustment will take place tomorrow.
Investors will be watching out the progress on daily caseload (which looks to have weakened significantly), vaccination ramp-up and monsoon progress in the near term. In addition to high government's capex program various industries have also announced higher capex programme to sustain growth, which should also aid economic recovery.
We believe the recent underperformance in private banking stocks and auto sector gives a good opportunity as they are expected to report strong earnings growth over the next few quarters and provides margin of safety.