Post Market views of Mr. Binod Modi, Head Strategy at Reliance Securities

Domestic equities remained firm and witnessed fresh record highs mainly supported by continued rebound in PSU banks. Baring auto, most of sectoral indices traded in positive range. Notably, volatility index shot up sharply today indicating unease about current valuations of the market. PSU stocks remained in flavor as valuations comfort, favourable dividend yields and emerging clarity over efficient capital employment continued to attract investors. L&T, ONGC, Cipla and Coal India emerged as top gainers, while Eicher Motors, Hero Motocorp, M&M and HDFC Life were laggards.

Positive data flows along with persistent FPI flows have been quite supportive for the markets. Further, better than expected IIP data for Oct'20 along with sharp jump in electricity suggests that industrial activities are back on growth track, which bodes well for equities. However, rich valuations of market do not offer much comfort and any threat to earnings recovery may lead to a reversal and broad-based rally will be difficult to sustain. Hence, we remain cautiously optimistic about market and advice investors to concentrate more on quality names with strong corporate governance and healthy margins of safety.

Source : Equity Bulls

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