Post Market views - Jan 27, 2021 - Mr. Binod Modi, Head Strategy at Reliance Securities

Domestic equities fell for the fourth consecutive day as investors continued to take profits off the table ahead of union budget. A steep fall in market today eroded investors' wealth by over Rs2 trillion. Barring FMCG and IT, most of the key sectoral indices witnessed sharp fall with financials witnessing the steepest fall followed by pharma, realty, metals and auto. Notably, volatility index too has surged by over 6% indicating uneasiness in the market at these levels. Tech Mahindra, SBI Life, Wipro and ITC were top gainers today, while Axis Bank, Tata Motors, HDFC Bank and Tata Steel were laggards.

A continued pullback from last four trading days clearly indicates investors taking profits off the table ahead of union budget. While FPIs too remained net sellers in recent days, we continue to remain optimistic about sustained positive FPIs flow in the medium terms given the underlying strength of Indian markets. 3QFY21 earnings so far have been impressive and most of the companies exceeded earnings estimates. Going forward as we continue to see rebound in economic momentum and governments' continued endeavour to sustain economic rebound, strong corporate earnings are expected to sustain even in subsequent quarters. Additionally, soft monetary policy stance of global bankers, weak dollar and huge fiscal stimulus in the USA should continue to offer support to emerging markets including India. Hence, we believe any sharp fall hereon will be bought out. Union Budget would be quite crucial for markets as this will offer further clarity about economic momentum.

Source : Equity Bulls

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