Post Market views - Jan 29, 2021 - Mr. Binod Modi, Head Strategy at Reliance Securities

Domestic equities appeared to be clueless today as benchmark Indices kept on fluctuating between gains and losses despite recording a strong gap up opening. Volatility index continued to move higher and surpasses 25 levels today. Financials supported markets today, while other key sectoral indices mostly remained under pressure. As expected, rotational trading was visible wherein select real estate, infrastructure and building materials companies saw buyers' interest. Notably, midcap and smallcap indices continued to outperform benchmark index, which augurs well for the market.

Economic Survey report was released during market hour, which indicates economy is likely to see V-shaped recovery by registering a growth of 11% in FY22E. This really sounds good for market perspective. However, to achieve that kind of growth, government must need to take strong measures to address demand concerns. In our view, a hefty profit booking for last six trading days looks to be overdone and may attract investors to quality stocks at these levels. We continue to believe that underlying strength of domestic equities remains intact considering sustained recovery in high frequency key economic data, lower interest rate cycle and government's continued endeavour to drive economic activities. Further, 3QFY21 earnings have so far been encouraging and a large number of corporate exceeded earnings estimate despite challenges. This really bodes well for our markets. We further believe FPIs selling should get stabilized in coming days as India continues to offer decent risk- reward proposition.

Source : Equity Bulls

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