Post Market views - Feb 2, 2021 - Mr. Binod Modi, Head Strategy at Reliance Securities

Domestic equities extended their gains with benchmark index Sensex once against reclaiming 50000 marks mainly on increased optimism among investors after favourable union budget. Additionally, strong cues from global markets also supported market rally today. Notably, as against value erosion of over Rs8 trillion in the last week due to hefty profit booking, strong rebound in market in last two days led value accretion of ~Rs10 trillion for investors. Financials and Auto continued to shine with these two indices gained over 3% today followed by Realty, Pharma and IT stocks.

The most crucial event of this year for domestic market "Union Budget" has turned out to be favourable and pro-growth for the economy. This budget succeeded to offer clarity on the sustainability of corporate earnings rebound by way of allocating higher amount for capital expenditures (26% increase on revised estimates). Additionally, a slew of reforms or measures by proposing to setup Bad Bank, Development Financial Institution, Gold Exchange, etc certainly augur well. Undoubtedly, Finance Ministry has picked a right spot to focus more on infrastructure development to sustain economic growth, as higher spending on infrastructure can essentially aid many ancillary industries and create more jobs. Further, choosing growth over fiscal consolidation shows the bold intent of the government. In our view, infrastructure, cement, building materials, auto and banks should outperform in the medium term.

Source : Equity Bulls

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