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Market Commentary
Post Market views - Feb 3, 2021 - Mr. Binod Modi, Head Strategy at Reliance Securities
Posted On : 2021-02-03 22:30:08( TIMEZONE : IST )
Domestic equities continued to remain in the grip of bulls and broader indices made fresh record highs today. Optimism, created after the announcement of bold measures in the union budget, continued to attract investors. However, favourable global cues also supported market rally. Notably, market cap of Indian market is just fraction away from surpassing Rs200 trillion levels. Most of the key sectoral indices traded positively with Pharma, PSU Banks and Metals emerging top gainers. It was a broad based rally today wherein strong buying was seen across the counters. IndusInd Bank, Powergrid, Coal India and Sun Pharma were among top gainers, while Shree Cement, UltraTech Cement , UPL and Maruti were laggards.
Growing optimism among investors after bold and pro-growth union budget helped market to rebound sharply in last three days. The underlying strength of domestic markets remains intact. Given sharp increase in capital expenditure along with a number of reforms to give impetus to investment activities, momentum in corporate earnings is expected to sustain in subsequent quarters. Further, higher fiscal stimulus in the USA, persistent soft monetary policy stance of global bankers and weak dollar should continue to act as key tailwinds for FPIs flows. In the near term, monetary policy outcome will be a key focus area for market, which is broadly expected to remain favourable. Higher allocation towards infrastructure and a number of reforms to boost the sector should result in sharp improvement in order inflows in subsequent months, which will also aid other ancillary industries. Therefore companies in infrastructure, cement, building materials, bank and auto are likely to outperform in the medium term. However, as market is already at all time highs and valuations are rich, investors must be cautious at these levels. They should focus on quality stocks, which have sound earnings visibility and margins of safety.
