Post Market views - Feb 5, 2021 - Mr. Binod Modi, Head Strategy at Reliance Securities.

Domestic equities remained buoyant and benchmark Nifty surpassed psychological 15000 levels before settling at lower end. Heavyweight SBI was in focus today with stock gaining over 10% after reporting better than expected asset quality in 3QFY21 earnings and upbeat commentary from management. Notably, RBI policy outcome was also broadly on expected line, while announcements about allowing retail participation in Bond markets through GILT Account, extension of HTM restoration to 19.5% upto June'23 and availability of funds under on tap TLTRO for NFBCs bolstered investors' confidence. Banking index especially PSU banks witnessed sharp rally today followed by Pharma and FMCG indexes. SBI, Tata Steel, Kotak Bank and Divi's Lab were top gainers, while Bharti Airtel, Tata Motors, Axis Bank and ICICI Bank were laggards.

Recent rally in domestic market clearly indicates that investors have been emboldened by pro-growth Union Budget. A higher allocation towards capital expenditures and various measures or reforms to offer much needed impetus to investment and consumption activities augurs well for the economy and market. Additionally, RBI's policy meeting outcome suggests that its policy is likely to remain pro-growth with dovish tone, which augurs well. Notably, 3QFY21 earnings remained encouraging and a large number of companies surpassed consensus earnings estimates. As Union Budget succeeded to offer clarity about revival in investment activities, we believe the ongoing rebound in high frequency key economic data and corporate earnings is likely to sustain in subsequent quarters. Despite all these, as markets are already at all-time highs with valuations started hitting the roof, investors must be cautious at these levels and should focus on quality stocks with sound earnings visibility and margins of safety.

Source : Equity Bulls

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