Post Market views - Feb 17, 2021 - Mr. Binod Modi, Head Strategy at Reliance Securities

Domestic equities witnessed pullback today amid weak global cues. A profit booking was visible in IT, Pharma and FMCG space, while PSU Banks continued to see investors' interest with PSU Bank index rising briskly by over 6%. As indicated rotational trading was seen, where a number of mid cap and small cap stocks witnessed sharp uptick as improving earnings visibility is attracting investors to this space especially in sectors which are considered to be beneficiary of higher capex. Adani Ports, Hero Motocorp, SBI and BPCL are top gainers, while Asian Paints, Nestle, Maruti and HDFC Bank were laggards.

Notably, a continued buying from FPIs has been a major driving force for the market in the recent period. An expansionary union budget with an aim to foster growth emboldened investors across the categories. In our view, higher capital expenditures and strong focus on infrastructure development are likely to aid a number of ancillary industries and create more jobs. Further, government's endeavour towards promoting private investment through PLIs and lower taxes provision have gradually started sowing results as a number of companies have already charted their fresh investments, which is also getting accentuated from lower interest rate cycle. Therefore, in our view, the recent revival in earnings rebound is likely to sustain in subsequent fiscals. However, rise in commodity prices and risk emanating from hardening bold yields could be a medium-term concern. While we remain positive about the outlook of equities for the long-term perspective, markets may witness some amount of pullback in the near term and rotational trading might be visible. In our view, infrastructure, industrials, engineering & capital goods, select auto and banks are expected to outperform in the medium term to long term.

Source : Equity Bulls

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