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Market Commentary
Post Market views - March 30, 2021 - Mr. Binod Modi, Head Strategy at Reliance Securities
Posted On : 2021-03-30 17:13:16( TIMEZONE : IST )
Domestic equities rebounded sharply today mainly led by strong buying in IT, Metals, Pharma and FMCG stocks. Barring realty, most of the key sectoral indices ended in green today. Further, favourable cues from global markets also supported domestic rally despite prevailing concern of sharp rise in Covid-19 cases in the various parts of the country. Notably, midcap and small cap stocks sharply underperformed today. UPL, JSW Steel, Infosys and Powergrid were top gainers, while M&M, Hindalco, Bharti Airtel and SBI Life were laggards.
A sharp spike in Coronavirus cases in various parts of the country made investors jittery in last couple of weeks. Further, recent announcements of night curfews by various state governments and indication of lockdown by Maharashtra state government certainly do not augur well for equities. Additionally, strengthening dollar index, which already gained ~1.5% last week and surpassed 93 today, can aggravate investors' concern in emerging markets including India. We continue to believe that ongoing concerns of new wave of coronavirus in the country may keep markets volatile in the near term. However, given the experience of 2020, spread can be controlled without putting a large scale of business restrictions. Additionally, a faster rollout of vaccination process can be helpful to contain the spread of virus. Hence, any adverse impact on business activities might not be meaningful. Further, a strong pick up in capital expenditures in FY22E, impact of new reforms announced in the budget to stimulate consumption activities and allocation for higher capital expenditures in select large state's budget for FY22E should continue to support ongoing rebound in corporate earnings. Hence, any meaningful correction in the market should only be creating an opportunity for bargain trading in quality stocks. Investors must focus on companies with strong earnings visibility and margins of safety.
