Post Market views - Jan 18, 2021 - Mr. Binod Modi, Head Strategy at Reliance Securities
(Time Zone: Arizona, USA)
Domestic equities witnessed pullback for second consecutive day as weak global cues continued to weigh on investors' sentiments. Barring FMCG, most of the key sectoral indices witnessed sharp correction and volatility index soared over 5% today before recovering from top. A sharp rebound in RIL along with buying interest in HDFC Bank after strong 3Q numbers offered support to benchmark Nifty index. Additionally, UPL, Titan and Eicher Motors were among top gainers, while most of the index stocks ended in red today.
While underlying strength of markets remains intact considering rebound in key economic data, sustained growth in corporate earnings in 3QFY21 with upbeat managements' commentaries and commencement of vaccination process. Additionally, favourable monetary policies of global central bankers, weak dollar and large fiscal stimulus in the USA are expected to ensure sustain FPIs flow in domestic equities. However, for the week market is expected to be volatile ahead of some crucial global events. Further, as union budget is just two weeks away, rotational trading might be visible in the market. We may see sectors like infrastructure, healthcare, defense, real estate and agro chemical may see buyers' interest in coming days. However, as valuations of market are at peak levels and many stocks are trading ahead of their fundamentals, investors should be cautious and bet on companies which have robust earnings visibility and margins of safety. Progress of vaccination drive, outcome of monetary policy of BoJ and ECB and 3QFY21 earnings would be key things to watch out for during the week.