Post Market views - Jan 19, 2021 - Mr. Binod Modi, Head Strategy at Reliance Securities
(Time Zone: Arizona, USA)
Having seen massive pullbacks in last two trading days, domestic equities witnessed sharp rebound today mainly led by strong cues from global markets. Positive statement from Janet Yellen about possibility of acting big to support economy bolstered confidence among investors globally today. Benchmark Nifty once against past 14500 levels as all sectoral indices contributed positively. Financials, Realty Auto and Metals witnessed very strong comeback today, while volatility index contracted by over 5% today. Tata Motors, Bajaj Finance, HDFC, Grasim were among top gainers, while Tech Mahindra, Wipro, IOC and ITC were laggards.
Indication about wider support to USA economy by the Janet Yellen (nominee for Treasury Secretary) certainly bodes well for emerging markets including India. We continue to believe that any meaningful correction in Indian equities will be bought out as underlying fundamentals of the market remain intact. Huge fiscal stimulus in the USA, persistent soft monetary policies of global bankers, weak dollar and better than expected earnings growth by corporate should continue to ensure favourable FPIs flow into domestic markets. However, we believe some rotational trading can be on the cards in coming days ahead of Union Budget, where sectors like infrastructure, healthcare, defense, real estate and agro-chemical should outperform. However, a broad-based rally is unlikely to happen as a large number of stocks are already trading ahead of their fundamentals. Investors should focus on only quality stocks with robust earnings visibility and margins of safety.