Post Market views - March 1, 2021 - Mr. Binod Modi, Head Strategy at Reliance Securities
(Time Zone: Arizona, USA)
Domestic equities witnessed sharp rebound today mainly on favourable global cues and positive GDP data. A broad-based rally was seen today wherein barring PSU Bank, most of key sectoral indices saw sharp recovery. Auto, Private Banks and Metals indices witnessed sharp rally ranging ~1.5-2.5%. Notably, volatility index softened by over ~8%, which offers comfort. Power Grid, ONGC, Grasim and UPL were top gainers, while Bharti Airtel, Cipla and Bajaj Finance were key laggards.
Indian economy has reversed technical recession by showing a growth of 0.4% in 3QFY21, which is heartening. Further, Union Budget has already provided much-needed impetus to sustain ongoing rebound in economic activities by way of sharp increase in capital expenditures and a number to measures to stimulate investment and consumption activities in the country. Hence, we believe ongoing rebound in corporate earnings is likely to sustain in subsequent quarters, which augurs well for equities. However, high crude prices and concerns of higher commodity prices are likely to remain as key challenges for the markets in the near term. In our view, underlying strength of equities remains intact, and any meaningful correction should be used to buy quality stock with sound earnings visibility and margins of safety.