Post Market views - Dec 17, 2020 - Mr. Binod Modi, Head Strategy at Reliance Securities

Domestic equities remained upbeat and recorded fresh highs. A dovish tone of Federal Reserve along with assurance of continuing asset purchase program until economy makes a substantial progress bolstered investors' sentiment. Financials and Pharma continued to outperform and supported market. HDFC twins, Divi's Lab and Bajaj Finance were among top gainers, while Hindalco, Asian Paints and HUL were laggards.

Better prospects of earnings recovery, dismal interest rate scenario and strong FPIs participation led markets to see record highs. As underlying strengths of market remain intact, we expect market to remain buoyant in the near to medium term. Further, excess liquidity situation globally is expected to sustain for the medium term, which will continue to lend support to equities. However, a visible slowdown in diesel sales, volumes in digital transactions and credit card spends post festivals and rise in input prices may be threats for earnings rebound. This along with rich valuations might not lead to a broad-based rally in subsequent period. Hence, investors must stick to quality names which enjoy strong earnings potential, better corporate governance and margins of safety.

Source : Equity Bulls

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