Institutional Equity Research January 05, 2021 R Model Portfolio January 2021 Binod Modi Head Strategy Contact: 022 4303 4626/9870009382 Email:
[email protected] D. Vijiya Rao Senior Research Associate Contact : (022) 4303 4633/9321404056 Email :
[email protected] 1 Domestic Equities Stayed Upbeat; Outlook Remains Strong Domestic equities continued to remain upbeat in Dec’20, as the benchmark indices recorded sharp rebound despite threat from new COVID-19 strain and business restrictions due to rapid rise in new coronavirus cases in the USA and European countries. Nonetheless, with consistent improvement in COVID-19 recovery rates and improvement in key economic indicators, India continued to attract FPIs flow with net inflow of Rs620bn from FPIs, while the DIIs sold equities to the tune of Rs373bn during the month. Notably, soft monetary policy stance by the global bankers along with additional fiscal stimulus worth US$900bn announced by the USA and commencement of vaccination process in several countries bolstered the investors’ confidence. While the Nifty and BSE 500 delivered ~7.8% return, RSec Model Portfolio delivered similar return during the month. Similarly, with a return of 14.9%, RSec Model Portfolio outperformed Nifty and BSE 500 by 850bps and 620bps, respectively in 2020 led by our strategy of getting overweight on pharma and IT and underweight on BFSI for the large part of the year. In our view, domestic equities should continue to do well in 2021 as well led by sustainable inflows from the FPIs on the back of soft monetary policy stance of the global bankers, robust recovery in corporate earnings and continued improvement in economic activities with the progress on vaccination roll-out.