Sanjeev Zarbade, VP PCG Research at Kotak Securities: Global markets had a good week as US markets rallied making new high on de-escalation of trade war with China. As a result, market sentiment was positive, which led to the BSE30 Index gaining 0.4 percent in the current week.
Markets were upbeat on slightly better-than-expected 2QFY20 results as well as hopes of a reform package from the government to address the NPA problem in the real estate sector. Yes Bank, Mahindra & Mahindra and TCS were among the major losers in the BSE-30 Index, while Vedanta, Tata Steel and HDFC were among the major gainers.
On the economy front, Moody’s downgraded India’s rating to negative from stable, noting slowdown in the economy. FPIs bought equities worth USD 782 million over the past five trading sessions while DIIs sold USD 563 million worth of equities in the same period. Market sentiment is positive but valuations of large caps are almost fair. Hence, investors should look for mid-caps as valuations are reasonable, but care should be taken to restrict to only those midcaps where the management quality is good and earnings growth has been healthy.