It is rare for markets to experience what they did in 2020 when they fell dramatically, but the recovery was even more dramatic before ending the year on a very high note. Now, what lies ahead for 2021? In today’s edition of News Par Views, Zee Business Managing Editor Anil Singhvi spoke to Market Expert Mehraboon Irani to know his outlook for the stock markets.(#NewsParViews)

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Irani said that there is a disconnect between the economy and the markets. But the direction is important. He said that there is full liquidity support in the market and a lot of optimism. The interest rates are low and there is a Reserve Bank of India's (RBI) direct involvement in the growth. Usually, they have a role in maintaining inflation but this time there is a balanced approach.

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In the US, President Elect Joe Biden will be taking over the office and there are expectations of a higher stimulus. Another important event is the Union Budget 2021. There could be a push in the market and it may top out at some point. There could be a correction and consolidation. All these things can happen in 2021.

Irani said that investors have been riding the momentum acquired by the markets, but it is time to pause and focus more on the companies, especially those ones which are expected to benefit from the budget, he said. People will have to be more selective now, he added.

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Irani added that when the Covid-19 pandemic began, most of the market participants who focus on the fundamentals were frightened as most were looking for an exit route. Many even exited. They also refused to believe in the market recovery, he said. Many of them have still not entered the markets. But the new investors drove the markets by putting in money. In the event, they made some money. That money is still there in the markets.

Irani said the liquidity inflow from domestic investors have been unbelievable.

His advice to investors is to remain a bit more watchful. He also cautioned investors that the liquidity is temporary and may not last forever.

Budget 2021 Expectations

Irani said that the theme for this budget will be 'Aatmanirbhar Bharat' and employment generation. He also pointed out sectors that were in distress including hospitality and aviation. Some direct benefits can come in the budgets for these sectors, he said.

Infrastructure development is a key subject and it has a multiplier effect on the GDP. It cannot be ignored if the recovery is to be achieved.

There could also be an emphasis on building medical infrastructure also, he said. There has been some success in the Production Linked Incentive (PLI) scheme in the mobile manufacturing and API sectors. That could be extended to other sectors as well, he opined.

The sectors which can enhance employment could be in focus. Incentives could come for auto, textile and power equipment.

He also expects a Covid cess and that could come for fuel or even mobile consumption.

Top Stocks and Sectors:

He said that IT, pharma and speciality chemical sectors have performed very well over the last 8-9 months. The valuations are on the higher side, he said adding that he was still bullish on the IT sector. Everybody has IT stocks now. They can be bought on corrections. Speciality chemicals have given a dream run. They will continue to do well.

Stocks to Buy with Anil Singhvi

This expert recommended stocks like Paushak, which is an Alembic Group company.