Stock markets had a superb last week, as investors digested the Union Budget and cheered the fact that there was no capital gains tax that was imposed in the Union Budget 2017-18. Stocks apart from the IT sector, particularly banking stocks were on fire.

Going ahead it is likely that we may see the markets stabilizing at the current levels. One thing is that the risk to reward ratio at the current levels is not in favour of equities. In fact, it may just be about the right time to partially book profits in select shares, if you have made money.

In fact, if you notice carefully earnings have not matched-up with expectations and the rally in stocks maybe a bit overdone. Take a look at the earnings from some biggies like ICICI Bank. The quality of assets has only got worse. At the present moment it is pretty much sensible to stay away from stocks. However, there maybe some pockets like IT that have been beaten down badly. These maybe good contrarian bets that could yield results in the future. However, domestic institutions are likely to be flush with funds, given that the tax planning season might see more money flowing into ELSS and ULIPs, which means they might continue to chase stocks.

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