01 Jan , 2022 By : Kanchan Joshi
Indian stocks logged the sixth straight year of gains in 2021, but analysts expect equity markets to enter a choppy phase with inflation, monetary policy normalization and the Omicron strain weighing on sentiment in 2022.
Although benchmark stock indices declined by 10% from their October peak, experts said that current valuations would keep sentiments muted because the new highly transmissible variant has clouded the market with uncertainty.
While the market trend might be volatile in the near term on account of a possible third wave of the pandemic in India and fragile global cues, corporate earnings, economic data and the Union budget may deliver some positive surprises in the long run.
“Indian equities are running into many challenges, including the US rate cycle, rising oil prices, elections in key states, a potential covid third wave, the upward inflexion in domestic interest rates, rich headline valuations and strong relative trailing performance," said Dhiraj Relli, managing director and chief executive officer, HDFC Securities.
Despite several challenges, benchmark indices Sensex and Nifty gained 22% and 24%, respectively, in 2021. This is their best performance since 2017 when both indices gained 28%.
“India outperformed most global peers in 2021, supported by robust retail participation, economic recovery, vaccine coverage and a rising appetite for Indian goods and services. Despite lingering fears surrounding surging Omicron cases, the domestic market is expected to be resilient, supported by healthy long-term growth forecasts and economic reforms," said Vinod Nair, head of research, Geojit Financial Services.
0 Comment