Despite volatility, inflation concerns, there could be positive suprises too - K R Srivats
K.R.Srivats | New Delhi, December 31 | AN UPSIDE TO EQUITIES |
Post a super show in 2021, Indian equity markets has the potential to give a positive surprise in 2022 despite challenges such as rising inflation and likely situation of interest rates moving up in both developed and developing world, say top honchos of brokerage houses and asset management companies.
The Indian equity markets in year 2022 may remain “range bound” amid volatility. As such it may not be a year of broad-based rally, but would be a year for stock pickers, said Santosh Kumar Singh, Head of Research, Motilal Oswal Asset Management Company.
ABC of markets
Naveen Kulkarni, Chief Investment Officer, Axis Securities said: “2021 has been a year of recovery, rehabilitation, and establishing a base for future growth. 2022 will be a little more volatile but will still be very good for equity investors in India. 2022 is very likely to be another year of good double-digit returns and continued wealth creation. Autos, banks and capital goods, literally the A B C of equity markets, will be the most interesting sectors for 2022.”
Equity markets in 2021 saw a roller coaster ride driven by global tailwinds and rising favour for the India growth story. India stood out as a favoured destination for foreign investors amidst turbulence in the rest of the Emerging Markets basket.
Key challenges
Dhiraj Relli, MD & CEO, HDFC Securities, said that globally and in India the marketcap on GDP ratio touched an all-time high due to large liquidity flows, low-interest rates, the expectation of early return to normalcy and low returns from other asset classes. He highlighted that valuation levels in Indian equities could make most people cautious on India within EMs and Asia. “Indian equities are running into many challenges, including the US rate cycle, rising oil prices, elections in key states, potential Covid wave 3, upward inflexion in domestic interest rates, rich headline valuations and strong relative trailing performance,” he added. However, the Indian market still has potential to positively surprise, as a macro construct and earnings remain largely supportive, Relli added. High quality stocks The positives on the macro front include improved GDP growth, tax collections, flush liquidity, the start of a Capex cycle, a listing of start-ups leading to risk-on sentiments, supportive monetary policy, better than expected pace of macro recovery post-pandemic, likely inclusion of Indian bonds in the global bond index by Q2FY22 and strong vaccination drive), according to Relli. “Markets can be more discerning in 2022 and hence sticking to high quality companies and maintaining your planned asset allocation remains key for a better outcome from 2022”, he said. He also said that Inflation continues to remain a key concern going ahead. Commodity prices (including crude oil) remain at high levels (post a small correction) due to supply disruptions and large demand to refill inventory levels. Globally households are sitting on trillions of dollars of excess savings, thanks to the pandemic stimulus, enforced frugality during the lockdown and high asset class returns across the board, he added.
Published on December 31, 2021
https://www.thehindubusinessline.com/markets/stock-markets/2022-will-be-a-year-for-stock-pickers-say-experts/article38082887.ece
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