Stock market: Omicron, Budget, polls, global trends for 2022

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NEW DELHI: From pandemic shocks to state polls to global trends, a host of sentiment factors are expected to steer the Indian stock market in 2022 after a historic year of significant returns and milestones for investors.
The EU budget, which will be closely watched for further reform measures, and quarterly corporate profits will be among the developments on investor radar as global central banks move towards a higher interest regime. strict as a result of inflationary pressures.
2021 has been a very rewarding year for equity investors. The Sensex 30-stock benchmark surpassed memorable levels of 50,000 and 60,000 this year after the pandemic-triggered crash in March 2020.
As the new year dawns, the strong momentum on the IPO front is expected to continue, with the listing of state-owned LICs and many other companies underway.
Until December 29 of this year, the Sensex gained 10,055.16 points or 21.05% and the index hit its all-time high of 62,245.43 points on October 19.
“A strong recovery in earnings will be the main driver of the market recovery and consumption may see further momentum in various verticals after nearly two years of a down cycle. The government could also try to stimulate further growth and consumption growth in the next budget… ”said Sunil Nyati, Managing Director of Swastika Investmart Ltd.
Another key aspect of the domestic stock market now is the growing participation of retail investors, which has also resulted in a scenario in which there is no over-reliance on foreign portfolio investment.
“Talking about the levels of Sensex and Nifty, on a cautious note, Sensex can test the 71,000 level and Nifty can hit the 21,000 mark by the end of 2022. On the downside, 53,500 / 51,500 and 16,000 / 15,500 are solid support levels, “Nyati said.
Siddhartha Khemka, Head-Retail Research at Motilal Oswal Financial Services Ltd, said global factors such as the announcement of the US Fed’s cut and the movement in interest rates as well as the risk of the Omicron variant should steer the market next year.
“Domestically, the Union budget, five state elections as well as the political decision of the RBI in response to the Fed’s decisions on interest rates would dictate the direction of the market,” he said. He underlines.
Analysts noted that oil prices, bond yields, investment models of foreign institutional investors and movements of the US dollar index would also have an impact on the markets.
Regarding risk factors, Nyati pointed to the uncertainties associated with the pandemic and rising inflation. “Otherwise, there are no major concerns visible.”
Markets underwent some correction towards the end of the year as the benchmark BSE fell more than 7% from October’s all-time high amid high valuations and fear of trading. Omicron. Therefore, the market trend in the short term will depend a lot on the potential risks of the Omicron variant.
According to analysts, 2021 has been a great year for investors, where benchmarks have returned around 21%, but real wealth has been created in the wider market.
Geojit Financial Services research director Vinod Nair said the positive drivers are a strong economic recovery, leading to strong growth in corporate profits and the benefits of reforms. “We expect a rise in interest rates which will make the financial market profitable with increased credit growth,” Nair said.
In addition, he noted that India’s future themes on green energy, ethanol, next-generation businesses, technology, manufacturing (production-related incentives) and online companies will help the market. fellow to perform.
In a recent memo, Motilal Oswal Broking and Distribution said that going forward, “we remain optimistic and expect Nifty to generate returns of around 12-15% in 2022, supported by the continued recovery. economy and strong earnings growth “.
Sectors such as IT, telecommunications, capital goods, cement and real estate are expected to do well in 2022. While banking and autos, which have so far underperformed the market , have the potential to become the dark horse in 2022, he said.
“Currently, we are in a correction mode, but in the long bullish rally. The short-term trend can be eased and the volatility can stay. However, we assume that we are in the last phase of correction and the possibility of further in-depth correction is low.
“We expect the market trend to improve in the latter part of the year,” Nair said.
According to Motilal Oswal Broking and Distribution, while the market trend could be volatile in the short term due to the potential risk of the Omicron variant and fragile global indices, in the long term strong profit production as well as positive macroeconomic data would be the key. to pull the markets up.
On the wishlist for the budget, Nyati said the markets would like a reformist, growth-friendly budget as well as more clarity on the pace of government asset monetization and divestment programs.

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