Post Market views - Dec 21, 2021 - Mr Mitul Shah, Head Of Research at Reliance Securities

Domestic equities rebounded with gain of ~1% after steep fall through the last few sessions. The market corrected more than 5% in last few trading session due to worries of new COVID variant, hawkish stance by the Federal Reserve and FII selling. The momentum is back in the Indian market is supported by strong gains in Asian peers. The US futures also traded higher, indicating positive opening. The market made a successful attempt of recovery as there has been a bit of short covering and value buying in several quality stocks given the expected growth in the economy and earnings in the coming years.

All major sectors are in green, Nifty is up ~1%, broader market outperformed the main indices, Nifty MidCap is up 1.21% while SmallCap index is up 1.24%. The government's focus is clearly on supporting growth through sufficient liquidity and low interest rates despite street fears over rising inflation, changes in interest rate policy by global economies and high commodity prices. However, India is at the beginning of capex revival phase and therefore corporate earnings recovery looks sustainable and premium valuations might sustain. We believe that India is better placed compared to major global economies in terms of handling Covid and its spread, while revival of capex and higher growth potential over next 1-2 years would keep Indian economy expansion ahead of many other nations. This would lead to bounce back in Indices.

Source : Equity Bulls

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