Post Market views - Dec 22, 2021 - Mr Mitul Shah, Head Of Research at Reliance Securities

Domestic equities closed higher for second consecutive day with ~1% gain after steep decline last week. The momentum is back in the Indian market, which is supported by strong gains in Asian peers. All major sectors are in green, Nifty is up ~1%, broader market outperformed the main indices, Nifty MidCap is up 1.4% while SmallCap index is up 2.2%. US equities finished sharply higher ending a selloff in the past three sessions, as the Biden administration promised to avoid March 2020-style lockdowns and outlined plans to fight rising COVID-19 cases driven by the omicron variant. The markets also were encouraged by news that the Senate will vote on President Biden's Build Back Better economic plan in January despite Democratic Sen.

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 going into 2022.

Source : Equity Bulls

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