Post Market views - Dec 24, 2021 - Mr Mitul Shah, Head Of Research at Reliance Securities

Domestic equities closed lower amid volatility after three consecutive days of gain. The market is taking negative cues from Asian peers which are trading at flat to negative. Nifty is down ~0.3%, while all major sectors are in red, except Nifty IT which is up ~1%. The broader market underperformed the main indices, Nifty MidCap is down 1.14% while SmallCap index is down 0.55%. On other hand, US equities closed at a record level in a pre-holiday rally along with positive data that suggested the Omicron variant is less likely to impact the economy. initial jobless claims in US came in at 205,000, sustaining a downward trend from the highs of their pandemic peak. Japan's November consumer inflation marked the biggest YoY rise in nearly two years on surging fuel costs with CPI, rose 0.5% YoY in November.

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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