Post Market views - Dec 27, 2021 - Mr Mitul Shah, Head Of Research at Reliance Securities

Domestic equities closed higher after initial selloff seen in the morning trade, taking cues from Asian peers which are trading flat to positive. Nifty up 0.6%, while all major sectors are in green, except Nifty Metal and Media which is down 0.1% and 0.9% respectively. The broader market underperformed the main indices, Nifty MidCap is up 0.42% while SmallCap index is up 0.3%. US markets were closed on last Friday due to charismas holiday, it closed at a record level on Thursday in a pre-holiday rally along with positive data. The data showed that consumer sentiment improved, new home sales increased, durable goods orders beat forecasts and jobless claims signaled further labor market healing. But inflation-adjusted consumer spending stagnated, flagging risks from rapidly rising prices.

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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