Post Market views - Dec 30, 2021 - Mr Mitul Shah, Head Of Research at Reliance Securities

Domestic equities traded sideway throughout the day with high volatility and closed almost flat. US market also ended on a mixed note with Down Jones and S&P 500 rising, while Nasdaq closing lower. Nifty ended flat today, while most sectors are more or less flat except IT, which exhibited positive trend by closing 1% higher. The broader market outperformed the main indices, Nifty MidCap ended flat while SmallCap index is up 0.2%. US 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. Recent increasing Omicron cases, Fed's tapering and very high inflation would keep US stock market under pressure over medium term.

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. We expect positive momentum to continue in IT and Auto space in 2022.

Source : Equity Bulls

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