Post Market views - Jan 4, 2022 - Mr Mitul Shah, Head Of Research at Reliance Securities

Domestic equities closed higher for 2nd consecutive day of the new calendar year led by Nifty bank which closed 1.06% higher. Nifty was up 1%, while all major sectors were in green except Pharma, Metal and Realty. The broader market underperformed the main indices, Nifty MidCap 100 was up 0.24% while SmallCap index was up 0.3%. US equities closed higher with Dow Jones rising 0.7%, S&P 500 added 0.6%, while the Nasdaq finished 1.2% higher, edging closer to record territory. Nasdaq rallied on the back of 13% surge in Tesla shares as company reported highest vehicles' delivery in Dec-ending quarter and Apple became the first company to surpass market cap of $3 trn, higher than India's GDP.

The GoI'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 in 2022. Recently rising Covid cases in India is of concern now and how it would shape up in coming days would key deciding factor for market trend in the month. We would be monitoring situation on recent Covid surge and Omicron issue.

Source : Equity Bulls

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