Post Market Views - Jan 14, 2022 - Reliance Securities

Mr Mitul Shah, Head Of Research at Reliance Securities.

Domestic equities closed almost flat Nifty 50 down marginally by 0.1%. While the broader market outperformed the main indices, Nifty MDCAP 50 dipped 0.03%, while Nifty SMLCAP 50 index was up 0.45%. Most sectoral indices saw a crunch except Nifty Realty, Nifty PSU Bank, Nifty Metal and Nifty IT. Nifty Realty gained the most at 1.35%, followed by Nifty IT at 0.61%. US equities closed lower, as concerns over FED raising interest rates remain, due to inflationary pressures. Despite being up for much of the session, the Dow Jones Industrial Average fell 0.5%. The S&P 500 index declined 1.4% while Nasdaq composite plummeted 2.5% as technology stocks dipped. The 10-year Treasury yield lowered to 1.71%.

India appears to be better-placed in terms of handling COVID compared to other countries throughout the pandemic, be it the first wave, second wave, Delta variant or the ongoing Omicron on the basis of which we expect fastest revival from the current slowdown along with similar strong bounce-back in the market. In past we have observed that volatility in market persists till the announcement of first rate hike by Fed, post that it settles down and flow in equities resumes. Equities would continue with the outperformance with double-digit returns. Our year-end 2022 target for Nifty is 20,000 at 22x FY24E earnings. We expect Nifty to enjoy premium valuation for the next 1-2 years on the back of higher earnings CAGR (before reaching stable earnings pace of growth), as India becomes a preferred destination for global manufacturing, going ahead. This trend would continue over the next 4-5 years, supported by China+1 policy and the government's support for various industries. We believe that an all-round calibrated economic recovery is on the cards, though the timing remains highly uncertain. Sectors like IT Services, Engineering, Capital Goods and EV ecology would continue to be in focus in 2022. Automobile is also another promising sector on the back of likely demand revival, better supply and commodity softening. 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

Keywords

PostMarketViews RelianceSecurities Nifty