According to analysts, macroeconomic data announcement, Omicron position and global trends will be the key driving factors for the equity market in the first week of New Year 2022.
As a landmark year, Indian stock indices surpassed several milestones and the 30-share Sensex posted an annual gain of 10,502.49 points or 21.99 per cent in 2021.
Ajit Mishra, Vice President (Research) Religare Broking said, “This week marks the beginning of a new month and participants will be closely watching some important high frequency data like Monthly Auto Sales, India Manufacturing PMI and India Services PMI. In addition, Updates on the COVID-19 situation and the performance of global markets will also be important.”
He said that although the markets have been seeing a recovery for the past two weeks, it is too early to say that “we are out of the woods”.
“Keeping in view the mixed signals, participants should maintain a cautious stance and prefer a hedge approach. Almost all sectors are participating in the recovery, but we feel banking, pharma, IT and FMCG (fast-moving (consumer goods) may outpace others in the coming week,” Mishra said.
Siddharth Khemka, Head (Retail Research) Motilal Oswal Financial Services Ltd said that the market will start the new year 2022 with its cautious sideways movement as Omicron expands rapidly in India and globally.
“However, we remain optimistic and expect Nifty to deliver around 12-15 per cent returns in 2022, supported by the continuation of economic recovery and strong earnings growth.
“While market trends could be volatile in the near term due to potential risks from Omicron variants and fragile global cues, in the long run, strong earnings distribution coupled with positive macro-economic data holds the key to propelling markets upwards, Khemka added.
PMI data for manufacturing and services sector to be announced this week will also impact business sentiment.
“Despite fears surrounding rising omicron cases, the domestic market is expected to maintain its resilience supported by a healthy long-term growth forecast for the domestic economy.
Vinod Nair, Head (Research), Geojit Financial Services, said, “The RBI’s decision on interest rate hike will be a major market-tracked event. We have a fairly positive outlook on the market for 2022.”
Automobile companies will also be in focus on Monday amid monthly sales data announcements.
The year 2021 has been largely beneficial for equity investors. The 30-share benchmark Sensex crossed the 50,000 and 62,000 levels last year after the pandemic-triggered crash in March 2020.
Nair said 2021 saw a strong recovery from the post-coronavirus outbreak amid ongoing challenges to outperform its global peers.
“The strong momentum was fueled by strong retail participation, economic recovery, vaccine coverage and a growing appetite for Indian goods and services.
“Investor confidence in India’s growth story has increased through IPO (Initial Public Offering) in the domestic primary market,” he said.
Movements in foreign institutional investors (FIIs), Brent crude and rupee will also impact sentiments.
This story has been published without modification in text from a wire agency feed. Only the title has been changed.
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