After the recent fall, the market will now go into a phase of consolidation. Then the market will get momentum only on the basis of domestic investment and consumption. Shiv Chanani, Research Head, Elara Securities, said this in a conversation with Moneycontrol. Regarding the budget, he said that he expects more emphasis on agriculture, health and infrastructure in the budget.
Interest rates to come down in 2022
Chanani, who has 20 years of experience in equity research and fund management, told Global Factors that he expects the US Fed to hike rates in 2022. Also, the Monetary Policy Committee will adopt a normal stance on the repo rate in February 2022 and the first hike in the repo rate may be seen in the second quarter of FY23. “We expect an increase of 50-75 bps in FY23,” he added.
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Technology adoption increased in 2021
On the biggest lesson in the year 2021, he said that the adoption of technology has increased everywhere. “While this has created huge opportunities in the technology solutions space, it has made almost every business vulnerable to digital constraints,” he said. Therefore, investors should keep an eye on such managements, which are adopting the mantra of “digital first”.
India in better position than the world
On fears of further downside in the coming months due to Omicron’s concerns, Chanani said, “Factors like Omicron and possible rate hike have led to the correction. Despite this, we believe that India is in a better position than the world in both respects.
List IPOs suffered a setback in 2021 due to market decline, falling 10-50% from their high
India’s forex reserves strong
On the macro front, he said India’s current account deficit and forex reserves are well positioned to meet volatility arising out of Fed decisions. Chanani expects valuations of some new age technology companies to be impacted in the event of liquidity crunch. However, he said that they are very small compared to the Indian market. “Overall, we expect the market to move into a phase of consolidation before the next uptrend,” he added. After this, the market will get momentum on the basis of domestic investment and consumption.
Budget expected to remain investment centric
On the question related to the budget, he said, “We expect the budget to be pragmatic and investment-oriented.” Chanani said, “GDP growth has surprised, along with tax revenue collection is in a strong position. Therefore, we expect to be under the estimate of the fiscal deficit. We expect the budget to focus on agriculture, health and infrastructure.”
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Key risk would be another round of severe virus pandemic which could de-rail the nascent economic recovery and result in continued inflationary pressure. Another risk may emanate from large scale bubble forming around cryptocurrencies which may cause systemic risk in the financial markets.