The Indian stock market has seen an increase for the sixth consecutive year in 2021, but market experts believe that due to rising inflation, returning strictness in monetary policies and new variant Omicron of Corona, there may be pressure on the market in 2022. We can see ups and downs in the year.
The Sensex-Nifty has slipped nearly 10 per cent from its October highs. Experts say that due to costlier current valuations, the market sentiments may remain under pressure going forward. The new variant of Corona has brought a cloud of uncertainty on the market. Experts also say that in the short term, the market may remain volatile amid fears of a third wave of corona in India, but from a long-term perspective, improving the performance of companies, good economic data and the announcements of the Union Budget in the market. Some positive surprises can also be seen.
Dheeraj Relli of HDFC Securities says that there are many challenges in front of the Indian equity market at this time. These include challenges like rising interest rates in America, increase in crude oil prices, elections in all states, possible third wave of corona, possibility of increase in domestic interest rates, costly valuations.
Despite all these challenges, the Sensex-Nifty has seen an increase of 22 percent and 24 percent respectively. Let us tell you that before this, 2017 was the best year in terms of market. In which the Sensex-Nifty had seen a rise of 28 percent.
Not much populist announcements expected in the budget, with the removal of Omicron’s effect, the withdrawal of FII will be light- Jyoti Rai
Vinod Nair of Geojit Financial Services says that amidst the challenges related to one new variant of Corona, there was a strong recovery in 2021 and the market managed to close on the edge on 31 December. India outperformed most of its global peers on the back of rising retail investor participation, a good economy recovery, accelerating vaccination and rising demand for Indian goods and services.
He further added that despite the threat from Omicron, the domestic market is expected to remain strong. The market will be supported by strong long-term growth prospects and measures taken for reforms.
Earlier in 2020, Sensex and Nifty had seen a rise of 15-16 per cent. Significantly, this year due to the nationwide lockdown due to the outbreak of the COVID epidemic, the Indian equity market had broken more than 20 percent. After that there was a strong recovery in the market after March 2020. In terms of dollars, in 2021, the Sensex has gained 20 percent and the Nifty has gained 22 percent. On the other hand, the MSCI EM Index has lost 5 per cent while MSCI World has gained 20 per cent.
If we look at the movement of small-medium stocks in 2021, BSE Midcap index has run up 29 per cent and BSE Smallcap 63 per cent during this period. The total market cap of the Indian equity market in December 2021 increased from $2.52 trillion in December 2020 to $3.42 trillion in December 2021. India is currently ranked 7th among the top 10 markets in the world. The Indian market has a share of 2.83 per cent in the market cap of $121.17 trillion of the worldwide market. Let us know that in 2020, India’s share in the total market cap of the world was 2.44 percent.
Naveen Kulkarni of Axis Securities says that 2021 has been a year of recovery for the Indian market and laying the groundwork for further growth. We may see a bit more volatility in 2022, but despite this, 2022 will be a very good year for investors. It is very likely that we will see double digit returns once again in 2022. Naveen Kulkarni is bullish on autos, banks and capital goods. He says that in 2022 these sectors will see good growth.
If we look at the data related to foreign institutional investors, in 2021, FIIs put $3.86 billion in India, although in the period from October to December, there was a sell-off of $ 4.70 billion by FIIs. Meanwhile, the increasing number of retail investors in the market acted to stabilize the market. Record demat accounts are open in 2021. In the period January to November 2021, 2.74 crore demat accounts have been opened. In contrast, this 1.05 crore demat accounts were opened in the whole of 2020. However, from 2020 itself, the number of retail investors in the equity market started increasing.
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