Investors remain cautious; eyes on Omicron, Budget 2022

Heading into the Christmas break session, Britain has unveiled tighter COVID-19 restrictions as the number of cases and hospitalizations continue to rise. The moves have been somewhat dampened by advances in therapeutic treatments and vaccine effectiveness, but are nonetheless concerning as the worst of the winter wave approaches.

The market will now focus more on releasing U.S. consumer inflation figures, which will influence the Fed’s decision to accelerate its stimulus measures and set the stage for a possible rate hike. interest in 2022.

FII being net sellers in India, ending in December 2021 as net sellers, this will be the first time since the end of 2016, when they withdrew funds from Indian stocks for three consecutive months.

Despite market volatility in recent weeks, domestic investors continued to invest through mutual funds in November 2021, equity funds registered net inflows of Rs 11,614 Crore, up from Rs 5,214 crore in October 2021 Money keeps coming through SIPs; Rs 11,004 crore in November, against Rs 10,518 crore the previous October.

After a record fundraiser on November 21, 8-10 IPOs are expected this month. Primary market activity is also expected to be strong during the remainder of December. We believe that around 20 companies are in the process of going public.

Among these, up to 10 companies are looking to launch their IPOs in December 2021 and will rest in January 2022. Collectively, all these companies are expected to raise more than Rs 35,000 crore.

The outlook for the primary market depends largely on the mood of the secondary market and the mood is volatile in the near term, given concerns about high inflation risk, lower than expected second quarter earnings and weak performance. world markets ahead of the US Federal Reserve’s quantitative easing program which could trigger more clearance sale. Looking ahead, sentiment should remain cautious given the absence of new triggers and a high valuation.

Going forward, the markets will start to set expectations for the next budget as there won’t be a major event in the next couple of months.

Investors focus on the budget can continue to encourage Atmanirbhar and make India the follow-up theme of infrastructure reforms, electricity reforms, support for electric vehicles and divestment strategy.

The year 2020 has been a year of unprecedented challenges and uncertainties as the year 2021 was all about the recovery, now is the time to perform and the year 2022 has a strong chance of outperforming.

Technically speaking, the short term bias could tip again in favor of bearish traders, if Nifty is unable to break through the 17,604 mark. The trend index tracking has formed an indecisive ‘Doji’ pattern with a crucial area of ​​17,500 to 17,600, if we maintain these levels that would be a positive indication for the bulls to make a comeback.

India VIX, the measure of future volatility and fear on Dalal Street, has eased further and is expected to decline in the coming weeks. Overall, we are bullish in the market and believe that any significant decline is an opportunity to accumulate quality stocks over the long term.

(Prashanth Tapse, Vice President, Research, at Mehta Equities Ltd)

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Posted on: Sunday December 12th, 2021 19:59 IST

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