After a stellar run in 2021 that saw the S&P BSE Sensex and the Nifty50 clock gains of 20 per cent and 22 per cent respectively, global equity markets, including India, are gearing up to welcome 2022 on a cautious note. For one, new variants of the Covid -19 infection that make current vaccines less effective is one of the key risks worth flagging, analysts said. Inflation was also a risk for this asset class in 2021, although most market participants expect that the current elevated inflation levels will be transitory.
'Overtightening of monetary policy by central banks and the spread of new Covid variants, which may force governments to restart lockdowns or restrict mobility.'
'Young working adults between 25 and 34, who are in Indian Tier II and III cities, are leading the charge in terms of crypto adoption.'
'Investors should keep them on their radar and invest over a longer time frame, and expect some of these companies to bite the dust.'
'The biggest risk to the Indian markets from a 12-18-month view is that the current government does not get re-elected, or loses in a way that is not represented at all in the next central government.'
'India seems to be on a relatively better wicket compared to other emerging markets.'
'Recent underperformance notwithstanding, equities should constitute a major part of investors' financial portfolio.'
'There will be massive differences in sectors and stocks over the next few years.'
'We have relatively strong growth and a healthy corporate earnings cycle as positives, but a worrisome current account deficit and high inflation as challenges.'
High networth individuals selling stocks to buy real estate is among the key risks for the Indian markets.
'It will be best for investors to have a systematic investment plan in mid-cap and small-cap funds with a three-/five-year horizon.'
Gold looks cheap compared to the stock markets that are highly overbought at the moment.
'2022 has not been -- and will not be -- the kind of 2021 bull market, which lifted all boats.'
'The selling in India may emerge as soon as the RBI reverses its interest rate stance.'
'In the medium to long term mid-caps tend to generate higher returns, albeit with increased volatility.'
'As we expect the economy to continue to grow above the trend line, we expect capex decisions to be taken next year when there is more certainty about the cost of funding and the economy.'
Rising oil prices, sharp slowdown in mutual fund inflows and steep valuations remain the key risks for Indian investors going ahead.
'Thankfully, most investors in India have now seen through this false narrative and are once again deploying their hard-earned money.
'The recent correction in indices has made the markets cheaper to invest for the long term.'
'Most Indian logistics firms do not have the facility to store and transport COVID-19 vaccine right now.'
'They can shift to dynamic asset allocation funds to automatically rebalance their equity exposure.'
'The markets have corrected almost 8-9 per cent from their highs, so one can accumulate quality stocks at reasonable prices.'
'There is a lot of interest from potential clients who have remained away from the markets in past years.' 'They are evaluating whether this is a good time to enter, especially since there are very few alternatives to earn meaningful returns.'
'If the third wave of Covid infections is as bad as the second one, the market may get very polarised with a preference for blue-chips with low volatility.'
'In 2022, active management, long-short strategies, multi-asset strategies, and asset allocation strategies need to be considered to meet long-term investment goals.'
The surge in IT, auto and FMCG stocks were led by investors seeking safety against market volatility.
'Good investment opportunities should not be missed.'
Christopher Wood, global head of equity strategy at Jefferies reiterate his bullish view on Indian equities on the back of a steady fall in Covid cases coupled with a sharp economic recovery in India, reports Puneet Wadhwa.
'The markets could shrug off demonetisation as a one-off extraordinary period.'
With GST, demonetisaton and the banking sector reset, investment banker Christopher Wood expects PM to focus on generating jobs ahead of the 2019 election.
'Internet, healthcare and life insurance are a few sectors which offer solid long-term decadal potential.'
Markets
'Markets are not prepared for a slowdown as the current expectation is of the continuation in earnings momentum.'
The best-case scenario -- to which Morgan Stanley attaches 30 per cent probability -- pegs the S&P BSE Sensex at 41,500 levels in the next 12 months.
'Earlier-than-expected tapering from the US, followed by rate hikes, and locally, a potential third wave, which mimics the second wave in terms of severity.'
'We are most bullish on all aspects of the financial sector -- private sector banks, even one state-owned bank, insurance, mortgage finance, broking, wealth management, gold finance, etc.'
'For someone who wants to invest for the future or his family, diversification is necessary.' 'Diversify across asset classes -- equities, gold, real estate, fixed income, commodities, and even cryptocurrency.'
'It is less dependent on imported capital.'
'For equities, inflation trending upwards but within the range of expectations can actually be a big positive as it helps earnings and may shift flows from bonds to equities.'
'Quality of management, corporate governance, allocation of capital, full disclosures should form the basis to decide investing in a particular stock.'
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