Sensex posts biggest annual gain in 4 years. Key factors to watch in 2022

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Indian stock markets ended 2021 on a strong note, ending the Sensex closing the last day of 2021 with a gain of 0.8% at 58,253. Nifty closed 0.87% higher at 17,354. For the year, the BSE Sensex and NSE Nifty closed in 2021 with gains of 22% and 24% respectively – the best in four years. Despite valuation concerns, India’s blue-chip Nifty 50 was one of the best performers among emerging markets in Asia in 2021, and overtook the MSCI World Index, which rose 17%.

Indian Equity Reached a record high in October, but retreated nearly 7% on concerns over higher valuations and Omicron’s spread around the world.

HDFC Securities MD and CEO Dheeraj Reilly says that post the super show in 2021, the valuation level in Indian equities may make most people cautious on EM and India within Asia. He said, “Indian stock markets are facing several challenges, including US rate cycle, rising oil prices, elections in key states, possible COVID Wave 3, upward swing in domestic interest rates, rich headline valuations and strong relative Includes trailing performances.”

“The transition to 2022 will see a more moderate monetary policy, and investors can expect more moderate returns from financial markets. Central banks will start raising rates but will be more tolerant of inflation. Central banks and their assessment of economic conditions will once again be front and center in shaping investment strategies in 2022.”

Naveen Kulkarni, Chief Investment Officer, Axis Securities said: “2011 has been a year of recovery, rehabilitation and setting a foundation for future growth. 2022 will be a bit more volatile but still very good for equity investors in India. 2022 is likely to be another year of good double digit returns and sustained wealth creation. Auto, banks and capital goods, virtually the ABC of equity markets, will be the most interesting sectors for 2022.”

Markets may become more sensible in 2022, said Dheeraj Reilly, MD and CEO, HDFC Securities, and “hence sticking to high quality companies and maintaining your planned asset allocation is critical for a better outcome from 2022.”

Analysts say the trend is looking positive in the near term. “Nifty has successfully closed above the level of 17350 – this should allow Nifty to move further up to 17500-17600. 17100-17150 is the new level of support and as long as it lasts, Nifty trend is positive,” says Manish Hathiramani, Proprietary Index Trader and Technical Analyst, Deen Dayal Investments. (with agency input)

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