Nifty 50 was up by almost 24 per cent in 2021 and investors are looking forward for the momentum to continue in 2022. Currently, there are several factors that appear to impact the stock market performance in 2022, but any surprises may not be ruled out either. From rising inflation, impending interest rate hikes, Budget 2022 to global factors such as Fed’s removal of liquidity and US interest rate hikes to the impact on Rupee-Dollar exchange rate, there could be more such factors as we move along 2022.
The stock market is not a one-way street and there will be ups and down in the asset prices. Although volatility is a part and parcel of the stock market, equities have to drift upwards over the long term. To find out what’s in store for stock market investors, including those who invest in equity mutual funds, here are some views from industry experts about how 2022 will shape up when it comes to equities as an asset class.
Abhijit Bhave, CEO, Fisdom Private Wealth
The theme for CY 2022 will be “Exceptional to Normalization.” As the post-Covid support from the governments and central banks in the form of fiscal and monetary policy gets gradually eliminated, a clear transition of the economies and policies towards a more normal state is expected.
Domestic equities have had a significant gain in the previous two years (Nifty is up by 24% in a year and close to 40% in a two years), owing to strong liquidity, supportive monetary policy, a faster-than-expected macro recovery following the pandemic and a vigorous vaccination effort combined with large scale domestic investor participation.
On both the global and local fronts, the economic cycle is in an expansion phase, which would operate as a tailwind for the stock market in CY2022 and we expect more stock-specific gains than a broad market participation. We expect the higher than normal returns to continue for another calendar year in CY2022.
In the current environment, we recommend that investors invest in tranches and take advantage of any periodic corrections to invest in equities for long-term wealth growth.
Rajan Pathak, Co-Founder & MD, Fintso
Like 2021, the equity market in 2022 will have its fair share of volatility. Several negative factors such as rich valuations, rollback of easy monetary policies across the globe, rising oil prices would lead to a market downturn.
However, a positive economic backdrop, revival in corporate earnings, and several IPOs of tech start-ups expected to hit the public market will elevate equity gains.
We believe markets will post their seventh consecutive year of positive returns in 2022, albeit more moderate returns than we have seen in 2021. Buying on dips or accumulation would be an ideal strategy. We would encourage investors to focus on quality large and midcap companies available at reasonable valuations.