Sensex, Nifty likely to touch fresh highs in 2022: DH Poll

Year 2022 will be another record-breaking year for the Indian equity markets with the BSE Sensex and the Nifty 50 benchmark indices seen touching fresh all-time highs, according to a dozen analysts polled by DH.

Analysts, on average, expect the 30-share BSE Sensex to rise 18% to touch the 68,732 mark by the end of the calendar year, aided by a host of factors including favourable policy decisions, a potential rise in fixed income flows and new issuances.

Meanwhile, Nifty 50 is likely to climb 18% to hit the 20,543 mark, according to the average analyst estimate.

Both the benchmark indices had touched their all-time highs in 2021.

The poll results offer hope at a time Asia’s third-largest economy is coping with a fresh wave of the Covid-19 pandemic, rising inflation and foreign fund outflows.

“Strong recovery in earnings, lower impact of Covid variants and liquidity support by the government and central banks will continue,” said Ajit Mishra, VP & Senior Technical Analyst at Religare Broking.

Many analysts tied the optimistic outlook to stabilising valuations. India sharply outperformed most of the global markets during 2021, which resulted in valuations turning expensive. But a recent correction has made Indian equities attractive again, they said.

“Going ahead, with more than 10% correction witnessed recently, valuations are no longer expensive. Further India witnessed highest GDP growth globally among the emerging economies while many other economic parameters are seeing sustained pick up and have crossed pre-covid levels. The earnings momentum too is expected to continue as we are in the beginning of a new earnings cycle,” said Sneha Poddar, AVP Research, Broking & Distribution, Motilal Oswal Financial Services.

While it is known that the US Federal Reserve might assume a hawkish stance in the foreseeable future, many analysts that DH spoke with predict that Foreign Institutional Investors (FIIs) might start buying again after heavy outflows last year.

“Infact FIIs have been net buyers since the start of (the) new year and we expect this positive inflow to continue. Primary market too would continue to attract FII interest given the humongous IPO pipeline planned for 2022,” Poddar said.

Others agreed.

“They have already sold a lot and the overall outlook of the Indian equity market is very bullish therefore they will again start to buy soon in our market. Generally, they start to come back to the Indian market after the 15th of January of the new year, said Santosh Meena, Head of Research, Swastika Investmart Ltd.

In 2021, FIIs turned big sellers in the secondary market by offloading over Rs 90,000 crore (provisional data) during the year, on the back of expensive valuations and fragile global cues, although they bought heavily in the primary market to the tune of over Rs 80,000 crore.

“Historically, when interest rates rise, the bull market doesn’t end there, it merely starts its maturer phase where men are going to be separated from boys,” said Sushil Kedia, CEO & Founder, Kedianomics.

In 2021, 65 companies launched their initial public offerings, generating over Rs 1.31 lakh crore. Analysts are confident that the IPO frenzy is here to stay.

“Lot of IPOs are lined up for the year 2022 which would keep the excitement high among investors,” Poddar said, citing the potential stock market debuts of a host of new-age companies including Oyo, Pharmeasy, Delhivery, MobiKwik and Ixigo.

Analysts also expect continued strong participation from retail investors. “We believe this trend is likely to continue given that equities outperform other asset classes and digitalisation has helped spread education on equities in the remote areas as well,” said Ruchit Jain, the lead research analyst at 5Paisa.