Recap 2021:
- Nifty & Sensex jumped 24% & 22% respectively.
- Large Cap generated 26% returns, Mid Cap 36% & Small Caps 57%.
- During CY2021, market rally was broad based unlike 2020.
- Most economies clocked in positive returns for the year due to reduction in COVID cases, stimulus measures & release of pent-up demand.
- Central Banks paused further rate cuts & speeding up tapering program.
- Emerging & Developed Countries are witnessing a high inflation.
- Corporate Balance Sheets appear to be healthy given rise in profits and decline in Debt over the last 2 years.
- 5x jump in the middle-income bracket (people crossing $2000 per capita income mark) in last 6 years.
- Supportive Govt. Policies – PLI Scheme, Insolvency & Bankruptcy Code, Consolidation of PSU Banks, Land Reforms, Make in India.
- Retail investors participation in direct equity jumped to a new high. Average 26 lakhs new Dmat accounts were added in 2021.
- There was a surge in new companies tapping markets through IPOs. Total 63 companies collectively raised 1.18 Lakh Cr in 2021.
Outlook 2022:
- Omicron threat has subsided as it is milder in nature and hospitalisation cases will be lesser.
- Equity markets will perform well but will be volatile due to changing macros and high valuations.
- Central Banks will be increasing rates due to persistent inflation and overall economic recovery.
- Increased vaccinations and launch of new breakthrough drugs may see an end of Covid in 2022.
- Crucial state election results (mainly UP) will decide the future of Modi Govt.
Avoid Investing Mistakes 2022:
- Not giving due respect to valuations & investing blindly with flow of markets.
- Not following asset allocation model for investing.
- Investing based on last 2 years bullish returns.
- Investing in IPOs without understanding the business.
- Not opting for Debt as a capital preservation tool.
Important events that will affect markets in Jan 2022:
- Quarter 3 results will be announced this month, expected to be in-line with expectations.
- Omicron spread and its impact in coming days will be keenly watched.
- 16500 Cr worth IPOs lined up in January 2022. Adani Wilmar, Ruchi Soya & Go Airlines among the big ones.
- Budget to be presented on 1st Feb, 2022.
Mushtaq is the co-founder of Moneyfrog.in. Mushtaq has had corporate stints with Kotak Securities & IIFL group. He holds an MBA degree from Pune University.
His interests include cooking & gardening. When he is not cooking or gardening, he is writing.
His interests include cooking & gardening. When he is not cooking or gardening, he is writing.