We are heading into the Christmas holidays session, Britain unveiled stricter COVID-19 restrictions as case counts and hospitalizations continue to rise. The moves have been muted somewhat by advances in therapy treatments and vaccine efficacy, but are nonetheless concerning heading into the worst of the pending winter wave.
The market will now focus more to the release of the US consumer inflation figures and that will influence the Fed's decision to taper its stimulus at a faster pace and set the stage for an eventual interest rate hike in 2022.
FII being net sellers in India, finishing December 2021 as net sellers, it will be the first time since late 2016 when they took out funds from the Indian equities for three back-to-back months in a row.
Despite market volatility in recent weeks, domestic investors continued to invest via mutual funds in November 2021, equity funds saw net inflows of Rs 11,614 Cr, up from Rs 5,214 crore in October 2021. Money continues to come through SIPs; Rs 11,004 crore in November month, up from Rs 10,518 crore in the previous October month.
After record fund raising in November-21, 8-10 IPOs expected this month. The primary market activity is expected to be strong in rest of the December as well. We believe 20-odd companies are in the IPO pipeline.
Out of these, as many as 10 companies are looking to launch their IPOs in December 2021 and rest in January 2022. Collectively, all these companies are expected to raise over Rs 35,000 crore.
The primary market outlook largely depends on the secondary market mood and the mood is volatile in the near term, given concerns over high inflation risk, lower than expected Q2 earnings and weakness in global markets ahead of the US Federal Reserve's quantitative easing programme which could trigger more sell-off. Going forward, sentiment is expected to remain cautious given the absence of fresh triggers and high valuation.
Going forward markets will start building up expectations for the forthcoming Budget as there’s no major event in the next couple of months.
Investors focus from budget may have a continued focus on encouraging Atmanirbhar and make in India theme followed be infrastructure reforms, Power reforms, EV support, and disinvestment strategy.
The year 2020 has been one of unprecedented challenges and uncertainties while year 2021 was all about recovery, now it’s time to perform and year 2022 has high chances to outperform.
Technically speaking, the near-term bias could again tilt in favour of bearish traders, if Nifty is unable to make a move above 17604 mark. Following to the trend index has formed indecisive ‘Doji’ pattern with 17,500-17,600 crucial zone if we sustain this levels would act as positive indication for the bulls to make a comeback.
India VIX, the measure of future volatility and fear on Dalal Street, eased further and expected to come down in coming weeks. Overall we are bullish on the market and believe any significant dip is opportunities to accumulate quality stocks for long term.
(Prashanth Tapse, Vice President, Research, at Mehta Equities Ltd)
