Equity markets witnessed a strong rally in 2021 with Nifty up around 22% while Nifty Midcap 100 and Nifty Smallcap 100 sharply outperformed with gains of around 43% and 53% respectively. Decline in covid cases, a significant pickup in the pace of vaccination, and the consequent sharp recovery in economic activity, consistently positive earnings surprises also led to rerating and rally in the market.
Going ahead in the new year, brokerage house Motilal Oswal remains optimistic and expects Nifty to deliver around 12-15% returns in 2022, supported by continuation of the economic recovery and strong earnings growth.
“After the recent correction, Nifty is now trading at ~20x 12 month forward PE which is no longer in the expensive zone. While the market trend might be volatile in the near term on account of potential risk from Omicron variant and fragile global cues, in the long run, strong earnings delivery along with positive macro-economic data would hold the key to drive markets upwards,” it said in a note.
The brokerage firm has recommended top stock picks in the midcaps space for the year upcoming year 2022 that one can look to buy, which includes Angel One, Macrotech Developers, Ramco Cement, Zensar Tech and Devyani International.
Motilal expects sectors such as IT, Telecom, Capital Goods, Cement and Real Estate to do well in 2022. While Banking and Auto that have underperformed the market so far – have the potential to turn out the dark horse in 2022.
“We expect the strong growth momentum to continue as we are in the beginning of a new earnings cycle and expect Nifty EPS to grow at 35%/19% for FY22/FY23 to INR730/INR873, after delivering 15% growth in FY21,” the brokerage note added.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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