As per the ICICI Direct report on Market Strategy 2022-CY21 has seen a strong economic recovery from the unlocked lows. The recovery in growth mainly stemmed from the government led initiatives by focusing on “Atmanirbhar” schemes panning across a gamut of sectors, which, in turn, will act as a multiplier catalyst across layers of GDP growth and get the economy back on fast track to achieve the $5 trillion aspiration.
Sea change in business dealings expected beginning CY 2022
Technological advancement will give new frontiers to businesses across verticals. From a market perspective, sectors that we are bullish on are IT, capital goods, auto ancillaries (EV exposure), retail and real estate. We also highlight the key risks for CY22 that may get manifested in the form of a) reversal in interest rate cycle globally amid inflationary pressures and b) geopolitical risks that may decide the direction of already spiking energy costs.
Nifty fair value pegged at 20,000
With the worst of asset quality concerns behind us amid resolution of big ticket stressed assets and economic optimism in the post-Covid era, Nifty earnings CAGR is impressively placed at 25.7% in FY21E-23E. We value the Nifty at 20,000 i.e. 24.5x P/E on FY23E EPS of | 815 with corresponding Sensex target at 66600.
Midcaps, small caps gave stellar returns in CY21. This is expected to continue in CY22E driven by inherent business moats as the earnings CAGR for midcap, small cap in FY21-23E is expected at ~39%, 28%, respectively. Going forward, innovative themes present in the midcap & small cap space (like speciality steel chemicals, home textiles, CRAMS, etc), superior earning potential and reasonable valuations (trades at
Stock picks for Cy 2022
|Stocks||CMP||Target||Upside (in %)|
|The Phoenix Mills||992||1200||21|
|Aster DM Healthcare||175||250||43|
The stock recommendations listed here are given out by ICICI Direct report dated December 30, 2021 and titled Market Strategy 2022.