Investors can invest in tranches and take advantage of any periodic adjustments to invest in equities with a view to long-term prosperity growth.
Nifty 50 rose by almost 24 percent in 2021, and investors look forward to momentum continuing in 2022. Currently, there are several factors that appear to be affecting stock market developments in 2022, but any surprises can not be ruled out either. From rising inflation, impending interest rate hikes, Budget 2022 to global factors such as the Fed’s removal of liquidity and US rate hikes to the impact on the Rupee-Dollar exchange rate, there may be several such factors as we move through 2022.
The stock market is not a one-way street and there will be ups and downs in asset prices. Although volatility is part of the stock market, stocks need to drift upward in the long run. To find out what lies ahead for stock market investors, including those investing in equity funds, here are some views from industry experts on how 2022 will take shape when it comes to equities as an asset class.
Abhijit Bhave, CEO, Fisdom Private Wealth
The theme for CY 2022 will be “Exceptional for normalization.” As post-Covid support from governments and central banks in the form of fiscal and monetary policies is gradually eliminated, a clear transition of economies and policies towards a more normal state is expected.
Domestic equities have seen significant growth over the past two years (Nifty has risen 24% in one year and close to 40% in two years) due to strong liquidity, supportive monetary policy, a faster-than-expected macro recovery after the pandemic and a sharp vaccination efforts combined with large-scale domestic investor participation.
On both the global and local fronts, the economic cycle is in an expansion phase, which would act as a tailwind for the stock market in CY2022, and we expect more stock-specific gains than broad market participation. We expect the higher than normal returns to continue for another calendar year in CY2022.
In the current environment, we recommend that investors invest in tranches and take advantage of any periodic adjustments to invest in equities with a view to long-term wealth growth.
Rajan Pathak, co-founder and MD, Fintso
Like 2021, the stock market in 2022 will have its fair share of volatility. Several negative factors such as rich valuations, the rollback of light monetary policies across the globe, rising oil prices would lead to a market downturn.
A positive economic background, revival in corporate earnings and several IPOs of tech start-ups expected to hit the public market will increase stock gains.
We believe that the markets will deliver their seventh consecutive year with positive returns in 2022, albeit more moderate returns than we have seen in 2021. Buying on decline or accumulation would be an ideal strategy. We would encourage investors to focus on high-quality, medium-sized companies that are available at reasonable valuations.
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