Inflation, bond yields, growth to steer market in FY22: Mrinal Singh of InCred Asset Management

Market Outlook

As the market seems to be following the trend of profit-booking after every rise, Mrinal Singh, CEO & CIO, InCred Asset Management, says it can be seen as the reshuffling of the portfolio. The market trajectory for FY22 will largely depend on a lot of macro factors such as inflation or yields, economic growth in the absence of stimulus and central bank policies, says Singh.

In an interview to Moneycontrol’s Nishant Kumar, he talks about the rise of retail investors, growth versus value stocks and earnings expectations for FY22. Edited excerpts:

The market is witnessing profit-booking after every rise. What is keeping the bulls in check?

Profit-booking is a natural occurrence during a market rise and it can also be called reshuffling of the portfolio.

What matters most during such times is that the earnings growth versus expectation is understood and chartered carefully. As long as the conditions for this are met, it is likely to turn out fine.

As expected, there is general anxiety around rising COVID-19 cases once again, as last year’s impact on the market was daunting for many.

Moreover, the bond yields spiking for a variety of reasons add to the existing situation. Understandably, market scenarios such as these are playing on the minds of investors.

What is your broader outlook for the market for FY22? What could be the biggest risk for the market in the new financial year?

The government has taken several measures in recent months, and the market is quite upbeat about the economic recovery that is coming from several sectors in the economy.

The sentiment is assisted by the accommodative stance taken by most central banks.

Having said that, the trajectory for FY22 is still unknown and unpredictable, largely because it is dependent on a lot of macro factors such as inflation or yields, economic growth in the absence of stimulus and central bank policies, etc which will influence the earning trajectory meaningfully.

Therefore, keeping an eye on the upcoming developments domestically as well as internationally is essential for investors.

Since 2020, India is witnessing strong participation from retail investors. What is proliferating the rise of retail investors?

We have finally entered the information age and pre-existing barriers to market entry have dissipated on account of digital expansion, affordability of smartphones and the internet and low commission rates due to economies of scale.

Even transactions are priced relatively low, apart from the fact that retail investors have also chosen to try investing on their own. However, we have a word of caution here for new investors.

Considering that this is a field where good investment advice can come in handy for each individual, to meet his/her financial goals, they will do well to get experts on-board.

Moreover, having an adviser onboard will go a long way in helping them achieve both long-term and short-term financial goals.

Growth stocks or value stocks—what will you prefer for the next financial year?

For understanding this, the ideal way to approach the issue would be to look at historical data.

Investors need to look at how economies recovered from similar crisis situations in the past, say the 2008 economic crisis following which markets came out strongly.

If we were to historically analyse such data, economic recovery from the bottom is best captured by the value-style of investing.

The signs are absolutely clear on this front and there is broad consensus among major players and experts in the market as well. Therefore, investment in value stocks would be my preference.

Can Indian Inc see earnings upgrade in FY22 also?

As already mentioned above, several aspects of this year’s performance are yet to emerge, and it will be too early to suggest anything.

However, our expectation is that we will witness dispersion in the sectoral earnings trajectory going ahead. This could also mean that active investing will deliver significantly different returns compared to an index.

Disclaimer: The views and investment tips expressed by experts on are their own and not those of the website or its management. advises users to check with certified experts before taking any investment decisions.