Even as the market remains volatile in the near term, a long term rally is in store, believe experts. Ladderup Wealth Management’s Managing Director Raghvendra Nath believes the market will witness a broad-based rally in the coming years. This will be driven by higher-than-normal economic growth and corporate profitability.
As COVID-19 concerns ease and fatalities reduce sharply, 2022 will see several positives since it would signal the end of economic blockades.
The government spending program would act as another trigger, said Raghvendra, who has more than 21 years of corporate experience, including 15 years in the mutual fund industry.
Do you expect the record highs for the market before the Union Budget?
It’s very difficult to say if we will see a record high before the Budget, but it looks like the markets shall be in good stead unless there is negative coronavirus-related news.
Do you believe the developments around Omicron will hit market sentiment?
There is more fear rather than real reasons right now for the market jitters related to the emergence of Omicron. There are still a few weeks before the world understands the extent of transmissibility, nature of disease, treatment protocols and if the vaccinations shall be effective in combating the mutant. I believe whenever the market reacts to such fears in advance, it gradually accepts the emerging developments.
Metal was the biggest loser with 13% loss in the last one-and-half-month, while other key sectors like Auto, Bank, Energy, Financial Service, and Pharma declined 6-8%. Is it the time to board some of these sectors?
If one is looking at investing for the long term, these short term corrections are always a good time to buy high quality stocks. We are likely to witness a broad-based rally in the coming years that shall be guided by higher-than-normal economic growth and corporate profitability. In such scenarios, most sectors of the economy shall end up doing well.
What do you expect from the RBI monetary policy this week? Do you expect the central bank to maintain status quo rates till 2022?
There is a very high probability that the RBI shall maintain status quo for the time being. Retail inflation is still in a manageable zone and the focus on growth remains high. Moreover, most central banks in the world are acting similarly these days, so the RBI would look at how the other large central banks, especially the Federal Reserve would act before changing course.
Do you expect further growth in industrial output in October 2021 after 3.1 percent growth in September?
There is a definite improvement in industrial activity and the manufacturing PMIs are a good indicator. So, yes there is a good probability that industrial growth will be better in the coming months.
What are the key events that will have an impact on the market in 2022?
Reducing COVID fatalities should be a very big positive in 2022, as it would signal the end of economic blockades and resumption of activity. Government’s spending programs would act as the other trigger.
If corporate India sustains the operating efficiencies that have been built over the last 2 years, it would boost earnings growth.
Do you expect the flood of IPOs to continue in 2022 as well, especially after record fund raising in 2021, with more than 55 companies hitting the primary market?
If the rally sustains, the flow of IPOs shall continue to remain high. However, with more listings, not every IPO will succeed.
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