NEW DELHI: If Nifty would not quit all of the positive factors made up to now within the final week of the calendar 12 months 2022, it might be for the primary time in historical past that India’s heartbeat index has given optimistic returns for seven consecutive years.
From 2016 to 2021, the index has given optimistic returns each calendar 12 months. 2017 was the most effective within the stretch with a yearly achieve of 28.6%. In all of the final three years, Nifty has rewarded believers with double-digit positive factors.
Amid renewed worries over the growing instances of Covid-19 in China and the chances of recent BF.7 Omicron sub-variant’s spreading in India, Nifty misplaced 2.5% final week. Apart from recessionary fears, traders have additionally been anxious that the Fed might hold rates of interest greater for longer.
A lack of one other 2.6% this week would break Nifty’s 6-year-old profitable spell.
Since Nifty50 was launched in 1996, the index’s earlier greatest streak was in between the years of 2002 and 2007 when the index went up multi-fold and in addition delivered six years of continuous positive factors.
Within the final 26 years of Nifty’s existence, 2009 has been the most effective 12 months for the fairness market when the index delivered a formidable achieve of 75.8% after a nerve-wracking crash seen within the aftermath of the 2008 world monetary disaster. The 12 months 2003 (71.9%) and 1999 (67.4%) have additionally been fortunate for Indian traders.
Alternatively, there have been solely seven cases – 1996, 1998, 2000, 2001, 2008, 2011 and 2015 – when Nifty has eroded wealth.
What ought to traders do?
Historic tendencies present that December has been an excellent month for Nifty with the index closing with a month-to-month achieve for 80% of the time within the final 20 years. This time, nonetheless, the index might find yourself on the opposite aspect because it has misplaced over 5% of its worth up to now in a month.
Regardless of the bearish sentiment, Nifty stays one of many world’s best-performing index. Nevertheless, the autumn has been sharper on Dalal Road than that on Wall Road in the previous few weeks.
Kotak Institutional Equities expects additional consolidation within the Indian market over the following few months because it totally digests the negatives of wealthy valuations, higher-for-longer rates of interest and progress headwinds.
“We see a interval of consolidation for the Indian market with additional correction in multiples of the market led by gradual de-rating of multiples of ‘progress’ shares from present excessive ranges because the market reconciles to higher-for-longer rates of interest,” stated Kotak’s Sanjeev Prasad.
Within the coming earnings season, which can start from January, analysts see low scope for optimistic earnings surprises given significant world and modest home headwinds.
Amid a number of macroeconomic headwinds like world financial slowdown, rising inflation, liquidity tightening, geopolitical tensions and re-emergence of COVID-19 scares, India’s decoupling idea from the remainder of the world is now dealing with the acid take a look at.
(Disclaimer: Suggestions, solutions, views and opinions given by the consultants are their very own. These don’t symbolize the views of The Financial Instances)
