|
|
|
EXPECTATIONS FOR 2022
MACRO EXPECTATIONS
|
- Interest Rates
Interest rates are still at the lowest in the last decade. We do believe that we are at
the bottom of the interest rate cycle, however the initial rate increases, as we
move towards our long term averages, have been positive for equities in the past.
It shows that the economy is normalizing.
|
|
- Inflation
So far Inflation is transient, mainly due to supply shortages. Demand has not yet
really picked up too much. This would need to be watched closely going forward.
|
|
- Corporate
Corporate profitability has started rising, after years of a downward trend. Return
on Equity is set to rise to an 8-year high. Corporate balance sheets have
deleveraged sharply. Cash flow generation is strong.
|
|
- Capex Cycle Revival
In the last 3-6 months, capex announcement from the private sectors has been to
the tune of Rs 3.3 tn, and PSU companies have announced capex spending of Rs
1.3 trn. Under the PLI scheme total capex of Rs 1.2 tn in the next 2-3 years is
expected.
|
|
|
|
EQUITY MARKETS
2022 is likely to be volatile with each tapering and raising interest rate
announcements. The flood of liquidity in the markets have resulted in Price
Earning expansion. Earning has only just started picking up. So this year may not
show such great returns for the equity markets as they have already run ahead,
but the economy as a whole should do well. Going forward expect equity returns
to continue to be in line with corporate earnings growth - estimated around
14-16% over the next 2-3 years.
|
|
The returns on debt mutual funds are likely to be around yield less expenses and
less impact of rising interest rates. The gap between the long term rates and
short term rates are at a high level of 300 bps, but we see short term rates rising
rather than the longer term rates falling. Main reasons are that the RBI would not
like to stifle growth and the Government's borrowing programme is high. Hence,
although debt mutual funds are not going to give great returns, debt allocation
cannot be ignored as basically it is needed to give stability to the portfolio and
also to have funds available to take advantage of pockets of opportunity when
the equity market corrects.
|
|
|
|
EQUITY MARKETS
Gold to S&P 500 ratio is at the lowest since 2005 - which is positive for
gold. Technically too, Gold is in a consolidation phase, and we expect it
to remain there for one or two quarters until the next up-move, which
is likely to be sharply higher.
In conclusion, in 2022 do not expect a repeat of 2021, but over the next
2/3 years it is very positive for India. Do not forget what John Cambers
of CISCO Systems said "Being the hottest Global market in both the
listed and unlisted worlds, India is literally on a roll!!! If I am betting on
one country in Asia, it's India. If I am betting on 2 countries in Asia, it's
India twice."
|
|
|
AKURDI |
WAKAD |
WANOWRIE |
MAGARPATTA |
B-20, Jai Ganesh Vision, Akurdi, Pune-411 035. |
No-1, Nisarg Deep Apartment, Kaspate Vasti Wakad, Pune-411 057. |
No. 26, Shraddha Regency, ’A’ Opp Kedari Garden, WANOWRIE, Pune-411 040. |
No. 14, 4th Floor, Destination Centre, Magarpatta City, Hadapsar, Pune-411 013. |
|
|