Market Overview – December 2021
Global growth is expected to moderate from 5.9% in 2021 to 4.4% in 2022, weighed down by Omicron, inflation and China’s property retrenchment.
Global economy and markets
- Global growth is expected to moderate from 5.9% in 2021 to 4.4% in 2022, weighed down by Omicron, inflation and China’s property retrenchment.
- Energy-price spikes and supply disruptions made inflation higher and more broad-based than anticipated.
- Key risks: rising global bond yields, sharp oil-price increases, Russia–Ukraine escalation, sticky domestic inflation and expensive valuations.
Indian economy
- India’s economy is expected to grow 9.2% in 2021-22, the highest among large economies, slightly above 2019-20 GDP.
- Growth-focused policy, policy continuity and tax stability were key positives of Budget 2022.
- The outlook holds despite a highly transmissible third wave driven by Omicron.
Indian stock markets
- Markets corrected after record highs in mid-October 2021, amid expected Fed hikes and FII selling of ₹1.4 lakh crore over four months.
- The Nifty is only about 7% below its 52-week high, while roughly 75% of small- and mid-cap stocks have fallen more than 20%.
- Fed hikes, rising crude and Russia–Ukraine tensions may cause short-term volatility that patient investors can benefit from.
Corporate performance (Q3 FY22)
- Q3 FY22 marked the sixth consecutive quarter of double-digit growth, though the slowest in six quarters.
- Revenue grew 24% YoY, largely on price realisation; net profit rose 27% YoY but dipped marginally QoQ.
- Earnings diverged sharply between sectors hit by input costs and those unaffected, such as BFSI, Metals and Oil & Gas.
- Near-term earnings may face input-cost pressure, while policy initiatives support longer-term momentum.
Outlook
- India is expected to outperform global markets on earnings growth, supported by low corporate leverage, a stable currency and record forex reserves.
- Reforms such as GST and the banking clean-up are delivering benefits, and government finances remain strong.
- Entrepreneurs have become more efficient; the pause in the 18-month rally is a passing phase.
Disclaimer. This overview reflects the views of the Care PMS investment team at the time of publication and is for information only. Investments in equities are subject to market risk. Past performance is not indicative of future returns. Please read the disclosure document carefully before investing.
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