By Narendra Solanki
With the conclusion of the results season which were largely within expectations for the corporate sector. However, the markets continue to witness volatility seen so far in 2022 with some session of rebound in between as inflation continues to scale higher and central banks in most countries are tightening monetary policies. The major part of the jump in global inflation has been led by supply-side factors such as supply disruptions in China due to zero Covid policy, inadequate supply of crucial materials such as microchips and bottlenecks due to the Russia Ukraine war. Lately, most of these factors are showing signs of improvement and inflation rates are likely to come down in the next few quarters.
Considering the recent market corrections ahead of monetary tightening, seemingly slowing economy and inflation peaking in later part of the year; it seems most of the negative factors seem to be already factored in by the financial markets. Moreover, we expect softer growth and the likely meaningful reduction in inflation which could slow down monetary tightening and liquidity withdrawal during the last quarter of 2022. Hence, gradually markets could see some consolidation from here as far as broader valuations are concerned. However, global events still continue to dominate and some sentimental improvement remains to be seen from it for markets to move decisively.
On the sectoral front we continue to see growth sustaining for structurally growing sectors and themes like Chemicals & Specialty chemicals, import substitution, Manufacturing, Defence, IT, Consumer Staples and Banks also looking like turning the corner as credit growth is picking up gradually.
Narendra Solanki – Head- Equity Research (Fundamental), Anand Rathi Shares & Stock Brokers
Leave a Reply