Post Market Views - Feb 17, 2022 - Reliance Securities

Mr Mitul Shah, Head Of Research at Reliance Securities

Domestic equities closed with Nifty declining by 0.1%. Broader markets underperformed in comparison to main indices with Nifty Midcap and SmallCap decreasing by 0.3% and 1.04% respectively. Most sectoral indices ended in red except Nifty FMCG (+0.3%). Nifty PSU Bank declined the most at 1.19% followed by Nifty PVT Bank (-1.18%) and Nifty Bank (-1.11%).

U.S. stock indices ended mixed post the release of the Fed minutes, after spiralling between highs and lows in the trading session. Geopolitical disturbances, added to the uncertainty in the markets. The Dow Jones Industrial Average fell 0.16%, the S&P 500 gained 0.09% and the Nasdaq Composite dropped 0.11%. The yield on 10-year Treasuries declined two basis points to 2.02%.

We expect volatility to persist in the markets till the announcement of first rate hike by Fed. Equities would continue to outperform with double-digit returns. Our year-end 2022 target for Nifty is 20,000 at 22x FY24E earnings. We expect Nifty to enjoy premium valuation for the next 1-2 years on the back of higher earnings CAGR (before reaching stable earnings pace of growth), as India becomes a preferred destination for global manufacturing, going ahead. This trend would continue over the next 4-5 years, supported by China+1 policy and the government's support for various industries. Though near term overhang on Russia Ukraine tussle would continue putting pressure on equity markets globally including India, it would rebound and positive traction would regain in FY23E.

Source : Equity Bulls

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