Direction of capital market will depend on corporate earnings and budget in 2022: Kotak Mahindra AMC


Kotak Mahindra AMC, which manages the Kotak Mutual Fund, said in its 2022 market outlook that it remains neutral to stocks as an asset because its price is fair.

The direction of the capital market in 2022 will depend on corporate earnings and the Union’s budget, Kotak Mahindra Asset Management Company said on Monday when the Sensex plunged more than 1,500 points during the day and closed with a loss of 1189 dots.

Kotak Mahindra AMC, which manages the Kotak Mutual Fund, said in its 2022 market outlook that it remains neutral to stocks as an asset because its price is fair.

“Company profitability is essential for the markets. We continue to consider a marginal underweight in small and mid caps due to their valuation and a marginal overweight in large caps. It is time to be neutral on equity as an asset because it is fairly priced,” said Kotak Mahindra AMC Group Chairman Nilesh Shah.

Morgan Stanley also downgraded Indian stocks to equal weight from overweight, a similar move by Nomura earlier this week.

Shah said the good sign is that corporate profits have started to rise which had been falling since 2011. The Nifty Earning Per Share for FY22 is estimated at Rs 729 against Rs 542 for FY21 and Rs 874 for FY23.

“India continued to outperform to such an extent that our weighting in the MSCI Emerging Market Index increased from 8% to 12%. This prompted some foreign portfolio investors (REITs) to make profits,” he said.

Shah said the huge turnout from retail investors had brought balance to the market despite strong REIT sales.

The market capitalization/GDP ratio is 112% against a historical average of 76%. That seems a bit high, but compared to the global market cap-to-GDP ratio of 138%, it seems reasonably priced, he said.

“Looking at various high-frequency indicators, 19 out of 22 indicators are now showing positive momentum and only three indicators are showing negative momentum. It’s fair to say that overall the economy has regained momentum and we’re seeing a V-shaped recovery in many segments and a K-shaped recovery in a few segments,” the official said. ‘AMC.

Luckily for India, even with the Omicron variant of the coronavirus, active cases have remained below one lakh. Business activity is now above pre-pandemic levels and this is reflected in the Business Resumption Index touching 114.9 from a low of 63.2 in the second wave, the company said in its note. prospective.

Financial Express is now on Telegram. Click here to join our channel and stay up to date with the latest Biz news and updates.

Previous 3 easy strategies to avoid capital gains tax
Next Conscious capitalism: making amends for unheard warnings