The equity markets did well in 2020-2021. But in the first half of 2022, volatility took over due to events such as the Russia-Ukraine war, supply chain disruptions resulting from COVID lockdowns in China, high inflation, central banks increasing interest rates, FPIs selling Indian equities relentlessly, etc. Here’s the outlook for the second half of 2022 and beyond.
Usually, earnings and liquidity drive equity markets. In the short to medium term, liquidity may influence the market direction. In the medium to long term, earnings decide the market trajectory. In this article, we will discuss the factors that impact earnings and liquidity and how they will influence the Indian stock market outlook in the second half of FY 2022.
Outlook for earnings
Since the start of 2022, stock markets across the globe, including India, have become volatile. This volatility is the result of several factors. Let us look at some of these factors and their impact on the earnings of companies.
a) High commodity prices due to the Russia-Ukraine war
The Russia-Ukraine war broke out in February 2022. Since the war started, the prices of most commodities, like crude ...