Stock market outlook for the rest of 2022. A look at the expert view about what to expect from the market

Q: Outlook for the second half of 2022 and beyond

The first half of 2022 was not so good for the Indian stock markets due to events such as the Russia-Ukraine war, high commodity prices, rising inflation, high interest rates, COVID lockdowns in China, and FPI selling. However, the outlook for the second half of 2022 looks better. Commodity prices have come down, China has opened up, and supply chains have been restored, indicating that peak of the inflation may be behind us. The Nifty 50 PE is below the 5-year average, and the Nifty EPS is expected to continue to grow. The ideal combination of below-average PE and growth in EPS should help the Nifty 50 do well. On the liquidity front, after seeing relentless selling of Indian equities in the first six months of 2022, FPIs seem to be making a comeback. FPI inflows in the second half of 2022 should help the Indian stock markets do well. All told, a combination of reasonable fundamentals (earnings growth for Nifty companies) and liquidity (FPI inflows) should help the Indian stock markets do well in the second half of 2022. However, investors should temper their return expectations and invest for the long term to enable wealth creation.

Date : 05/09/2022
Read: 7 mins

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 ...

To read the full story