Investment in the stock market has always been a tricky option for Indian investors. The global catastrophe of Covid-19 further impacted the market adversely as the country went through a series of complete & partial lockdowns. However, the year 2021 is a year of revival as Nifty scaled upto 17k for the first time and BSE raced towards 60k! Collating reasons to rejoice, this blog highlights 7 reasons why the stock market investment may rise in 2022 in India.
Low-Interest Rates: The decrease in interest rates have been a huge relief for the customers who were already under pressure of lockdown and job cuts. Continuing with the low rates this fiscal year, the RBI has given a huge boost to the economy. As bank deposits and bonds become less attractive, it drives investors to take higher risks by investing in the stock market.
As the inflationary concerns are transitory in nature, the low interest rate makes future capital expenditure a lot easier and cheaper. RBI has indicated that inflation is likely to be reasonable in the second half of the current fiscal year that gives confidence to the investors.
Rollout of vaccines PAN India: The efficacy and seriousness in vaccinating citizens PAN-India are pitched to be one of the biggest market drivers! Being only second to China in terms of population, the vaccination drive was planned and executed in the best possible way. With over 22Cr citizens fully vaccinated, this has boosted the confidence of investors and trade experts in the recent past.
The uncertainty of the 3rd phase is eventually drying out as Govt initiatives and awareness drives have made the difference. Follow the safety norms, people are resuming their regular financial activities that are a positive sign.
Increase in Corporate Earnings: Based on robust retail and institutional participation, India’s equity market (get high accuracy researched equity tips for equity stock trading) has performed better as compared to its global peers. As per reports, Nifty is up by 45% over the past 12 months and 19% on a YTD basis. Credit Suisse recently shared that “12-month forward earnings have begun to rise sharply as more of 2021”.
It also expects that 50 to 60% of the YoY EPS growth expected in FY22 will be from consumer discretionary, energy, and private banks. Alongside metals, banks, NBFC, small and midcap segments have also delivered results.
Growth of Economy: The Indian economy rebounded at a record rate within 3 months by June, in the midst of the second wave of covid-19! While the economy shrank by 24% last year in June, the GDP grew upto 20.1% in the 2nd quarter 21.
Experts said that this growth has led the RBI to continue with the stimulus measures till the end of this year. Manufacturing, consumer spending, and private investments are said to be the torchbearers in driving the economy this year.
Union Budget: As the Government is determined to steer the pandemic-battered economy, the Union Budget was also framed in the right direction. Various elements like creating DFI, hike in capital expenditure target, the placing of V-shaped recovery process, a boost for foreign investors helped the market. Some highlights of the budget:
- Support for MSMEs
- Capital gains tax exemption for investing in start-ups
- Extension of tax holiday for start-ups
- Growth of Digital payment platforms
- Decriminalization of the LLP Act
Positive Global Growth: The global market also worked in India’s favour to turn the fortunes and help the stock market. Countries like the US worked to push India as the balancing factor in South Asia. The disruption of global manufacturing during the covid period helped to reduce the dependence on the China market.
With the gradual shift of global supply chains, sectors like pharmaceuticals, machinery, speciality chemicals, and automobile components have witnessed growth. During the first five months, gross FDI inflows exceeded above $31 billion!
Market Capitalization: Did you know that Indian stocks are the most expensive in the world? The fact that market capitalization of the Indian market increased to $1 trillion over the last year, making it $3.2 trillion. Dominant domestic and foreign institutional inflows have been a major contributor to the improvement of the stock market.
With India’s equity market going strong inspite of the ongoing pandemic, the stock market is poised to gain new heights!