Nifty, Sensex likely to see further correction in coming days: Experts

NEW DELHI:  Despite the havoc caused by Covid-19 on the economy, there was no stopping the stock market. After the pandemic-led sharp correction in March 2020, markets worldwide recouped their losses in the financial year ended March 2021.

In India, Nifty ended FY21 with 71 per cent returns, outperforming the MSCI World Index (up 51 per cent) and MSCI Emerging Market Index (up 55 per cent). In fact, the market delivered positive returns in all four quarters of FY21 and going forward, experts feel India’s equity market may witness more correction on account of rising bond yields and the second wave of Covid-19.

“In the immediate future Indian markets could go in for some correction and consolidation phase but as time goes by it could recoup and standout” said Rusmik Oza, Executive VP, Head of Fundamental Research at Kotak Securities.

Ozwa added that India’s stable currency and bond yields could help attract higher FPI (foreign portfolio investment) flows in comparison to other emerging markets. He expects Nifty-50 to end FY22 somewhere 15,500 levels and Sensex to be at 52,300. If Nifty 50 goes below 14,000 levels then it will be an ideal time to accumulate stocks from a two to three-year perspective, he noted.

Axis Securities in its future looking commentary said Nifty may rise to 17,200 level by December this year. “Earnings growth for the entire decade from 2010-2020 was quite sluggish with an earnings CAGR of 7 per cent (doubling in ten years). However, the current expectations build for earnings doubling in the next 4 years translating to an earnings CAGR of ~18% which is quite significant” the brokerage house said.

It added that mid and small caps will continue to outperform the large caps in FY22. The Nifty midcap 100 and Nifty small cap 250 more than doubled beating the large cap NIFTY 50 in FY21. Sector and stock wise, Axis believes that IT and metal will continue to deliver good returns in FY22, while BFSI will hold the key but the trends from large private banks like ICICI continue to remain very strong.

Experts also note that the RBI policy decision and earnings season, which would start from mid-April, could be the next trigger for the market. “As Q4 earning season is approaching, investors’ focus will shift to earnings announcements and management commentary,” said Ajit Mishra, VP - Research, Religare Broking Ltd.