IT sector is expected to report a strong set of numbers with higher executions and order book growth. The sector would although continue to report high attrition rates.
Divam Sharma, Co-founder of Green Portfolio feels 2022 should be a better year than 2021 from IPO perspective as the water has been tested for start-ups with companies like Nykaa, Zomato and Paytm hitting the STreet. “There might be questions on valuations but the interest from investors towards this new-age companies is huge.”
Divam who has over 15 years of experience in wealth management.
When asked about his outlook for markets, he said: “If Omicron turns out to be as bad as the second wave, the market in India can see further correction.”
Edited excerpts:
Companies will start releasing their December quarter earnings soon. What are your expectations?
We had seen a good set of earning upgrades from companies over the last few quarters. However, a large part of that rise could be attributed to the pent up demand and on that high base being achieved, a further significant rise in topline seems unlikely. Also, not to forget, we have seen supply side disruptions in Q3 FY22. Further, we expect the pressure on margins to continue as we saw in Q2 FY22.
Which sectors are expected to report strong earnings growth for the quarter ended December 2021?
IT sector is expected to report a strong set of numbers with higher executions and order book growth. The sector would although continue to report high attrition rates.
Sectors like Pharma, Chemicals, the growth drivers for demand remained favourable, while challenges in high raw material prices, logistics bottlenecks, high energy cost will have an impact on the margins.
Automobile sector could show subdued numbers as the sector faced supply side shock in the quarter.
Analysts largely expect LIC IPO to take place in first quarter of CY22. Will the government focus more on monetisation in budget 2022? What could be the amount raising by the government via LIC IPO?
LIC IPO is expected to fetch approximately Rs 1 lakh crore to the Government. We expect a high interest in this IPO from institutional as well as retail investors. The decision to give allocation of IPO to policyholders can also contribute to the increase in retail participation in direct equity investments.
With Omicron and withdrawals from FPI that the developing economies have witnessed, we expect that the Government might fall short of their FY22 divestment target. The Government has, however, shown a clear intent with the progress in companies like Air India and should increase the monetization plans of PSUs in the upcoming budget.
Most of experts feel the year 2022 is expected to be much better than 2021 for the primary segment and the fund raising could be around Rs 2 lakh crore including LIC. Do you feel so, and what are the companies that are planning IPOs in the year 2022?
From IPO perspective, 2022 should be a better year than 2021 as the water has been tested for start-ups with companies like Nykaa, Zomato and Paytm. There might be questions on valuations but the interest from investors towards this new age companies is huge. Companies like Pharmeasy, Delhivery, Mobikwik, Ola, Oyo are all gearing up for listing on the bourses.
Do you think the recent correction has created a great opportunity for investors who missed the bus in the last one-way rally? What are the sectors look attractive for value buying now and why?
We believe that this decade belongs to India. We are sitting in a sweet spot with our population demographics, policy action from our leadership specially post the pandemic, manufacturing focus shift from China, the IT culture that India has nurtured, thanks to companies like Infosys, TCS, and Wipro.
The broader market is throwing some great investment opportunities post the recent correction. The investors should be allocating capital in a staggered manner in such opportunities of market fall.
We continue to like IT with every company wanting to include and upgrade technology in their business, and sectors which will benefit from PLI i.e. pharma, chemicals, textile for CY22.
After more than 20 percent rally in 2021, how will the market look like in 2022?
We believe that in 2022, the rally will shift to companies which show performance. There is a huge disruption across the globe and across the sectors and the markets should continue to reward the winners. The global supply related disruptions should ease going forward and hopefully Omicron should not be as worse as we saw in the second wave.
We see many companies to benefit from PLI scheme implementation in 2022. We expect rise in exports across the key sectors.
Omicron cases have been increasing in India as well as globally. Do you still count it as a major risk for the global markets in 2022? What are other risk factors that can dent market sentiment in 2022?
If Omicron turns out to be as worse as the 2nd wave, the markets in India can see further correction. There is very less room for the Reserve Bank to further increase liquidity. Inflation levels in USA have surpassed highs of last 4 decades and the Federal Bank is expected to increase the interest rates sooner than later.
The inflation will also be closely monitored as more economies should see opening up post the herd immunity is built in post the ongoing massive spread across key economies.
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Reference Link – https://www.moneycontrol.com/news/business/markets/daily-voice-market-will-fall-further-if-omicron-wave-turns-out-to-be-as-bad-as-2nd-wave-divam-sharma-of-green-portfolio-7888011.html