Sensex, Nifty50 end 2021 with a bang as risk appetite returns

The global markets were strong today after US equities ended at their record high levels for the 70th time in the calendar year as investors’ concerns around the Omicron variant are receding despite the surge in caseloads.

While Covid-19 cases have surged across the world, hospitalisation levels have dropped and case fatality rate has remained low leading experts to suggest that the Omicron’s impact could be milder than previously expected.

The optimism in the global markets percolated here as the Nifty50 index ended 0.9 per cent higher at 17,354.05 points, while the BSE-Sensex closed at 58,253.8, up 0.8 per cent.

However, the gains came on the back of low volumes given the general absence of institutional investors due to year-end holidays.

The year 2021 has been a strong one for equities where large-cap benchmarks delivered 21-23 per cent returns to investors, with second-rung benchmarks delivering up to 60 per cent returns.

Analysts said double-digit returns for stocks are very much likely in 2022 as well.

Brokerage Motilal Oswal said the Nifty50 may deliver 12-15 per cent returns in 2022, supported by the continuation of economic recovery and strong earnings growth. After the recent correction, Nifty50 is now trading at 20 times 12-month forward PE, which the brokerage said is no longer in the expensive zone.

“While the market trend might be volatile in the near term on account of potential risk from Omicron variant and fragile global cues, in the long run, strong earnings delivery along with positive macro-economic data would hold the key to drive markets upwards,” it said.

With the withdrawal of easy and cheap money globally, fundamentals would come to the fore, said Sharekhan.

“Unlike 2021, returns from the equity market are likely to revert to the long-term average of mid-to-high double-digit range, which itself are very healthy compared to other asset classes, especially fixed income (bank deposits),” it added.

MARKET MOVERS

The gains in the market were across the board, with beaten-down sectors like metals, automobiles, and real estate seeing strong gains.

The Nifty Metal rose nearly 2 per cent after PMI manufacturing data in China for December came out above economists’ expectations earlier today. The Chinese market is the biggest for metal exporters in India.

Titan’s shares surged nearly 3.5 per cent on expectations that the company will report a strong business update next month for the quarter ended December.

’ shares rose over 2 per cent on expectations of strong December sales numbers despite the production challenges the company is facing.

Some chemical stocks continued their recent rally as investors believe the recent correction has rendered them cheap. Shares of

, Alkyl Amines, Gujarat Fluorochem, and Carborundum ended 4-8 per cent higher.