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Below is the Daily Market Commentary 31st December 2021 By Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services

Indian equities opened in green amidst positive global cues and drifted upwards towards 17,400 mark. The indices finally ended the last trading day of the year 2021 with decent gains of 150 points (+0.9%). Broader market outperformed benchmark to close at with gains of 1.4%. Among sectors, all indices ended higher with Auto, Bank, FMCG, Metal, Oil & gas, PSU Bank and Realty indices up 1-2%. Volatility index, India VIX was down -2.1% at 16.2 levels.

Major global markets were closed in observance of new-year. Asian markets were positive on back of better-than-expected Chinese data, wherein China's manufacturing sector continued to expand in December, providing some relief as it continues to struggle with a property market slump.

Market ends the fourth consecutive year with gains and all the sectoral indices closed in the green this year. Going ahead, it would start the New Year 2022 with its cautious sideways movement as Omicron spreads rapidly both in India and globally. However, we remain optimistic and expect Nifty to deliver around 12-15% returns in 2022, supported by continuation of economic recovery and strong earnings growth. After the recent correction, Nifty is now trading at ~20x 12 month forward PE which 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. 

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