Equity Outlook for 2022 By Mr. Rahul Shah, Equitymaster
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Below is the Equity Outlook for 2022 By Mr. Rahul Shah, Co-Head- Research, Equitymaster.
You see, the stock markets have usually corrected by 20% or more after going up more than 100%-120% in a bull market.
In this bull market so far, the Sensex has gone up by 140% from its lows in March 2020 to its all-time high in October 2021.
Thus, there is a strong possibility we may witness a correction of 20% or more in the coming year. In fact, we are already down 7% from the October highs and we may go down further.
Valuations wise also, the markets are expensive what with the Sensex currently trading at a PE multiple of more than 27x versus its long-term average of around 21x.
Thus, if earnings growth does not come in as strong as expected, markets may perhaps disappoint in 2022.
Hence, it may not be a bad idea to book profits in stocks that have gone up a lot over the last 1-2 years and take some money off the table.
Make no mistake, the long-term India story does remain intact.
But it is always a good idea to take advantage of these small bull and bear markets within the larger, longer-term bull market and give your portfolio that extra edge.
On the stocks front, prefer stocks with strong balance sheets and reasonable valuations and maintain a safe distance from highly speculative counters where the track record is hardly inspiring”.
Above views are of the author and not of the website kindly read disclaimer
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