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Below is Perspective on How will the market look like by Diwali 2022? By Mr. Mohit Ralhan, Managing Partner & Chief Investment Officer of TIW PE

The Indian market has gone up by ~60% since Diwali of 2020. It has been a massive bull market fuelled by economic recovery, vaccine breakthroughs and high liquidity. As a result, the markets have run ahead a bit of corporate earnings, with P/E of nifty hovering around ~26x-27x. Currently the market is in the zone of caution. While the economic recovery is expected to be on track, the central banks around the world are likely to start unwinding their balance sheet expansions sooner than later. Therefore, the coming Samvat year is expected to be a year of normalization. The economic activity is likely to get normalized along with the monetary policies of the central banks across the world, as they are faced with the challenge of balancing growth and inflation. The corporate earnings are also expected to get normalized with catching up of the base effect and costs pressure due to inflationary environment. Therefore, the next Samvat is likely to give normalized equity returns in low double digits, which means Nifty hovering around the levels of 20,000. Nevertheless, a keen investor will continue to find significant wealth creation opportunities as India story continues to unfold in the next year and beyond.

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