Markets to Welcome 2022 on a Positive Note.
First and foremost, here is wishing you all my readers a very Happy New Year filled with health, wealth and happiness. The year-end is always a special moment for the investors as most tend to evaluate their individual portfolio performance and look out for market reports to identify the best opportunities for the upcoming year.
No doubt the year 2020 was good and 2021 was equally healthy for the long term investors. 2022 promises to be full of opportunities in our view. The opportunities could be narrower in 2022 when compared to the previous two years; however, there is a good probability of several bottom-up stories turning out to be multibaggers.
Yes, it is time to adopt a bottom-up investing approach as there are quality stocks in several booming sectors and even in recovering sectors such as textile. It is very important that we get the sectoral view correct. In 2021 the FMCG index is up by ~11 per cent, while the IT index is up by more than 50 per cent. This disproportionate performance in sectors can lead us either to underperformance or outperformance. A lot of emphasis should be given on understanding the sectoral trends. The key to outperformance in 2022 will be to get the sectoral allocation and preference right.
The current issue, also one of the most awaited one, will feature “Where to invest in 2022” portfolio. We have an immaculate track record of beating the markets every year and I am sure investors such as yourself will benefit from our top 10 picks for 2022. The cover story highlights opportunity areas where investors can focus. The cover story also highlights the most promising investment themes for 2022, which can come in handy in stock selection. Do go through it in detail and share your feedback with us.
In one of our special stories, we have discussed Algo Trading and how it impacts the new age investor. Algo Trading and its impact need to be understood realistically and this is likely to get more and more popular with time. Our other special story focuses on the FMCG sector and highlights the investing opportunities in the same.
As far as market expectations go, I think the recent market correction has been a blessing for long term investors as it is facilitating several investors to re-enter instead of sitting on the sidelines. The year 2022, contrary to most investors’ expectations, could turn out to be a healthy year wherein the key benchmark index likely delivers a double-digit return. It is always tricky to predict the winners, however we think several winners will emerge from the defensive pack i.e IT and pharma. The underperformance in pharma stocks could be over and 2022 could see some of the pharma stocks outperforming the markets. There could be several opportunities thrown open from the new age industries too such as EV, clean energy, digital business, etc.
Investors will have to keep an open mind while investing in these new age companies as the valuations are not always easy to digest. Also, the valuations are driven by expectations and not on numbers delivered, thus leading to higher speculation.
With the available data and the prevailing market sentiment, it looks like another good year ahead for the investors. However, in 2022 the market leadership may get narrower and hence stock selection will become more important.
Happy New Year !
RAJESH V PADODE
Managing Director & Editor