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3 devils that can make life tough for Nifty bulls in next 6 months

NEW DELHI: Notwithstanding the recent pullback rally, both the US market and the broader market in India remain in firm bear grip. Nifty is, however, faring a tad better as the headline index is still around 1,000 points away from entering the much-feared bear zone. With central banks hiking interest rates globally, the worries around inflation are now giving way to recession.

A mid-year survey of a dozen brokerages by ETMarkets shows that many analysts are not ruling out a dip of another 5-10 per cent within the calendar year 2022. If the predictions come true, then the bear market may be a reality soon as a drop to 14,882, or 20 per cent from peak, would confirm the rule of bears.

“While a relief rally is highly likely, we believe that Nifty may test around 14,300-14,500 levels given the overall gloomy global sentiment,” Yesha Shah, Head of Equity Research, Samco Securities, said.

Pankaj Pandey, Head – Research, ICICIdirect, is among the most bullish in the lot as he believes that since most of the devils are known, we might not have major cracks from here.

Escalation of war and involvement of other nations, a persistently high inflation and a recession culminating in the west came out as top three looming concerns for the market.

Here’s what top brokerages said on what would be the three biggest concerns for the market:

Deepak Jasani, Head of Retail Research, Securities

Inflation at global levels that will influence the policies of central banks on interest rates will be the key concern area going forward. Apart from this, geo-political issues in Europe and China region have to be closely monitored. If recessionary conditions start cropping up in the developed economies, then emerging economies will suffer a fallout from this.

Roop Bhootra, CEO – Investment Services, Anand Rathi Shares and Stock Brokers

Inflation, geopolitical uncertainties and fear of recession especially in developed markets are biggest concerns for the market in near term. Market has seen a major part of correction and valuations have also come down, and now major indices are trading at attractive levels. Hence, most of the fall is behind us.

Vinit Bolinjkar, Head of Research, Securities

We believe that there is definitely room for correction. We do not rule out the market reaching 14,000-14,500 levels. The biggest concern being the hike in interest rate, escalation of geopolitical issues and increase in crude oil prices.

Siddarth Bhamre, Broking

We believe most of the recent concerns for equities globally have emerged from the Russia-Ukraine war. If war led supply bottlenecks remain then we may see this fight with inflation stretching leading to further correction in valuations. Less than normal monsoon may break the back of rural demand which has been anyway marred by high inflation. Lastly, financial shocks which may emerge due to fall in asset prices.

Punit Patni, Equity Research Analyst,

The biggest concerns for the market going ahead would be higher than expected inflation, intense rate hikes by central banks leading to a hard landing, and slow down of economic growth. Most of the negativity is already factored in and therefore levels are attractive. However, further 5-10% fall can’t be ruled out.

Shiv Chanani, Head of Research, Elara Securities India

Continued geo-political uncertainty remains the biggest risk for the market as it would entail sustained higher energy prices and hence elevated inflationary pressures. Secondly, risk would emanate from significant economic slowdown, particularly in markets like the US which could impact export demand. Finally, continued inflationary pressure would mean margin pressure for companies and possibility of earnings downgrade.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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