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Indian stock markets were off to a firm start in 2022 with BSE Sensex and Nifty50 indices finishing sharply higher today, lifted by strong performance in banking stocks, even as investors remained cautious over the spike in Omicron cases. The Sensex surged 929 points higher at 59,183 while Nifty rose 1.6% finish above 17,600.

Global stock markets and U.S. futures were mostly higher on 2022′s first trading day after Wall Street ended last year with a double-digit gain.

Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments, said: The index has marched forward gallantly and is all set to move up higher. As expected on Friday, we have achieved the target of 17600. We should now be headed to 17850 as the next level of resistance. Post that 18050 would be the next possible target for the Nifty. Since we are in positive terrain, any drop or intra day dip can be utilized to accumulate buy positions for higher targets."

Financial stocks led the gains with Nifty bank index surging 2.5%. TCS, Bajaj Finserv, Bajaj Finance, Axis Bank, and ICICI Bank were among the top gainers in the Sensex pack.

Market breadth was extremely positive with a host of small and midcaps across sectors posting smart gains.

“As India widens its vaccine coverage, Bulls ushered in the New Year in style as the Nifty Bank led the rally with good support from other sectoral indices buoyed by positive global cues," said S Ranganathan, Head of Research at LKP Securities.

Narendra Solanki, Head- Equity Research (Fundamental), Anand Rathi Shares & Stock Brokers, said:  “Healthy buying was observed in blue-chip stocks. Sentiments were upbeat as finance ministry said that Goods and Services Tax (GST) revenues grew 13 per cent to over 1.29 lakh crore in December 2021, as compared to 1.15 lakh crore GST revenues in the same month last year, mainly due to pickup in economic activity and anti-evasion steps. However, traders overlooked report that India’s manufacturing activity lost some momentum in December easing to a three month low after hitting a 10 month high in November, amid fears that the rapidly spreading third wave of the coronavirus (Covid-19) pandemic may hit consumer sentiment and output."

Data released today showed India's manufacturing sector activities moderated in December but output remained in the growth territory, amid slower rise in sales and new orders, even as business sentiment was dampened by concerns surrounding supply-chain disruptions, COVID-19 and inflationary pressures.

The seasonally adjusted IHS Markit India Manufacturing Purchasing Managers’ Index (PMI) eased to 55.5 in December, from November's ten-month high of 57.6.

On his outlook for 2022, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, says: "Investors should prepare for modest returns in 2022 with outperformance expected from financials, IT, telecom and construction related segments. “The biggest support to the global market rally is coming from the mother market US which is on a secular rally."

On risk factors, he said: “Even though Omicron is spreading fast, the market doesn't expect any restriction on economic activity that will impact growth and earnings. A trigger that can break this uptrend is a sharp rise in inflation and the Fed and other central banks hiking interest rates above market's current expectations. If inflation comes under control, markets may continue the rally."

Sectors to shine in 2022

“IT's outperformance (60% in 2021 and 55% in 2020) is likely to continue in 2022 too. Private Bank's underperformance ( 4.58% in 2021) is likely to be reversed in 2022 with improving credit demand, declining NPAs and rising margins," said Vijayakumar of Geojit Financial Services.


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