Market Outlook: 3 freaks that could make life difficult for Nifty bulls in the next 6 months

New Delhi: Despite the recent fall, both the US market and the broader market in India are in the grip of a strong bearish downturn. nifty However, it is underperforming as the headline index is still around 1,000 points away from entering the much-awaited bear territory. With global interest rates hiked by central banks, inflation concerns are now turning into a recession.

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

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

Pankaj Pandey, Head-Research, ICICIDirect, is one of the fastest in the lot as he believes that since most of the devils are known, we cannot have big cracks here.

Escalation of war and involvement of other nations, persistently high inflation and an ending recession in the West emerged as the top three major concerns for the market.

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

Deepak Jasani, Head of Retail Research, Securities

Inflation at the global level, which will affect the policies of central banks on interest rates, will be a major concern going forward. Apart from this, geopolitical issues in Europe and China region will have to be closely monitored. If a slowdown starts to arise in the developed economies, then the emerging economies will have to bear the brunt.

Roop Bhoot, CEO – Investment Services, Anand Rathi Shares & Stock Brokers

Inflation, geopolitical uncertainties and fear of slowdown especially in developed markets are the biggest concerns for the market in the near future. The market has seen a sharp decline and valuations have also come down and now the major indices are trading at attractive levels. So, most of the decline is behind us.

Vineet Bolinjkar, Head of Research, Securities

We believe that there is certainly room for improvement. We do not rule out the market reaching the 14,000-14,500 level. The biggest concerns are interest rate hikes, escalating geopolitical issues and rising crude oil prices.

Siddharth Bhamre, Broking

We believe that most of the recent concerns for equities globally have emerged from the Russo-Ukraine war. If the supply constraints due to war persist, we could see this fight with inflation which could lead to further correction in valuations. A below-normal monsoon could break the back of rural demand, which is anyway fueled by high inflation. Finally, the financial shocks that can emerge due to the fall in asset prices.

Puneet Patni, Equity Research Analyst,

The biggest concerns for the market in the times to come will be higher than expected inflation, a hard landing due to sharp rate hikes by central banks and slowing of economic growth. Most of the negativity is already contained and therefore the levels are attractive. However, further 5-10% fall cannot be ruled out.

Shiv Chanani, Head of Research, Elara Securities India

Continued geopolitical uncertainty remains the biggest risk to the market as it will exacerbate sustained higher energy prices and hence higher inflationary pressures. Second, the risk would arise from a significant economic slowdown, particularly in markets such as the US that could impact export demand. Lastly, continued inflationary pressures will mean margin pressures for companies and the potential for declining earnings.

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