Sharp sell-off makes many stocks attractive

Mumbai: Equity markets opened gap-up and maintained their momentum throughout the session, following the recovery in global markets and strong domestic GDP data. Both the indices ended the session with gains of one per cent. Except pharma, all other sectoral indices ended in the green with Metals and PSU bank up more than two per cent. Indian economy clocked a healthy growth rate of 8.4 per cent in 2Q FY22 returning to its pre-Covid levels. However, we continue to believe that consumption may remain weak in the coming quarters as a result of a weak household sector. We estimate in a real GDP growth forecast of 5-5.5 per cent YoY in 2H, leading to a growth of 9 per cent YoY in FY22, which is only one per cent higher compared to FY20 levels. Also, GST collections jumped to over Rs 1.31 lakh crore in November, the second highest since its implementation in July 2017, in line with the trend in economic recovery. The seasonally adjusted PMI rose from 55.9 in October to 57.6 in November.

"Global markets turned positive after investors shrugged off concerns over Omicron and shifted focus towards positive economic growth. The sharp sell-off have also made many stocks attractive and thus investors tapped into this opportunity to buy into dips," Siddhartha Khemka, head (retail research), Motilal Oswal Financial Services, said.

Going ahead, we expect the market to continue with its volatility given the uncertainty around the new Omicron variant and Fed tapering. However sharp sell-off have made valuations comfortable and the economic data points continue to point towards economic recovery thus keeping long term fundamentals intact. We would thus advise investors to buy in this volatility in staggered fashion, he added.