Investor Safir Anand on what one should expect from Dalal Street in the New Year

Renowned value investor Safir Anand believes that the second rung stocks may continue to outperform large-caps in the New Year. He sees around 15 per cent upside in the benchmark BSE Sensex and NSE Nifty in 2022 and 5 per cent-10 per cent odd more for mid-cap and small-caps next year.

The 30-share index Sensex has advanced over 16 per cent so far in 2021. On the other hand, the BSE Mid-cap and Small-cap indices have gained 32 per cent and 52 per cent, respectively, during the same period.

In an interaction with BusinessToday.In, Anand said that government spending, the turnaround in banking non-performing assets (NPA), credit offtake and exports to give direction to the market going ahead. However, he highlighted that the new COVID-19 variant Omicron, which is going out of hand, and a rise in inflation, are the key risks for the domestic equity market in 2022.

The Union Health Ministry on Tuesday said that around 200 cases of Omicron variant of coronavirus have been detected in India so far. Maharashtra and Delhi have recorded 54 cases of Omicron variant, while Telangana registered 20 cases, Karnataka 19, Rajasthan 18, Kerala 15 and Gujarat 14 cases.

The market watcher also advised investors to keep sectors like food processing, banking, midcap IT, telecom and textiles in their watching list going ahead. The BSE Bankex, BSE IT and BSE Telecom have gained 9.20 per cent, 46 per cent and 36 per cent, respectively, on a year-to-date basis (YTD) till December 20. Select textile players including Raghuvir Synthetics, Sportking India, SEL Manufacturing, Felix Global Venture and Samtex Fashions have surged over 500 per cent YTD.

“Investors can also zero in on small and mid-caps where capital expenditure has been expanded and have a potential of exports and import substitution,” Anand said.

Considering the present market situation, he suggested equity investors put 50 per cent of their wealth in large cap and 25 per cent each in mid-caps and small-caps.

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