Where To Invest In India's Stock Market During Volatility — BQ Poll

India's stock benchmarks could fall by up to 10% this year as volatility grips markets, and capital goods, construction and large private banks may be the best sectoral bets for investors during this phase, according to a BloombergQuint survey.

For the Indian market, global rate tightening is a much bigger worry than geopolitical tensions, a majority of the 11 market experts and analysts surveyed said.

Benchmarks S&P BSE Sensex and NSE Nifty 50 have in February alone swung 3% in a single day twice. Foreign investors have been selling since October on concerns over soaring oil prices, inflation, faster rate hikes by central banks across the world. The tensions between Russia and Ukraine have amplified worries.

BloombergQuint asked analysts and market participants on what's likely in 2022 and how investors can navigate it better:

About 80% of the respondents consider faster rate hikes globally as the biggest risk. None see state elections or the possibility of a new Covid-19 wave as potential concerns.

India's benchmark indices could potentially fall 5-10% if major central banks adopt faster tapering or the situation in Ukraine worsens, according to more than half of those surveyed.

More than half of the market participants expect foreign investors to return despite the markets being choppy.

More than half of the respondents will stick to growth stocks. The other half is betting on value stocks, with about 18% choosing to allocate up to all of their incremental money.

Capital goods and construction is the top sectoral bet after the capex push in the budget for 2022-23. Autos, banks and information technology showed similar preference.

New-age businesses such as Zomato Ltd., PolicyBazaar (PB Fintech Ltd.) and Nykaa (FSN E-Commerce Ventures Ltd.) were the most overvalued, according to 70% of the respondents.

Large private banks were the top pick for most respondents as India's economy continues to rebound from the lows of the pandemic.