Digital will be big theme 2022

Year 2021 was about the big digital IPOs; Zomato, Nykaa, Policybazaar and Paytm. These 4 IPOs collected a huge Rs.39,000 crore between them and now account for combined market cap of around Rs.3.50 trillion. Year 2022 will see more big-ticket digital plays enter the IPO market including PharmEasy, Snapdeal, Delhivery, Swiggy etc. But the more important digital trend will be how the investors will approach and invest in these digital stories in the year 2022. Year 2021 was about investing in the digital stories based on brand, visibility and availability. Today, there is a good presence, so investors will look for more specific performance metrics in digital plays. Investors will want to know how the cash burn will be minimized. The digital stories will have to narrate how cost structures will be trimmed and how the companies will offer transparent and clear timelines. Profits may get delayed, but investors will look at clear metrics on top line growth, progress on EBITDA and how the so-called intangible assets will be monetized. In short, digital story in 2022 will be more about the detailing. 

Embedded green themes 2022

This will be one of the big stories of 2022, especially for existing companies. What is common between the EV plans of Tata Motors, green energy plans of Reliance and the proposed hiving of the renewable energy business of NTPC? They are all embedded green themes. These are not about new companies or new projects. It is about every company in India seriously looking to identify the green themes in their own business and giving a distinct business twist to it. One of the big advantages of embedded green themes is that these are existing and well-established companies that need no introduction. That makes the entire due diligence part a lot easier.  

Cautious on financials

In the Indian markets, the financials have more than 35% of the market cap and remain crucial drivers of the Nifty. However, year 2022 could see a lot of tumult for the financial sector. Banks and NBFCs are likely to see added stress from Fintech plays. Higher yields on bonds will put pressure on cost of funds and also on investment portfolios. The simmering portfolio discontent in the form of hidden bad assets could come out into the open. Like 2021, financials would most likely underperform. Of course, you may have focused rallies amidst a tepid Nifty. Financials do not have problems like 2008, but it will be a kind of return to reality for them.