The Indian markets will rise in 2022 as well despite steep valuations, and the BSE's 30-share benchmark is expected to be at 62,000-level by the next year-end as against Monday's close of 58,283, a French brokerage said.

"We think strong growth forecast in the medium term should support the valuations. We like the stability of macroeconomic parameters that should support consumption and investments, leading to continued earnings estimate upgrades," analysts at BNP Paribas wrote in their outlook note.

It can be noted that the issue of valuations has divided the analyst community with some saying there is more room to grow, while others have expressed fears to re-rate Indian equities.

Rapid GDP growth recovery post the second Covid wave and the revival of mobility parameters and employment levels to pre-Covid levels support the hypothesis of robust consumption, the BNP Paribas analysts said.

It can be noted that economy watchers, including the central bank, are circumspect about the strength left on the consumption front, which had been the mainstay of the growth since the global financial crisis. The doubts come from weak earnings, especially in the COVID-battered informal sector of the economy which had rendered many unemployed or decreased earning potential.

At a time when concerns are raise over excess capacity not leading to an increase in investments, the brokerage analysts said the Indian capex cycle is "on the verge of a sustainable recovery" after a decade-long hiatus.

The government's large National Infrastructure Pipeline and various supply-side measures adopted since late 2020 should boost private capex sentiment, it added.

It flagged depreciation of the rupee as a worry, but added that large forex reserves and a recent moderation in oil prices should partly assuage those concerns while the recent drop in oil prices should help.

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