India's stock benchmark scaled new records in 2022 amid global uncertainty stemming from a looming recession in the developed nations and Russia's war in Ukraine.
While S&P BSE Sensex and the Nifty 50 hit all-time highs of 63,583.07 and the Nifty 50 at 18,887.60, the benchmarks only rose 3.8% and 3.66%, respectively.
Gains in banks drove the rally towards the end of the year even as key sectors including information technology and pharma lagged.
Predictions for 2023 have been of muted returns as the U.S. and Europe anticipate recession after series to rate hikes to quell inflation.
As the year draws to a close, BQ Prime polled 10 analysts and market participants to gauge what's in store in 2023.
Here's what's in store:
All respondents agreed that the markets will gain at least 5%, with half of them predicting a more than 10% rise in equities in 2023.
46% of the market participants suggest a flexi-cap portfolio for the best possible returns in 2023, according to the survey.
A spate of new initial public offerings in 2020 and 2022—from 114 companies—now offer a choice for flexi-cap investors to pursue some for better returns, according to independent market expert Mahantesh Sabarad.
While stock markets are expected to remain volatile and muted in 2023 amid a global slowdown, 67% of the respondents still see equities to return best gains among asset classes, according to the survey.
"We still believe that equities will remain the best asset class in 2023, and investors have to invest in stocks where the margin of safety is strong and where sector tailwinds continue to remain positive," Avinash Gorakshakar, head of research at Profitmart Securities said.
According to Sabarad, the end of rate hikes is near, making equities attractive.
Rakesh Bansal, partner at Rakesh Bansal Ventures, is betting on equities and silver. "We would see both domestic and foreign inflows into equities." He expects a "big momentum" for silver.
Despite being the worst performer in 2023, IT services sector remains the top pick among export-oriented sectors, according to survey.
According to the survey, 54% of market participants are betting on the IT sector, followed by specialty chemicals.
Software services providers, according to Gorakshakar, are all cash-rich and do not require huge incremental capital to grow and any green shoots seen here in 2023 will result in a quick bounce-back.
According to the survey, 50% of market participants see PSU stocks to outperform in 2023 as well.
Sharmila Joshi, an independent adviser, said state-owned banks are aided by recovery in non-performing assets.
Gorakshakar, however, expects PSU bank stocks to initially consolidate in 2023 and then offer moderate to steady returns.
The banking, financial services, and insurance sectors, along with manufacturing sector, remain top betsn for 2023.
The domestic-focused sectors are well positioned as compared to export-oriented ones, said Gorakshakar.
Siddharth Sedani, executive vice president at Anand Rathi Shares and Stock Brokers Ltd., said bank earnings will continue to surprise due to a strong credit growth, improving net interest margins amid rising interest rates, and the under-penetration of financial services in India. He remains constructive on manufacturing, citing government initiatives and an uptick in private capex cycles.
The Adani Group stocks were among the top performers in 2022. According to the survey, a majority of the respondents are betting either on Reliance Industries Ltd. or Tata Group stocks to create more value in 2023.
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