What’s in Store for Indian Stock Markets

0

Samvat 2079 is finally here and markets are hoping to breathe easy after braving two years of turmoil as India’s growth prospects are expected to attract flows to domestic markets.

While the risks – rate hikes, recession and geopolitical crises, the main ones – will continue to weigh on global markets, analysts see India leading the way.

With the economic recovery and the investment cycle on the cards, the consumer and capital goods sectors should emerge as important themes, experts said.

BQ Prime reached out to market veterans to find out their outlook for Samvat 2079. Here’s what they said:

Andrew Holland, Chief Executive Officer, Avendus Alternative Strategies

Thoughts on Samvat 2078

  • The market was very volatile, but on a relative basis, India was the star. We saw Wall Street fall sharply, but Indian markets outperformed.

Outlook for Samvat 2079

  • The first expectation is that the Federal Reserve and other central banks will stop raising rates, and then we’ll have to see how deep the recession is.

  • Once everything calms down, everyone will be looking for growth, and in that sense India will shine, especially with the possibility of investment-led growth.

Main risks

  • We need to pay more attention to financial risks than to economic risks because the latter have already been discounted.

  • We have to watch out for political missteps, as in the case of the UK and Credit Suisse. Any financial problem that has been swept under the rug can become a major risk.

  • On the geopolitical level, beyond the ongoing conflict in Ukraine, the tension between China and Taiwan deserves a close eye.

  • Rising interest rates remain a major risk.

Important topics

  • We will see capex in new sectors, including renewable energy, defence, semiconductors and electronics. India’s electronic manufacturing is poised for growth.

  • With the recovery gaining momentum, banks, autos and consumer discretionary will be the key themes.

Target

Vikas Khemani, Co-Founder, Carnelian Capital Advisors

Thoughts on Samvat 2078

Outlook for Samvat 2079

  • The outlook is positive for the upcoming Samvat, as earnings growth has not been affected.

  • With the China+1, Europe+1 strategy in place, India will see substantial inflows of IEPs.

Main risks

  • With quantitative tightening in full swing, rate hikes remain a major risk.

  • The uncertain global environment, in particular the ongoing crisis in Ukraine, poses a threat.

Important topics

  • Banking, automotive, manufacturing and industry will be the key themes this year.

  • Good IT stocks given the strength of their order books.

Target

  • Returns can be in the range of 18-20% in Samvat 2079.

  • The Nifty can test 19,500 to 20,000 levels. The Sensex may reach 70,000 over the next year.

Milind Karmakar, Director & Principal Fund Manager, Dalal & Broacha Stock Broking

Thoughts on Samvat 2078

  • It was a difficult year, especially after January due to the conflict in Ukraine and then the tightening of liquidity later in the year.

Outlook for Samvat 2079

  • Going forward, we can see things improving dramatically. Economic activity is on the mend, with GDP growth expected to be between 6.5 and 8%, and an investment cycle on the horizon.

  • We can expect the U.S. Fed pivot to occur during the second quarter of 2023.

Main risks

  • The protracted war in Ukraine and the fear that it will go nuclear will keep investors on their toes. Although this outcome is highly unlikely.

  • A global slowdown is on the cards, but India is safe.

Important topics

  • With the economic recovery, we will see an increase in per capita income. The Capex cycle will create more jobs. These developments will help the consumer, capital goods and banking sectors.

Target

Atul Suri, Founder and CEO, Marathon Trends PMS

Thoughts on Samvat 2078

  • The past year has been very volatile as the world has gone from inflation to recession. Rising bond yields were another flashpoint.

  • While indices mask the pain, India suffered, especially tech stocks.

Outlook for Samvat 2079

  • In the coming year, we may not have a massive index-linked rally globally as easy money is no longer available and economies have shifted to quantitative tightening.

  • In the coming year, some sectors and countries will do well.

  • The rally will be growth-centric as silver finds regions and sectors that promise the highest growth, which bodes well for India.

Main risks

Important topics

Target

Mitul Shah, Head of Research, Reliance Securities

Thoughts on Samvat 2078

  • Samvat 2078 was a tough year for the Indian and global markets, due to many macro factors including the impact of Covid in the first half of 2078.

  • Factors such as high inflation globally and monetary tightening policies by central banks aimed at curbing the same unexpected geopolitical turmoil due to the Russian-Ukrainian conflict led to a sharp sell-off in equity markets.

  • FII outflows, currency depreciation and supply chain disruptions have impacted the economy and business performance despite falling commodity prices.

  • Nifty has corrected 5.4% over the past year, while global indices like the Dow Jones (down 13.4%) and Nasdaq (down 28%) have corrected significantly.

  • The market experienced one of the strongest volatility of the year. Indian equity markets, however, proved resilient and outperformed most of the world’s developed and emerging economies, supported by healthy retail and HNI participation, expanding SIPs and lump sum inflows which helped offset significant outflows from REITs.

Outlook for Samvat 2079

  • We expect markets to remain under pressure and see greater near-term volatility due to deteriorating global macros and prevailing uncertainties in Western economies.

  • However, we believe that India would experience a multi-year bullish economic cycle amid stronger macros, minimal Covid impact, China plus one strategy and various government initiatives in terms of programs such as PLI, localization, gray list for the import of critical products. articles, etc., in the future.

  • In addition, slowing commodities, good Rabi harvest led by normal monsoon, spike in inflation and likely currency stability would support corporate earnings in 2HFY23. Therefore, we believe in India’s story and remain positive on Indian equities as an asset class.

Main risks

  • The biggest risk at the moment is the depreciation of the rupiah against the US dollar and imported inflation, mainly due to rising crude prices. This may stretch our dollar outflows and our foreign exchange reserves will be affected in the future. A strong weakening of the national currency and high inflation, either of these elements, if not within the tolerable range, can prove to be a major drag on the economy and the markets scholarship holders.

Important topics

  • The government’s focus on the infrastructure sector, coupled with sound investment spending, would revive the economic cycle. The energy crisis has recently drawn attention to green energy and more renewable energy options in an effort to have a cleaner source of energy. Therefore, considering all the key themes above, we expect sectors such as finance, capital goods and engineering, renewable energy to do well over the next year.

Target

  • Maintaining our FY23 end target for Nifty at 19,000, while we introduce our Samvat 2079 Nifty target of 20,000.

Amnish Aggarwal, Research Manager, Prabhudas Lilladher

Thoughts on Samvat 2078

  • Samvat 2078 will go down in history as one of the most volatile years when exuberance around tech stocks and the IPO boom were followed by war between Russia and Ukraine, high global inflation on several decades and the fastest interest rate hikes in recent times.

Outlook for Samvat 2079

  • In this hazy global scenario, India today looks like a pearl in the ocean with the advantages of food security, domestic demand driven economy, PLI program in industry and defence, banking system solid with a decade-low NPA, strong capex and growing unicorn investments. . Even though high inflation has impacted demand in lower and lower mid sections, festive demand is buoyant with reduced impact from Covid, good monsoons, recovery in infra and property development [boosts employment] and a strong demand for hiring in all sectors.

Main risks

  • The uncertain global environment and the expected slowdown in the US and Europe remain a concern, we believe that India will weather this period successfully and emerge stronger. We continue to favor companies in emerging segments, with strong balance sheets and commercial moats.

Important topics

  • Automotive, capital goods, IT, banking, telecommunications, consumer discretionary and hospitals.

Target

Nilesh Shah, Group Chairman and Managing Director, Kotak Mahindra Asset Management

Outlook for Samvat 2079

  • Samvat 2079 will probably resemble Diwali. There will be a celebration with a loud burst of crackers. Ukraine, US Fed Rate, Oil, Inflation and China’s zero Covid policy will continue to soar.

Important topics

  • Banks, capital goods and manufacturing are expected to outperform the market in Samvat 2079. Technology and pharmaceuticals will offer attractive opportunities on an upwards basis in the correction.

Sunil Damania, Chief Investment Officer, MarketsMojo

Perspectives on Samvat 2079

  • As we enter the new Samvat year, some factors affecting market sentiment will begin to subside. The Fed may not be as aggressive on interest rates, and furthermore, inflation could slow just because of the higher base effect.

Important topics

  • Capital goods, pharmaceuticals and cement will outperform, while public and private banks, NBFCs and the automotive sector may lag.

  • We also expect mid and small caps to outperform large caps. If you look at the data from the latest Samvat to the current one, there is almost no difference between the performance of large, mid and small caps. On the contrary, small caps performed better than large caps. Therefore, the performance of the Indian stock market going forward would be driven more by small and mid caps. We are bullish on mid and small caps, given the year-on-year rise in retail investors.

  • By the next Samvat, we expect the market to perform exceptionally well.

Share.

Comments are closed.