Tuesday, December 13, 2022

NIFTY RETURNS IN 2023 EXPECTED TO BE MUTED?

The target for the Nifty in 2023 is 19,500, implying modest but positive returns. The debate over two scenarios—a prolonged global revival or a soft landing—leads the foreign brokerage to anticipate that the 50-pack index will largely remain within a range of 17,000 to 20,000 levels throughout the course of the year. India may perform better than developed markets, but it may perform worse than emerging markets. Better returns could be achieved by buying dips and being strategic in swing sectors. This fall may be led by externally facing IT, materials, energy, and select automobiles, which account for 21% of Nifty sales, as well as consumer discretionary with high valuations; whereas domestic defensives and cyclicals may perform better. Nifty may trade around the 17,000 level overall. Our analysis indicates that Indian economic growth and markets experience fewer declines and faster recovery during global recessions, so we recommend purchasing these dips. It stated that, despite reducing Nifty FY24/25 earnings growth to 8%/12%, Nifty could trade at 20,000 in such a scenario. India's position among FIIs is at an all-time low in this scenario.

Nifty will finish 2023 at 19,500 following market volatility, implying modest but positive returns. Our views point to a very likely recession in the United States, Europe, and the UK, risks skewed toward a longer rate expansion, additional Fed tightening, a later but deeper recession, persistent inflation, and a $100 a barrel crude average and spike to $110 in H2, we assume bearish/Scenario 1 earnings. Domestic cyclicals, industrials, cement, global revival play metals, and defensive staples/utilities make up the majority of our portfolio's volatility. We underweight IT, consumer discretionary, automobiles, telecom, pharmaceuticals, and Northwest energy.
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