It may be a little early to cheer the recovery in the fast-moving consumer goods (FMCG) space as a deceleration in discretionary demand, after the festival season, may offset fragile rural recovery, analysts have cautioned. "The overall demand environment for staples remains muted, while discretionary demand trends have seen some deceleration after the festival season. "We believe margins in staples have bottomed out, but we expect only a gradual uptick with the ongoing softening in raw material prices.
'People trust India and Indians a lot more than they trust China and the Chinese.'
Here's how leading brokerages and research houses expect 2023 to play out for the equity markets, and their sector preferences.
Brent crude oil prices may rise to $110 a barrel in 2023, up nearly 33 per cent from the current levels, said analysts at Morgan Stanley, in a recent note. This is, however, lower than the peak level of nearly $127 touched earlier in 2022 as geopolitical concerns took centre stage amidrising demand. "Looking ahead, Brent oil price growth will decelerate even more in the coming quarters. "This comes even as our global oil strategist expects a rise in oil prices back to $110 a barrel by the second half of 2023.
The bull run in the Indian equity markets is intact, said analysts at Morgan Stanley in a recent note. They expect the S&P BSE Sensex to hit 80,000 levels by December 2023 in their bull-case scenario, to which they have assigned a 30 per cent probability. From the current level, this translates into an upside of nearly 29 per cent.
'New record for the Nifty50 is only a question of when.'
Investors seem to be shying away from stocks of companies in the 'digital' space with most counters that comprise the Nifty India Digital index giving negative returns over the past year. The index tracks the performance of a portfolio of stocks that broadly represent the 'digital theme' within basic industries, such as software, e-commerce, IT-enabled services, industrial electronics, and telecom services. The fall in some of these stocks over the past year has been steep; the sharpest decline of around 60 per cent was seen in shares of PB Fintech (parent company of Policybazaar).
'Calendar year 2023 is going to be big as pessimism takes a back seat.'
An escalation in the already simmering tensions between North and South Korea, China and Taiwan, and Russia and Ukraine could prove to be a bigger worry for the markets over the next few months rather than central bank policy action, said analysts. The markets, they said, are still not fully factoring in this possibility. "The conflict between Iran and Saudi Arabia is another geopolitical worry.
'An eerie similarity with 2019 inflation trajectory could now mean that the RBI and market inflation estimates could go awry.'
'2022 has not been -- and will not be -- the kind of 2021 bull market, which lifted all boats.'
'India seems to be on a relatively better wicket compared to other emerging markets.'
ITC has been one of the best performing large-cap stock at the bourses thus far in calendar year 2022 (CY22), rallying nearly 52 per cent during this period and outperforming the sector benchmark - the S&P BSE FMCG index - by a wide margin that moved up around 17 per cent during this period. However, the counter has lost over 5 per cent from its recent high of Rs 346.25 hit on September 23, 2022 and has underperformed the S&P BSE Sensex, which has lost nearly 2 per cent since then. So, is the rally in the stock coming to an end, and is this a good time to book profit?
Indian frontline benchmarks - the S&P BSE Sensex and the Nifty50 - have rallied around 12 per cent each since June-end and outperformed their global peers by a wide margin. On Thursday, the US Fed hiked interest rates by another 75 basis points (bps) - the third such hike this year - and surprised the markets by projecting further sizable hikes in the coming months. With the latest hike, the Fed fund rate (FFR) now stands in the range of 3 - 3.25 per cent and is highest since January 2008.
India witnessed a 12 per cent year-on-year (YoY) jump in total household wealth last year, at $14,225 billion, according to the Global Wealth Report 2022 by Credit Suisse. The report also forecasts the number of millionaires in the country to more than double from 796,000 in 2021 to 1.6 million in 2026. According to the report, which is based on data for the wealth holdings of 5.3 billion adults across nearly 200 countries, global household wealth rose 9.8 per cent in 2021 to $463.6 trillion, driven by widespread gains in share prices and a favourable environment created by central bank policies in 2020 to lower interest rates but at the cost of inflationary pressure.
'It will be best for investors to have a systematic investment plan in mid-cap and small-cap funds with a three-/five-year horizon.'
'We have relatively strong growth and a healthy corporate earnings cycle as positives, but a worrisome current account deficit and high inflation as challenges.'
One hundred and forty nine new individuals joined the rich list club of 1,103 Indians across 122 cities who cumulatively accumulated a wealth of Rs 100 trillion. Bengaluru -based Kaivalya Vohra, 19, of grocery delivery application Zepto is the youngest self-made and the youngest rich individual, according to IIFL Wealth Hurun India Rich List 2022. The report found 1,103 Indians with a networth of Rs 1,000 crore each - an increase of 62 per cent over five years. There are 221 billionaires (Rs 100 crore networth) in India on the 2022 list - down 16 compared with last year, while 13 people born in the 1990s made it to the list, all self-made.
After a turnaround in performance by Indian equity markets since July that has seen the S&P BSE Sensex and the Nifty50 wipe out the year-to-date losses, analysts suggest investors start nibbling into stocks that are focused on the domestic economy. While they say intermittent corrections, led by policies of global central banks and other economic data, cannot be ruled out, analysts expect India's relative outperformance among global equity markets to continue as it looks better placed with a healthy economic recovery, and remains one of the fastest growing major economies. In this backdrop, Neeraj Chadawar, head of quantitative equity strategy at Axis Securities, believes that amid global slowdown, aggressive tightening by the central banks, and preference for domestic interests first (by the local government), export-oriented themes are likely to be muted or will deliver conservative returns in the near-term.
It has mostly been a one-way street for markets that have moved up sharply since July. The front-line indices - the S&P BSE Sensex and the Nifty50 - have gained 6.7 per cent and 7.3 per cent, respectively, in the past three months. The rally in mid- and small-caps has been sharper, with both indices surging 14 per cent and 9 per cent, respectively, during this period. This sharp run has made analysts at Jefferies cautious.
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