'We are not entirely out of the woods.' 'The broader trajectory remains tentative.' 'However, we may expect some near-term bounce.'
The combined market-cap of all listed Adani group firms has plunged nearly Rs 7.11 trillion since January 24 when the Hindenburg report was made public.
Zomato has lost over 9 per cent thus far in calendar year 2023 (CY23) and has underperformed the S&P BSE Sensex that has slipped nearly 5.3 per cent during this period. Despite this underperformance, analysts at HSBC think that the stock can hit Rs 87 going ahead - up over 64 per cent from the current levels. The food delivery industry, wrote Yogesh Aggarwal and Abhishek Pathak of HSBC in a recent note, has slowed considerably in the last few months.
Historically, March has been a volatile month for Indian equity markets. To begin with, it marks the end of a financial year, wherein there is some compulsive portfolio rebalancing trade by large funds - domestic and foreign. Retail investors, too, prefer to 'cash in' on their gains and losses before the financial year runs out.
The global turmoil in the banking sector has made analysts cautious, who advise that investors stay away from stocks of this sector till the overall sentiment improves. The recent trouble for the banking sector started with the collapse of US-based Silicon Valley Bank (SVB), Silvergate Capital and Signature Bank. On its part, Moody's Investors Service has also cut its outlook for the US banking system to 'negative' from 'stable', citing the run on deposits at these three banks that led to the collapse of these banking majors in less than a week.
However, in the last few sessions, the stock of Mukesh Ambani-controlled Reliance Industries Limited (RIL), hit its 52-week low level of Rs 2269.75, and has been one of the worst performers among the Sensex pack thus far in calendar year 2023 (CY23). Thus far in CY23, RIL has tanked nearly 11 per cent as compared to a fall of around 5 per cent in the S&P BSE Sensex. The fall in the stock, according to Gaurang Shah, senior vice-president at Geojit Financial Services is mostly due to the overall dip in the market sentiment, which in turn has impacted large-caps, including RIL.
'Markets could face uncertainty in the short to medium term.' 'It would be prudent to invest in alternative asset classes, especially debt, for about a year.' 'Bank fixed deposits are offering rates as high as 9 per cent per annum and these can be used as a great hedging tool until equity markets stabilise.'
'The Fed rate will peak in the range of 5.1-5.3 per cent during the second quarter of CY23 and will most likely stay there for a while before rate cuts start in CY24.'
An aggressive rate hike by the US Fed and the possibility of a recession can trigger a slide in these stocks, which will be a good opportunity to buy from a long-term perspective.
The Indian equity market is likely to remain under pressure and rangebound over the next few months. This comes as global central banks, led by the US Federal Reserve look at a possibility of hiking rates aggressively to tame inflation. Back home, the Reserve Bank of India, too, remains data dependent in its endeavour to keep inflation in check and pursue an aggressive monetary policy stance.
Domestic mutual funds (MFs) have kept their faith in the Indian stock market despite multiple headwinds all through 2022-23 (FY23), with their net flows into equities crossing the Rs 1.5-trillion mark for the second consecutive financial year. MFs pumped a net Rs 1.53 trillion into equities till March 1, 2023, the Securities and Exchange Board of India (Sebi) data shows, as compared to Rs 1.72 trillion in FY22. Since FY15, MFs have been net buyers of equities, except in FY21, when they sold a net Rs 1.21 trillion.
'While foreign institutional investor flows are still negative, they will turn positive in the latter part of 2023 as India's resilient growth becomes perceptible.'
'The market will focus on the fact that India does have strong earnings growth this year.'
Elevated food price-led inflation could become a sore point for markets, which they seem to be ignoring at current levels, observe analysts. Retail inflation in India - as measured by the Consumer Price Index (CPI) - came in at a three-month high of 6.52 per cent in January 2023, compared with 5.72 per cent in December and 5.88 per cent in November 2022. The inflation print for February, according to Madan Sabnavis, chief economist at Bank of Baroda, will be critical for the Reserve Bank of India's monetary policy committee.
'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).
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