Veterans tell how 2023 will turn out for the markets
MUMBAI : Retail investors have acted like shock absorbers to counter the sell-off of a record ₹1.21 trillion by foreign portfolio investors (FPIs) in 2022, the highest ever in a calendar year. Domestic institutional investors (DIIs), who bought more than ₹2.6 trillion of equities, primarily via systematic investment plans (SIPs) in mutual funds, countered foreign outflows amid global shocks such as the Russia-Ukraine war and the US Fed’s monetary tightening policy to combat decadal high inflation. Rising credit growth as well as tax receipts point to the relative buoyancy of India amid global headwinds. So, how will 2023 be for the markets? Mint gets some market veterans to share their outlook:
NAVNEET MUNOT
MD & CEO, HDFC AMC
Events of the last few years have clearly shown how hazardous near-term predictions could be. The surge in inflation, central bank tightening and geopolitical risks made 2022 one of the toughest years for global investors. While the near-term outlook on inflation has improved considerably, we must remember a part of the inflation surge is structural in nature. This is a regime shift. Hence, global policymakers will have to continually focus on anchoring inflationary expectations while supporting real investments. Supply augmentation, not demand calibration will ultimately win the war against inflation. In a chaotic world with crazy volatility, Indian markets showed solidity in 2022. Macro stability, policy predictability, recovery in corporate profit and strong domestic flows helped. Our valuation premium has gone up with significant outperformance of the Indian markets. Investors are well-advised to remain focused on the long term and stay disciplined as near-term volatility may be on the higher side.
NILESH SHAH
MD & CEO, Kotak Mahindra AMC
There is a fight between valuation, on one side, and growth on the other. Our valuation on a near-term basis looks expensive to peers. Our valuation on a long-term basis looks cheaper to peers. The intersection of these two forces will determine the trend of the market. We remain bullish on infrastructure and manufacturing sectors. Information technology (IT) and pharma will provide an entry point this year, and a 10% movement, either side, can be seen depending on how global events unfold.
KRISHNA KUMAR KARWA
MD, Emkay Global
2023 will be a year of consolidation with intermittent bouts of volatility. Patient investors will reap the gains. Short -term investors could be disappointed. Astute asset allocation will be the key differentiator for overall wealth returns. 2023 should give 10%-plus Nifty returns from the current 18,100 level. The small-cap portfolio will outperform over a three-year period.
JYOTIVARDHAN JAIPURIA
MD, Valentis Advisors
After a weak year for global markets, we expect 2023 to be a better year though the returns will be back-ended. Inflation may weaken and the US Fed may pause rate hikes helping equities. There will be a soft recession, which curtails returns, but it will lead to expectations of rate cuts by the Fed in late 2023 boosting equity markets. Earnings growth in India will be 12-15%. The topline will see some weakness driven by a slowing economy on the back of a global recession. But margins should rebound as commodity prices weaken. Return from equities in India will be in high-single digits though back-ended. We think small-caps will be weaker in the early part of the year, but by the end of the year it will be higher than large-caps.
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