Stock Market Outlook: Nifty will break 20 thousand level in FY23! This factor is important, on which sector and theme one should bet

FY23 Stock Market Outlook: Despite many challenges, FY22 has proved to be better for the domestic stock market. Nifty and Sensex have closed with a good gain of about 20 per cent in FY 2022. The first half of the financial year was excellent for the market. Whereas in the second phase, there has been uncertainty due to geopolitical risk, rate hike cycle, selling by FIIs and some other global factors. While IT, Metal, Power and Banking & Financial sectors performed well in the last financial year, auto and FMCG sectors have been under pressure due to high commodity prices. Financial year 2023 has also started with volatility in the market. However, experts are seeing a boom in Gabazaar this year and there are many big factors behind it.

Nifty will cross 20000 level in FY23!

Sunil Nyati, Managing Director, Swastika Investmart Ltd, says that the domestic equity market has dealt well with many concerns in the market. At the same time, it is ready to perform better in the new financials. However, high inflation, prevailing interest rates can be a reason for uncertainty in the near term. On the other hand, if there is any new development even in COVID 19, then it is a negative factor. On the other hand, the next few quarters will be challenging for India Inc due to higher raw material prices. Yet the long term outlook for the Indian economy, especially the sector facing the economy, is very bullish. Nifty can cross 20,000 level in FY 2023. In very bullish cases, it can even reach the level of 21,000.

Profit of Nifty companies expected to increase by 20%

Sanjay Chawla, Head (Institutional Research), brokerage house Emkay Global Financial Services, said in a note that there are challenges in the market due to rising crude and commodity prices, strict monetary policy. These challenges will remain this year. Central banks around the world are taking a tough stand. At the same time, LIC’s IPO domestically in the short term can affect the liquidity in the market. He says that by the financial year 2023, the fair value for Nifty is showing a level of 19,000. During this period, the profit of Nifty 50 companies can increase by about 20 percent.

Crude prices are a big concern for the market

Nirav Sethi, CEO (Institutional Equities), Emkay Global Financial Services, says volatility in oil prices due to geopolitical tensions is a major concern. With this, the terms of trade (ToT) and its impact on GDP can be seen. If oil prices remain above $100 per barrel on average, then the CAD-to-GDP ratio could be 3 per cent in the financial year 2023. He says that in the first half of the financial year 2023, the RBI can maintain an accommodative stance. But if commodity prices remain high for a long time, the central bank can take action on inflation.

Which theme and sector to keep an eye on for investment

According to brokerage house Emkay Global, the government’s focus is on supporting private capex apart from increasing domestic manufacturing. At the same time, credit growth is increasing due to the economic recovery. In such a situation, one should keep an eye on the sector and quality share related to capex revival theme, quality share related to the consumption theme sector and export oriented sector. The brokerage house is overweight on the banking sector. At the same time, an underweight rating has been given on the consumer sector. While the pharma and IT sectors are also seen overweight.

Will the long queue of IPOs strengthen sentiments?

Sunil Nyati says that the market was in a strong bull run in the first half of FY21, which showed enthusiasm in the primary market. Many loss-making companies brought IPOs in the market during this period with unrealistic valuations. Now their shares are trading much lower than the issue price. Hence, there was a negative sentiment in the IPO market in the second half of FY22.