• In the coming year 2023, ICICI Direct expects the first half to be volatile as investors seek answers on key factors such as week economic growth, interest rates cycle, central bank rate hikes and corporate performance.
Looking back at the year 2022, it is safe to say that despite extreme volatility Indian markets have outperformed the benchmark Sensex and Nifty 50 compared to global counterparts. In the coming year 2023, ICICI Direct expects the first half to be volatile as investors seek answers on key factors such as economic growth, interest rate cycles, central bank rate hikes and corporate performance. However, the brokerage also believes that the volatility could create attractive opportunities in domestic oriented schemes. Hence, the brokerage has picked nine stocks for 2023.
At around 11.47 am on Thursday, the Sensex was trading at 60,958.36, up 30.93 points or 0.05%. The Nifty 50 closed at 18,125.45, down 6.85 points or 0.04%. Overall, the performance is on a flat note after the rally in the last 2 days.
However, it needs to be noted that despite global volatility due to macroeconomic uncertainties, both the benchmarks have still performed well. A year ago, on December 28, the Sensex was below the 58,000 mark at 57,897.48, while the Nifty 50 was also below the 17,300 mark at 17,233.25.
From a year ago's level, the Sensex has gained 3,034.92 points and the Nifty 50 has gained over 903 points till date. The annualized upside is over 5% each.
In the current year, so far, the Sensex has jumped over 1,740 points and the Nifty 50 has jumped over 510 points. Year-to-date, the upside is about 3%. It should not be forgotten that on December 1, the Sensex touched an all-time high of 63,583.07 and the Nifty 50 touched an all-time high of 18,887.60.
In its Market Strategy 2023 report, ICICI Direct said that India has performed well in relative and absolute terms with respect to economic and stock market performance.
Going forward, the brokerage believes that the first half of 2023 could be volatile as investors across the globe seek answers to key conundrums such as
- how quickly interest rate hikes stop at the global level,
- damage to economic growth, especially in developed economies,
- Effect of rise in interest rates in India on demand cycle and corporate EPS etc.
However, the brokerage also believes that such volatility will provide attractive opportunities in domestic-oriented sectors such as banks, capital goods, infrastructure, logistics, which will be beneficiaries of massive capex spending by the government/private sector and improving margins. Will remain / Profitability. Also, it added that out of these, domestic sectors such as retail, real estate and auto ancillaries (domestic focused) will also provide good opportunities in the medium to long term.
On Nifty 50, the brokerage's note highlighted that after rebasing in FY22 and surpassing the steady gains seen at ₹450-500 levels in FY18-21, Nifty gains ~15% in FY22-25E growing at a CAGR. This is primarily driven by improved asset quality and credit growth revival in the index-heavy BFSI space, pick-up in capex activity and consequential execution in the capital goods domain, margin and profit recovery in auto, FMCG, metals, pharma and oil. and gas station.
Thus, ICICI Direct offers healthy upside potential of ~19% to Nifty at 21,500 i.e. 21x P/E with FY 24-25E average EPS of ₹1020 with Sensex target at 71,600.
In addition, for 2023, ICICI Direct picked nine stocks. These are:
1. Kajaria Ceramics: From its 1 year low of ₹886.05 recorded on March 9, 2022, the stock is up nearly 25% year to date on BSE. ICICI Direct has set a target price of ₹1,340 on the stock, with an upside of about 22% from Tuesday's price levels.
2. Sterlite Technologies: The stock has rallied nearly 37% from its 1-year low of ₹128.60 on 28 December. The brokerage has set a target price of ₹220 on the stock, an upside of 28% from Tuesday's price level.
3. Maruti Suzuki: In this auto major, the brokerage has set a target price of ₹11,200, implying 35% upside for the stock going forward. Maruti's stock has gained nearly 29 per cent since its one-year low.
4. Mahindra CIE: The brokerage sees an upside of 26% on the stock from Tuesday's price levels and has set a target price of ₹410. Shares of Mahindra CIE are currently trading near their 52-week high and have skyrocketed almost 109% since their 1-year low.
5. IndusInd Bank: In this private banker, ICICI Direct has set a target price of ₹1450, an upside of 21% from Tuesday's levels. IndusInd Bank has rallied almost 61% from its 1-year low so far.
6. HDFC AMC: The HDFC-backed asset management company is up nearly 28% on D-Street from its 1-year low so far. Going forward the brokerage sets a target
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