Indian share markets are unlikely to deliver positive returns during the Jan-March’23 quarter. From November levels, Nifty may see up to 5% correction till June 2023, said Unmesh Sharma, Head of Institutional Equities, HDFC Securities in an interview with Harshita Tyagi of FinancialExpress.com. Indian markets are expensive but it is not so frothy that one can not consider putting money in right now. Sharma said. From now till June, the probability of an upside is far lower as compared to risk on the downside. “You can deal with this in two ways. Either you invest in a staggered manner or you reduce the risk in your portfolio by betting on growth at a reasonable price, value, and thematics,” he added.
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According to Unmesh Sharma, there could be a Santa Claus rally in December where the domestics are buying and FPIs are not really present. Asset allocation will really start in January. “So from now till January, we see a benign environment meaning a few 100 pts here and there. In January, with earnings coming in, we do not see great numbers for the quarter. On top of that, we will be in the run-up to the Union Budget, so there will be discussion around long-term capital gains tax regime changing which leads to investors thinking, “Let’s take a call after the Budget”, he said.
As uncertainty will return to markets in January, markets are likely to remain more volatile. “I don’t see any positive surprises during this time either from the earnings or from the government side. The likelihood of positive returns in the January-March quarter is low. We might start the new year on a very uncertain note with a reasonable amount of negativity. In the same time, there will also be realisation that inflation is coming off but it is proving to be sticky.
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Where to invest for gains?
HDFC Securities Institutional equities is very positive on large private sector banks. “Worst environment in terms of asset quality is behind us. Things will improve in a rising interest rate environment. Additionally, valuations are not crazy,” said Sharma, adding that their top picks in the basket are ICICI Bank, SBI, and Axis Bank. While the bias is slightly positive on second-tier banks, it is not positive on NBFCs. In the financial basket, other positives are life insurers, AMCs, and capital market companies amid financial inclusion.
Infra remains HSIE’s big call of the year, as there will be a big shift from capital to Capex or Consumer to infra. L&T, KNR Constructions remain top picks in this sector. Some other top bets include Real estate Sector (Prestige, DLF), Power Utilities, and Pharma (Cipla, Alkem Laboratories). It is underweight on the new-age tech sector.
(The stock recommendation in this story are by the respective research analyst. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)