"2022 has been a story of opportunity in adversity. The biggest learning from markets in 2022 is the virtue of humility and importance of developing conviction," says Anand Dalmia of Fisdom.
And next year, he adds, is expected to create a conducive environment for domestic business growth, earnings expansion and a structural uptick reflecting in broader markets.
On the upcoming Union Budget, the co-founder and CBO of the financial service firm expects the 2024 general elections to influence Budget to a meaningful extent as it presents an agenda with a strong political undertone.
Dalmia, who has more than a decade of experience in the investment banking space, expects segments of banking and financial institutions that includes public sector banks in an important way, infrastructure, capital goods and transport/logistics to lead the broader uptick expected in capital markets.
Do you think PSU banks is a great space to be in for 2023?
PSU bank stocks picked meaningful pace before the uptick hit a pause recently. PSB earnings have been looking up through the quarters so far in FY23. These banks are undergoing a structural transformation with improving governance, stronger operating efficiencies and rapid digitisation of services.
Externally, the revival in capex and credit cycle, strong growth in NIIs and NIMs and healthier balance sheets are strong tailwinds to the sector. We expect the strength to continue reflecting in forthcoming earnings as well.
The near and medium-term outlook on the segment is positive. Stocks in the segment, especially the ones closely trailing the pack leaders, are trading at relatively comfortable valuations as well.
What are your thoughts on the equity markets behaviour in 2022? Also what are your great learnings from 2022?
2022 has been a story of 'opportunity in adversity’. Broader markets were threatened quite a number of times during the course of the year. Right from global runaway inflation, elevated interest rate environments, Russia-Ukraine geopolitical crisis, and consequently fractured trade ecosystems tested investor resilience to great extent.
However, it is amid such a chaotic year that bellwether indices and sector indices hit lifetime highs as well. The biggest learning from markets in 2022 is the virtue of humility and importance of developing conviction. The bouts of volatility left bulls and bears sweating alike through the year. The key to successful investing is providing for the unknowns while being humble about one’s knowledge on the knowns.
Do you think 2023 is going to be like another 2022 as far as equity markets performance is concerned?
2023 can be expected to be a very different year for market participants. With most known risks materialising and repercussions factored in, there are limited trajectories that known risk variables can take going ahead. The coming year can be expected to be characterised by a recovery in the domestic economy from the ground-up as strong macroeconomic fundamentals insulate against external shocks to a great extent.
The next year is expected to create a conducive environment for domestic business growth, earnings expansion and a structural uptick reflecting in broader markets. We expect 2023 to be the year of fuller recovery for the economy, businesses and capital markets.
Will the Finance Minister deliver a blockbuster budget? Also will they take into account general elections 2024?
We expect the upcoming Budget to pursue fiscal consolidation as the central theme while trying to strike a finer balance so as to not jeopardize growth prospects. From a positive perspective, we do not expect larger-than-life sops and subsidies being announced but a well-calibrated sectoral allocation instead.
The Budget can be expected to achieve overall economic growth through priority allocations. We can expect the general elections of 2024 to influence the budget to a meaningful extent as it presents the agenda with a strong political undertone.
What are the expected negative factors that can dampen market sentiment in 2023?
Any higher-than-expected print on the inflation, interest rates or unemployment metrics in advanced economies or any negative turn in prevalent strained geopolitical relationships could bear heavy on investor sentiments.
Domestically, adoption of a relatively aggressive path to fiscal consolidation, headwinds from externalities such as tepid exports or ballooning imports or surprise fiscal slippages from any other facet could challenge broader markets’ buoyancy.
Which are the themes that are going to play in 2023?
Against the prevalent backdrop of credit uptick and capex outlay expansion, we expect segments of banking and financial institutions that includes public sector banks in an important way, infrastructure, capital goods and transport/logistics to lead the broader uptick expected in capital markets.
Do you expect any kind of major earnings downgrades in 2023?
We do not expect any major earnings downgrades in the coming year. In fact, the environment seems conducive for many to surprise on the upside.
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