MC Interview | Expect 18-19% market return in FY23, house recommends 4 stocks, says Prakarsh Gagdani of 5paisa

We have been advising diversification as the primary strategy at this volatile stage. Concentrated risk-based investing in equities is not preferred. Prudent allocation of funds to all asset classes and within equity also, diversification is necessary.

The global risk-off environment is likely to sustain for quite some time and even if we see economic recovery, the impact of the Russia-Ukraine crisis on the global economy and commodity prices will persist for most part of this year.

How do you approach the equity markets and what kind of returns do you expect for the new financial year?

We have seen markets rallying for one-and-a-half-years from the March 2020 lows. There has been a corrective phase in the second half of 2021-22. However, on a longer-term chart, this down-move of the last two quarters just seems to be a corrective phase within an uptrend and the Nifty has seen a time-wise as well as price-wise correction due to global uncertainty.

We believe that all the negative news flows have been factored in by the market in this correction and in the coming financial year, we expect a resumption of the broader uptrend. The retracement theory (which is used for projections) gives us a probable target of 20,400 for the Nifty, which could be tested in the coming financial year. This gives us returns of about 18-19 percent from the current juncture.

What are the global themes you want to suggest to investors, which can deliver double-digit returns in FY23?

Technology still remains a favourite and will also be the preferred theme domestically. FMCG is also likely to do well. In terms of stocks, our house recommends L&T Infotech, Mphasis, Hindustan Unilever and Britannia. We also expect stocks from sectors such as metals, chemicals, sugar and agro/fertilisers to deliver good returns in the coming financial year.

Also read - India to be one of brighter pockets with likely growth of around 8.5%: Asheesh Chanda of Kristal AI

Do you expect significant FII inflow in FY23?

Foreign institutional investors have consistently sold equities in the Indian markets in the past few months, while domestic institutional investors were buyers and provided support to the market. Given that valuations have come off highs and our markets are fairly valued, FII selling should reduce, going ahead.

In fact, given that our country is one of the fastest-growing countries in the world, we expect them to turn buyers at these valuations if the external risks cool off, going ahead.

What is your view on overall consumer sentiment, especially after companies increased prices to offset the impact of commodity inflation?

Well, consumer sentiment remains bullish as the economic recovery picks up pace. However, geopolitical concerns and commodity inflation are going to hurt corporate earnings. Many will be forced to increase prices and this may affect consumer demand. However, considering the strength of the domestic economy, we believe demand will remain strong.

Will the impact of higher commodities prices last for two or more quarters?

Earnings will be impacted for the next 2-3 quarters.

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