Emkay foresees Nifty at 19,500 and Sensex at 64,500 by December 2023

Emkay Institutional Equities expects the Nifty to touch 19,500 by December 2023 and Sensex at 64,500, indicating a 7-8 percent increase from the current levels.

Barring any major change in the global macroeconomic and geopolitical set-up, the increase in Nifty50's profit after tax (PAT) in 2023 will be led by banks, believes Emkay Institutional Equities.

Banks will be followed by a PAT uptick in auto original equipment manufacturers (OEMs) and ancillaries, oil and gas, and IT companies.

Follow our live blog for all the market action

"Higher-for-longer interest rates, and a sudden rise in Brent crude oil prices are potential challenges for the market in the next 6-12 months. A capex-intensive budget by the government may spur investment; however global and domestic growth uncertainties may act as an impediment," Sanjay Chawla, Head, Institutional Research, Emkay Global Financial Services, said.

Expensive valuation is also a near-term headwind to Nifty’s performance. Current price-to-earning ratio of 19x is at a 11 percent premium to 10-year average. "Valuations are not cheap, relative to own-history, bond yields and to MSCI-EM," the brokerage said. The Nifty now trades at an 86 percent P/E premium to the MSCI-EM index against 10-year average of 45 percent.

Given the set-up, the firm is significantly overweight on banks and autos. It is moderately overweight on insurance, cement, power and utilities, telecom.

It is underweight on IT Services, non-banking financial companies, consumer staples and oil marketing companies.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.​​​