While retaining its bullish view on Indian equity markets, Axis Securities believes that select themes may deliver a solid return to investors after a 9 per cent fall registered by benchmark equity indices in 2022 so far. The brokerage sees Nifty at around the 18,400-mark by the end of March 31, 2023, showing an upside of nearly 15 per cent from the current levels.
Considering the present market situation, Axis Securities is bullish on ICICI Bank, Bajaj Auto, Tech Mahindra, Maruti Suzuki India, State Bank of India, Bharti Airtel, Cipla, Federal Bank, Varun Beverages, Ashok Leyland, Astral Ltd (India), Bata India, APL Apollo Tubes, HealthCare Global Enterprises, Praj Industries and CCL Products (India).
In a report, the brokerage added that two major trends are likely to emerge from here onwards. Firstly, inflation is emerging as a big theme. Value-focused sectors tend to do well in the rising inflationary scenario and would likely see a notable allocation in the next one to two years. Secondly, the market’s earning expectation remains intact even though it has witnessed a notable correction in several stocks from their 52-week high.
“We believe ‘Growth at a Reasonable Price’ is an emerging theme that provides good long-term risk rewards in the current market environment,” Axis Securities said.
The market is now eyeing the earnings season which stands critical in terms of upgrade/downgrade amidst elevated raw material prices. “We do not expect a major earnings cut but some moderation of growth is expected in certain sectors,” it said.
While sharing its view on sectors, Axis Securities added that with rising concerns over the global slowdown, aggressive tightening, and preference for domestic interests, the export-oriented themes are likely to be muted or perform conservatively in the near term. Furthermore, the market will adopt a wait-and-watch approach till more clarity emerges on the direction and intensity of prevailing inflation as well as the demand scenario.
“On the positive side, given the government’s stance on domestic interest first, as well as India, being a domestic consumption economy, local or domestic-oriented themes are likely to deliver superior performance in the near term. At this juncture, banks and automobiles look attractive,” it added.
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