FY23 Outlook: Analysts believe volatility in markets may continue; robust earnings, FPIs inflows, softening oil - positive triggers

The volatility in the Indian markets is likely to continue in the current financial year of 2022-23 on the back of weak global cues and inflation concerns, most analysts estimate, while citing the outlook of the new fiscal.

In this regard, Kanika Agarrwal, Co-founder, of Upside AI said, “FY22 was a rollercoaster year – started strong and the last two quarters have been very volatile. This is to be expected. FY23 has a lot of factors to consider – yield curve inversion risk, inflation, companies’ ability to pass on rising costs.”  

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While potential tailwinds of earnings growth, FPI (Foreign Portfolio Investors) flows returning, oil prices going down, among others are likely positive triggers for the market, he added, expecting a volatile FY23.

Similarly, Nishit Master, Portfolio Manager, Axis Securities, also expected FY23 to witness continued volatility in equity markets, especially in the first half of the year with rising interest rates globally and high inflation, which is expected to persist.

“In this scenario, we expect money to move from long-duration debt funds to equity funds in the second half, which should bode well for equities,” he added.

The portfolio manager at Axis Securities said, “Our year-end target for Nifty is 20200. Some sectors where we are positive include Metals, Hospitals, Hospitality, Oil Refining, Capital Goods, etc.”

Not expecting a smooth ride, Ajit Mishra, VP - Research Religare Broking, said, the concerns regarding rising inflation and Fed's hawkish stance would prompt foreign investors to take money out of emerging markets like India.

Having said that, Mishra advised investors to remain stock specific and focus on companies that have the potential to deliver strong earnings growth. 

Indian equity markets on Friday kicked off FY23 on a very strong note, Parth Nyati, Founder, Tradingo said. He added it may continue to outperform where movements of global markets, Crude oil prices, FIIs' behaviour, and news flows related to the Russia-Ukraine issue will remain key factors.