Markets to have a bumpy ride in FY23; be stock specific, focus on value stocks , say analysts

FY23 is not likely to offer a smooth ride to the stock market participants, many analysts opine. Multiple issues weigh and that could spoil the sentiments every now and then during 2022-23 (April). Geopolitical issues, weal global cues and inflation are some of the strong headwinds that could hinder the market movement. Investors are advised to remain stock specific and focus on the companies which have strong fundamentals and attractive valuations. 

“Usually when benchmark indices (Sensex, Nifty50) have gone up by 130-140 per cent from their bear market lows, there has been a significant correction in the market. However, the present correction hasn’t been as steep as in the previous cycles,” Rahul Shah, Co-Head of Research at Equitymaster said, 

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Thus, we won’t be surprised if FY23 brings with it a correction of a significant magnitude, the market analyst shah said in his expectations comment, adding further that  there are no guarantees in the market and hence, asset allocation will play a key role.  

“We would recommend investors to steer clear of stock with suspect quality and where valuations have run up a great deal. When a crash strikes, it is these stocks that are hit the hardest,” Shah said. 

Both the BSE Sensex and Nifty50 have reported 18 per cent growth in the financial year 2021-22 (FY22). Sectors like power, utility and metals recorded more than 50 per cent gains, outperforming the benchmarks by a big margin, the analyst had said. 

Similarly, Ajit Mishra, a VP Research at Religare Broking said, “We do not expect that it would be a smooth ride for the markets in the upcoming financial year as concerns regarding rising inflation and Fed's hawkish stance would prompt foreign investors for outflows of emerging markets like India.” 

In FY22, FPIs (Foreign Portfolio Investors) have sold US $19 billion, and their stakes in Indian markets have gone down to 18.5 per cent at the February-end 2022. On the contrary, DIIs (Domestic Institutional Investors) have bought US $29 billion in Financial year to-date 2021-22.  

The VP Research at Religare Broking also suggested, “We would advise investors to remain stock specific and focus on companies that have the potential to deliver strong earnings growth.” 

While the market analyst Sandeep Jain, who is Director at TradeSwift believes, the foreign investors will have to come to India again, as the global cues normalizes, and inflation dust settles amid China and Russia plus 1 policy. He believes, the first quarter results of FY23 likely to be spectacular.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)