Yes Securities sees Nifty50 hitting 20,000-mark by March next as the FPI inflows returning back in a big way in 2023, besides continued strong domestic interest in equities as an asset class, Amar Ambani, Head-Institutional Equities has said.
He further added that Nifty50 could hit 35,000-mark by March 2026 and Sensex 1,25,000 on the back of top companies better earnings growth and rerating of price-earning multiples.
“We will surely takeout the previous high of Nifty sometime next year. FPIs will definitely be back in 2023. They will come back with a bang once your US bonds stabilises and your rupee stabilises. I think rupee has topped out. Worst for rupee depreciation is over. Rupee is not going to go beyond 84 and it will settle around 79 and 80”, Ambani told businessline here.
On high valuations
He said that the premiumness on valuations currently enjoyed by Indian equity markets — India benchmark indices having most premium among emerging markets — will continue to stay, especially when FPIs are expected to return in a big way.
“One or two odd fortnight of outflows may be there. Bulk of FPI outflows is done. They have got a sense that rupee has topped, their US bonds are stabilising and started taking note that India is now fastest growing large economy. Trust deficit in China has increased and their options have reduced”, Ambani added.
FPIs had sold $35 billion worth of equities in India between September 2021 and July 2022. However, from August 2022 and until now, FPIs have pumped in $11 billion, bringing down the net amount sold in the calendar year to date to $19 billion. “As compared to current calendar year when FPIs may end up as net seller, we expect them to be net buyers of Indian equities in 2023. In recent months, they have already reduced their selling.The best of buying is yet to come”, he added.
Second-highest monthly inflow
Already in November 2022 so far, FPIs have pumped in ₹30,385 crore in equity and debt markets. This is the second-highest monthly inflow since January this year.
Ambani also highlighted the possibility of policy pivot by the US Federal Reserve in the coming days and noted that it is widely expected to go in for another 75 basis points hike in interest rates and then stop its tightening cycle.
Asked about the sectors which are expected to do well in 2023, Ambani said that financials (banks), Information Technology, building materials and discretionary consumption are favoured by YES Securities witnessing buying interest.
“The worst is over for information technology companies in equity markets”, he added.
Asked about new age companies, Ambani said that those companies with a path to profitability will “survive”.