Financial year 2023 may well go down among the most turbulent years in the annals of the Indian stock markets, but the last day brought some cheer to investors. At the close of FY23 on Friday, Sensex gained 1.78 per cent or 1,031 points to close at 58,991. The Nifty rose 1.63 per cent or 279 points at 17,359.

This came even as the equity markets, through the fiscal, were hit with high-octane developments starting with the Russia-Ukraine war, the historic interest rate hikes by the US Federal Reserve, the collapse of two banks in the US and back home, Adani Group losing more than $100 billion in market cap after coming under attack from the bear cartel. The chaos saw the Sensex and Nifty close the year on a tepid note after stellar gains for the past two financial years.

Comparatively better

During the year, the Sensex and Nifty witnessed a 20 per cent swing but closed with little gains compared with last year. While the Sensex closed FY23 at 58,991, with a gain of just 0.7 per cent or 423 points, the Nifty ended at 17,360, down 0.6 per cent or 105 points. In comparison, the MSCI Emerging Markets index declined by over 14 per cent and MSCI World Index was down 10.3 per cent during the FY.

Inflation management has remained a core theme for global central bankers since the start of the Russia-Ukraine war. Global crude oil prices hit $130/barrel before cooling off to below $70. However, inflation has been slow in falling mainly due to supply chain disruptions. Equity assets became less attractive with the US Fed raising interest rates.

Promising FY24?

But analysts say next year could be promising for the markets mainly as interest rates in the US, India and in most countries have peaked and may be cut. “Morgan Stanley has upgraded India to equal-weight, with the narrowing valuation premiums and a resilient economy. As we enter a new fiscal year, we may see some more gains before pre-Q4 results nervousness kicks in,” said Deepak Jassani, Head of Retail Research, HDFC Securities.

BoFA (Bank of America) Securities has cut its target for Nifty for December 2023 from 19,500 to 18,000, citing downward pressure on earnings growth estimates.