ETMarkets Diwali Survey: Brokerages bullish on India-centric sectors; global factors may haunt

New Delhi: Diwali is just around the corner and most brokerage firms remain positive on the India Inc story. Market participants are shedding fears of a recession and economic slowdown and expect Nifty50 to hit as high as 21,000 in Samvat 2079.

Analysts participating in ETMarkets.com survey for Diwali 2022 remain bullish on sectors related to infrastructure and domestic consumption. Themes such as Auto, Financials, FMCG, Consumer Discretionary and Health Care should do well.

On the contrary, they fear an impending recession and geopolitical tensions. They remain skeptical about international issues such as IT, metals, oil and gas, among others. US dollar strength would be another factor driving markets.

Here’s what Dalal Street pundits said about the potential outperformers and underperformers sectors for next Diwali:

Deepak Jasani, Head of Retail Research, Securities

“Central bank monetary policies, geopolitical issues, inflationary tendencies, rural income growth dynamics, economic growth dynamics in India and globally,” he named the main drivers of the markets and suggested healthcare, FMCG, telecoms and capital goods for the upcoming Samvat.

According to him, continued tight monetary policy, rising geopolitical tensions, slow or negative growth globally and GDP growth below 5 percent in India could hamper the rally. He has singled out metals, oil and gas, and IT packages as laggards.

Siddhartha Khemka, Head of Retail Research,

“Domestic consumption, discretionary spending, credit growth, capacity expansion are key factors to watch out for while the global economic slowdown, high interest rates and persistent inflation could weigh on markets in the coming year.

Khemka is bullish on sectors such as BFSI, consumer discretionary, automotive, retail, capital goods, real estate, hotels, footwear, QSR, defense and hospitals, to name a few.

Vinod Nair, Research Director,

Nair said that a resilient domestic economy, India emerging as a manufacturing hub, FDI and FIIs and the fall in international commodity prices are the key triggers to be combined with a positive view on IT, pharma, FMCG, consumption, green energy and e- Trade.

“On the contrary, investors need to keep an eye on hyperinflation, global recession, tightening monetary policy leading to rate hikes and escalation in the Russia-Ukraine war,” he added. Nair is negative towards Metals, Oil, Reality and Infra.

S Ranganathan, Research Director,

He said peak rebound, domestic consumption, economic formalization, digitization, deleveraging balance sheets and tax hikes are likely to guide markets. He expects domestically focused sectors and large undervalued banks to outperform.

“Global recessionary tendencies, geopolitical headwinds and rising inflation and interest rates could weigh on markets,” he added. “Companies with poor capital allocation will remain laggards.”

Amit Jain, Co-Founder, Ashika Global Family Office Services

“We are optimistic about IT, banks and pharma. FMCG could be a laggard for us if we stick to the timeline for next year,” he said. “These stocks could be good drivers for the future of the Indian markets. The global credit and currency crisis may hold Nifty back.

Siddarth Bhamre, Head of Research, Broker

Bhamre said high growth driven by domestic consumption, industries operating at 75 percent capacity and falling crude oil prices should guide the market. “India is the most resilient in a very uncertain global environment,” he said.

On the contrary, global issues that could lead to a financial crisis that could also affect India temporarily, if not structurally, he replied, citing auto, banking, cement, consumer durables, FMCG and IT among the top performers, while metals and oil and gas could be missing.

Tejas Jariwala, Head of Research, Jainam Broking

PLI, National Logistic Policy, manufacturing activities, infrastructure and green energy issues for the coming year. “Manufacturing, tourism and corporate lenders should do well,” he added. “IT, Auto, Stahl should be laggards.”

Vaibhav Agarwal, Head of Research at Basant Maheshwari Wealth Advisers

“We believe that the US Federal Reserve needs to cut interest rates in the next fiscal year and restart the QE process because if US interest rates remain high for a long period of time, the economy will collapse,” he said. “Global macros should improve which should lead to a rally in our equity markets.”

Urban consumption should do well, be it fashion retail, apparel or ethnic wear, Agarwal said. “IT services should do well as the dollar is expected to continue strengthening, demand is resilient and churn is falling. Commodities as a sector could underperform.”

(Disclaimer: Experts’ recommendations, suggestions, views and opinions are their own. These do not represent the views of Economic Times)

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Russell Falcon

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