US Recession, IPOs And Stock Selection To Rule In 2023 For Stock Market
One of the worst years for the stock market, 2022, has finally gone. Back home, investors too had a tough time to handle the market amid global headwinds, the surging corona infection, Sri Lankan mass protest, Russia-Ukraine war, price caps on oil, Elon Musk’s Twitter take over and Federal Reserve’s rate hikes. Despite all these, the Indian stock market was able to outperform better than the global market.
2022 was an unusual year for the stock market in many ways. The year showed 71 per cent of positive S&P 500 at the time, but this didn’t mark the perfect stock path, according to the collated data by Carson Group’s Ryan Detrick.
After the dull 2022, 2023 is expected to bring the shine and positivity back to market trading. Adding to this are a few market trends, that are estimated towards the new stock chapter. These trends are –
Higher Inflation
As reports suggests, 2022 was a brutal year for inflation. And considering this, 2023 needs an action plan to conquer the disturbed inflation. As inflation has a direct influence on goods purchased, consumer behaviour needs special observation and demands for goods should be decreased.
Now the demand for goods is not an easy task to conquer in a growing marketing world where everyone is influenced to buy more and elevate inflation. Experts suggest an increase in interest rates as a solution to control growing inflation.
Energy Sector Monitoring And Investing
Indian market’s history suggests energy stocks as a popular choice among Indian investors. Experts point out that India with the third largest oil reserve has a significant economy. Though the country’s rapid growth and challenging industrial sector make it difficult to invest in the energy sector, but with proper monitoring and research, energy sector investments could take investors to a great place and would support healthy stock market practices.
Since the government has coal deposits enough for 100 years, the Energy sector seems a promising stock market trend for this new year.
US Recession 2023
History suggests that the US recession has been a boon to the Indian stock market. As the US recession is likely to impact the crude oil price, the fall in crude oil prices will benefit India's balance of payments eventually bringing down the cost of money. Looking back to the past four decades, an Indian stock market boom is never without a recession in America. Experts suggest the US recession is likely to come in the first half of 2023, with a stock market boom in the first half.
Selecting Stocks
Since the year ended with mixed world stocks (Europe down and Asia mostly up), the selection of stocks has become more important than before. With 2022 being so unusual, nothing can be predicted for 2023 and as the stock market is uncertain, no one can predict tomorrow’s trading so the selection of stocks should be followed by proper stock market analysis and updates.
IPO Debuts
2022 witnessed a lot of IPO debuts, with 88 companies on BSE and 40 companies on NSE. Reports suggest IPOs gave an average return of 32 per cent on investment. Adani Wilmar, Hariom Pipe, Venus Pipes, Veranda Learning and Vedant Fashions with about 50 to 120 per cent of positive returns are a beam of light for the coming 2023 IPO offerings.
These can be the key trends to move the stock market in 2023, but experts’ opinions will provide a better insight into the stock market’s future. As Lakshmi Iyer, CEO-Investment Advisory, Kotak Investment Advisors Limited suggests, “2023 would be a year to watch for 4 Cs – CPI globally, are we seeing a trend reversal or just a lull before the storm, whether China will dominate and how soon the currency USD will continue to display its indomitable spirit.”
She added that an overlay of these factors, coupled with geopolitical events could well mean the possibility of convergence (4th C) in returns in equities and fixed income as an asset class. Central banks’ actions to hike rates may see a plateau in 2023, but it may be too soon to pivot toward rate cuts.
To understand the Market trends further, ICICI report suggest some stocks to watch out for. These include Kajaria Ceramics (KAJCER) target price: Rs 1340 (22 per cent upside), Sterlite Technologies (STETEC) target price: Rs 220 (28 per cent upside),Maruti Suzuki India (MARUTI) target price: Rs 11,200 (35 per cent upside), Mahindra CIE Automotive (MAHCIE) target price: Rs 410 (26 per cent upside), IndusInd Bank (INDBA) target price: Rs 1450 (21 per cent upside), HDFC AMC (HDFAMC) target price: Rs 2600 (20 per cent upside), Nesco (NESCO) target price: Rs 800 (33 per cent upside), V-Guard Industries (VGUARD) target price: Rs 310 (19 per cent upside) and Reliance Industries (RELIND) target price: Rs 3050 (20 per cent upside).
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