Although the calendar year (CA) 2022 starts on a negative note with the fear of Omicron, the fear of a nuclear war between Russia and Ukraine, inflation and rising bond yields, trends for the T1FY23 remain robust.
“High-frequency indicators for the first quarter of FY23 appear robust so far and indicate that the economic recovery is underway,” ICICI Securities said in a note Monday.
He said that in addition to these multiple headwinds, the more-than-expected ferocity of the US Federal Reserve and India’s RBI led to a rise in the “risk-free rate” as sovereign bond yields soared and acted as a double whammy for equity valuations.
However, with a sharp reduction in omicron cases, stabilizing commodity and bond yields, the war between Ukraine and Russia shifting from a global nuclear conflict to a local conflict, the economic recovery seems on the on track and they also put a floor on stock valuations, the brokerage said. .
“The drop in the latest PCE inflation data in the US, the general cooling in commodity prices and the expected increase in oil production by OPEC+ will likely add credence to the spike argument. inflation,” ICICI Securities said.
Based on its valuation, the brokerage sees Nifty hitting 19,000 in March 2023. “Incorporating these factors and trends, our Mar’23E target for the NIFTY50 comes out at 19,000,” he said. .
The brokerage was overweight stocks driven by the investment rate, savings rate, credit growth, exports and pent-up consumer discretionary.
Top 25 ICICI stock picks:
SBI, Axis Bank, HDFC Bank, Aditya Birla Capital, SBI Life, Larsen & Toubro, NTPC, NHPC, GAIL, Oil India, Coal India, UltraTech Cement, Bharti Airtel, Tata Communications, Gujarat Fluorochemicals, Phoenix Mills, Brigade Enterprises, Greenpanel Industries, Indian Hotels, Jubilant Foodworks, Metro Brands, Sapphire Foods, Inox Leisure, TVS Motors, Eicher Motors.
Meanwhile, the Nifty 50 and Sensex stock benchmarks have managed to yield a positive return of 2-2.5% over the past three months as of June 6, 2022. Over the same period, shares of Automotive, FMCG and Energy have gained the most as Nifty Auto and FMCG are up 14% and nearly 11% respectively, while BSE Energy has gained around 12% so far Monday.
Around 2 p.m. Monday, the broader Nifty50 was trading flat with a positive bias and approaching 16,600 points, while the 30 shares traded 20 points higher to reach around 55,800.