ETMarkets Smart Talk: IPO likely to pick up in 2023; Nifty target seen at 21,035: Amnish Aggarwal

In an interview with ETMarkets, Aggarwal who has an experience of around 20 years in the financial markets, said: “We expect IPO market to improve in coming 6 months than what we have seen in the past 2-3 quarters” Edited excerpts:

As we approach the last month of the year 2022 – we have reclaimed all-time highs. Where do you see markets headed in 2023?
We remain bullish on Indian markets and expect markets to scale new highs in 2023. We have a 12-month Nifty target of 21035.

The year 2022 was full of volatility and global events which impacted the Indian markets. Will the headwinds of 2022 continue to haunt equity markets in 2023 as well?
2022 was impacted by FII selling, Russia Ukraine war, high inflation, and a sharp increase in interest rates. We believe that inflation has mostly peaked and the pace of interest rate hikes will be lower in the coming months.

Overall commodity inflation has peaked, and India seems better placed due to lower inflation (domestic food production) and the import of Russian oil and relatively strong demand.

Although geopolitical uncertainty continues and the US slowdown fears remain. The worst seems over as the situation stands today.

Which sectors are likely to hog the limelight in 2023?
2022 saw a sectoral churn as consumer, technology, E-Com, IT, and Pharma were on the receiving end. 2022 saw a strong comeback by Capital Goods, Specialty chemicals, Hospitals, Telecom, Retail, QSR, Travel, and PSU’s outperformed.

We believe the churning will continue and we expect sectors like Banks, Capital Goods, Hospitals, Insurance, Auto, and select consumer stocks to outperform during the coming six months.

Rate continued to rise in 2022 – do you see further rate hikes in the year 2023?
We believe rate hikes might continue for another quarter or so; however, the pace of hikes will slow down.

A lot depends upon global inflation and the trend in global interest rates. A likely slowdown in a rate increase in the US and other countries will prepare the ground for a pause in interest rate hikes in India as RBI has been hiking rates to maintain a sufficient gap between G-sec rates and US rates.

Amid rate hikes, global headwinds, and slowdown concerns — how should one pick stocks in 2023?
There is no fixed strategy or philosophy in stock picking. We believe that the bottom-up approach with strong cash flows will be better in the coming year.

We would tend to avoid companies that can face structural headwinds due to global energy, mobility and technology transition in coming years.

How are earnings likely to pan out in 2023?
We expect earnings growth momentum to improve given strong demand and peaked out commodities. We estimate 13.3% NIFTY EPS growth in FY24 which will be led by Auto, Cement, Consumer, Pharma, and Telecom.

As we have already hit unchartered territory – what is the kind of fundraising you see for IPO? Do you see more SME IPO hitting the Street?

We expect the IPO market to improve in the coming 6 months to what we have seen in the past 2-3 quarters. We expect investors to remain cautious post the sharp losses in some of the IPO including tech IPOs of last year.

SME segment has seen a sharp increase in IPO in the past 6 months. An increase in capital flows and private equity funding can slow that down in the coming couple of quarters.

According to two depositories, NSDL and , the total number of demat accounts is 9.28 crore as on April 30, 2022. This number is almost three times the number recorded as of March 2020. What is the kind of growth you foresee for retail investors in 2023?
The number of retail investors and demat accounts has increased at a sharp pace post covid given the run up in markets and a lot of people shifted to trading in markets as other avenues were non-operational at that point in time.

We believe post the sharp increase in the number of retail investors in the past 2 years, now the number will increase at a more moderate pace in the coming years.

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