Nifty headed to 21200, Bank Nifty may top 52000 in year 2023; Banking, Tech shares may drive rally

Nifty headed to 21200, Bank Nifty may top 52000 in year 2023; Banking, Tech shares may drive rally

While the Dow Jones and S&P 500 have declined 10-20% so far this year, Indian benchmark index NSE Nifty 50 has outperformed, rallying around 4% YTD. In the coming year CY23, Nifty is likely to move towards 21,200, according to analysts at ICICIdirect. “Low leverage among heavyweight sectors like banking and technology to lead Nifty towards 21,200,” the brokerage said. After one year of continued outflows, the BFSI space has started witnessing fresh flows in the last two quarters where banking was the major beneficiary. Analysts expect the same trend to continue in 2023 as well, it added.Bank Nifty to move beyond 52000

The Bank Nifty index has been the major driver of the Nifty since 2008 as visible through price ratio. There have been intermediate corrections of 25-30% in the ratio, followed by outperformance by 50-70% as seen in 2013, 2015, and 2019. “Henceforth, we believe that a similar outperformance trend should be seen in the coming months,” the brokerage said. HDFC Bank is expected to lead the index as the weight of the stock in the index is likely to increase due to the merger of HDFC Ltd and HDFC Bank.

Quant stock picks for 2023

Bharat Forge: Initiation Range: Rs 875-900 | Target: Rs 1150 | Stop Loss: Rs 730 | Upside: Rs 28%Hindalco Metal: Initiation Range: Rs 455-470 | Target: Rs 590 | Stop Loss: Rs 380 | Upside: Rs 26%LTIMindtree: Bharat Forge: Initiation Range: Rs 4350-4450 | Target: Rs 5800 | Stop Loss: Rs 3620 | Upside: Rs 31%MCX: Initiation Range: Rs 1610-1655 | Target: Rs 2150 | Stop Loss: Rs 1330 | Upside: Rs 30%State Bank of India: Initiation Range: Rs 610-625 | Target: Rs 790 | Stop Loss: Rs 515 | Upside: Rs 26%Sun Pharma: Initiation Range: Rs 970-1000 | Target: Rs 1260| Stop Loss: Rs 830 | Upside: Rs 26%

Indian market obstinate

Indian markets have changed course from being Hypersensitive to becoming Obstinate, according to analysts. From 2011 to 2020, Indian equities were hypersensitive to global volatility as the degree of reaction to rise in US VIX was much higher. However, in the post covid era, Indian markets have shown signs of maturity and exhibited significant resilience to intermediate surge in global volatility, the brokerage stated.

Volatility upsides to be limited in 2023

According to the ICICIdirect report, historically, volatility has been in a downward trend for a prolonged period of time, which, in turn, has been one of the best return periods for the Nifty. “While the low volatility could be a cause for concern due to lack of risk perception, historical evidence suggests that low levels of volatility may remain for an extended period of time,” it said, adding that since 2021, India VIX has failed to sustain above 26 and remained in a declining trend. “We expect volatility upsides to be limited in 2023 and remain on the lower side,” the brokerage said.