Bull case for Nifty at 20,919 in 2023- Kotak Securities

Bull case for Nifty at 20,919 in 2023: Kotak Securities

By Siddhant Mishra The Nifty could touch 20,919 in 2023 in a bull case scenario, according to the Kotak Securities Market Outlook 2023.

Jaideep Hansraj, MD and CEO of Kotak Securities, said: “No one could have expected India to be positive on equity markets this year, despite $30 billion of outflows. This was due to the strong domestic and SIP flows.

He added that if SIP flows remain strong, along with the PF/regulatory money that goes into ETFs, things won’t be too shaky.

Given the outflows, an upside of 15-20% from the lows of June has been unprecedented, he pointed out, especially at a time when global indices tumbled.

Asked about the strong SIP flows despite profit-booking and volatility, Hansraj said the trend in SIPs will continue if not grow further. We’re sceptical about HNI or bulk money that comes to MFs, as the allocation will be done at the higher end of the spectrum.

For retail investors, a 7-7.5% return offered in fixed income, which translates to 5% after tax, is not too attractive after taking inflation into account. Therefore, they are unlikely to remove money from SIPs.

In a base case scenario, Kotak Securities has set Nifty target at 18,717 for 2023, while in a bull case the benchmark Nifty could reach 20,919. However, in a bear case, the Nifty target is set at 16,515.

Given the 40% earnings growth in FY22, the firm expects net profits of the Nifty index to grow 10.8% in FY23, 16.3% in FY24, and 15.5% in FY25.

Sectors like automobiles, banks, diversified financials and telecom are likely to contribute to the bulk of growth in net profits.

Further, the brokerage estimates a Nifty EPS of `816, `950, and `1,101 for FY23, FY24, and FY25, growth of 10.8%, 16.3% and 15.5%, respectively.

Crude oil prices are expected to remain volatile in 2023 as the EU will have to find a replacement for Russian crude while economic activity remains subdued.

However, Kotak Securities expects a sustained decline unless supply risks improve or there are signs of a significant slowdown in demand. WTI Crude oil is expected to trade in a range of $60-100/bbl, and MCX Crude is expected to trade in a range of $4,700-8,300 with a sideways to positive bias.

Asked factors like volatility in crude prices and a Budget with an eye on the 2024 elections could impact market sentiment, Hansraj said there will be some pressure on the fiscal policy.

How much of that comes out in the Budget is to be seen, but with the expectation that the incumbent government will continue, we don’t see them being too loose in policy matters or becoming too populist. Volatility will be predominantly on account of global factors and FPI flows.