Investment Outlook for the Year 2023

Investment Outlook for the Year 2023

The year 2022 has been a roller coaster ride for the whole world. The Russia-Ukraine war affected the markets globally, featuring higher inflation, geopolitical variability and a rivalry between fiscal and monetary policy. Europe Energy Crisis has affected the economy badly. China’s economy is slowing down as the result of adoption of zero-COVID policy and weakening global demands.

After such market uncertainties, the market valuation is more appealing. While economic conditions are deteriorating and experiencing variability, the approach of entering the market will preferably be cautious positioning and preparing for entry points with gradual approach. Though the global markets have seen the decline in their values in 2022, some analyst predicts that the worst is yet to come. The Fed is expected to stop increasing rates in early 2023 to combat rising inflation.

The episode of uncertainties in the world of economy seems to be never ending. This has impacted Indian economy negatively. However, despite of the global crisis and growth forecast downgrade, India will remain one of the fastest growing key economies in 2023.

Fortunately, the Indian stock market is enjoying spring season when most of the global economy is slowing down. Wall Street brokerage Morgan Stanley has stated it as an “absolute upside with relative downsides” for the domestic equity markets with SENSEX rallying 10 per cent in a base case scenario in 2023 scaling to 68,500 points by December.

Global equity market is expected to be volatile in the upcoming year and defensive sector will be more preferable for investment with the strategy of stable earnings, low leverage and pricing power.

Bonds have never truly been an investment pick like stocks or crypto-currency. But looking ahead to 2023, there is a compelling argument for investing in this underwhelming sector of the market since bonds are cheap, they are expected to pay ever-richer interest, and yes, their deteriorated values are probably going to rise again.

Irrespective of your net-worth, risk tolerance or time horizon, the portfolio of 2023 should have focus on Alternative Investments. Alternatives may diminish inflation- and recession-induced volatility and boost returns more than dividend stocks alone because of their low connection to traditional asset classes like stocks and bonds.

Amid global market volatility, Indian market witnessed the launch of successful IPOs like Dream Folks services and Syrma Technologies that gave investors premium of 46% and 42% respectively in terms of listing gains. Similarly, around 70 companies launched SME IPO that witnessed post listing gains. In the upcoming year, IPOs of some famous companies are in pipeline, some of which are OYO, Byju’s, Swiggy and Go first.

Looking at the market conditions, there could be various methods to make a lucrative gain. Amongst all methods, making returns through listing gains in both SME Board and Main board IPO could be technique (definitely checking the fundamentals first). The second approach could be a long term approach by taking monthly entries in cash market but keeping yourself restricted in nifty250 and entering into companies that are intended towards growth and more ESG Centric. The third method can be used for swing trades i.e. entering into bull spread hedge when you are moderately bullish. And lastly, the most discipline approach could be by doing monthly SIPs and making sure that you are buying optimized worth of NAV.

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