Indian equity market outperformed most of its global peers in 2022 despite uncertainties due to rising interest rates and geopolitical crisis between Russia and Ukraine. While benchmark equity indices BSE Sensex and NSE Nifty gained nearly 8 per cent on a year-to-date basis till December 5, 2022, BSE Midcap and Smallcap gained 6 per cent and 2 per cent, respectively, during the same period. Meanwhile, the 30-share index Sensex and the 50-share index Nifty scaled their fresh highs of 63583.07 and 18,887.60, respectively, on December 1, 2022.
So will the ongoing outperformance in the largecap space continue in 2023? Business Today spoke to renowned investor Safir Anand to understand what investors should do to make money in the new year. Edited excerpts:
BT: Indian equity market achieved a new all-time high before completing the year 2022. Where are the markets going in 2023?
Safir Anand: Markets should be in better shape in 2023, especially if global supply chains and logistics get sorted out and inflation which is showing some signs of easing eases over tensions. Most of the US Fed impact will also be in the system and India should see a sweet capex uptick. I expect a 15 percent rally in 2023, unless we have a black swan.
BT: Midcap and Smallcap have underperformed the benchmark equity indices in the current calendar year. Do you think they will follow the large cap next year?
Safir Anand: Data shows that mid and small caps have performed well over time and even in December, mid and small caps have generally seen a sharp rally over the past 19 years. Another interesting data, I read that reclassification of midcap to large or midcap to small brings a rally but not always mid to small. We have some excellent companies in both and some of these have weathered the current inflation and supply chain turbulence. I am sure they will be caught soon.
BT: Where do you see the next set of leaders in the next 12-36 months? Why?
Safir Anand: Banking continues as it is in a good position due to decline in non-performing assets (NPAs) and the upcoming capex cycle. A cluster of manufacturing players who are sharp on any edge such as technology transfer or making India a replacement hub for China or Taiwan or similar can benefit. Don’t forget that most of them are also highly efficient with capital. Some have recently announced strong capex.
I also like the hospital area that is getting cleaned up. I also prefer specific small and midcap stocks, especially in sectors like logistics where there is a lot of potential and railways is seeing huge investments.
Even some of the beaten up infrastructure companies are looking healthy and have not been left with their historical burden of non-payments. The government has changed a lot for the good and seems very serious about the infrastructure sector.
BT: What does your financial portfolio look like at the end of 2022? What is the composition of equity, debt, real estate and others?
Safir Anand: My portfolio is almost in equity and for the time being I want to keep it that way.
BT: Which stocks have given you stupendous returns from Covid lows in 2020 to all-time highs in 2022? How do you select such stocks?
Safir Anand: First of all, I love reading and I believe it empowers you with facts or to discover facts. Secondly, I also like to analyze facts over noise. Stocks like ICICI Bank, State Bank of India (SBI), Canara Bank, RACL, Lumax and Feem Industries have given me great returns since the post covid bottom.
BT: How do you see the IPO market in 2023? Any special IPO you are waiting for?
Safir Anand: I am not much of an IPO investor as the allocation is small if you are lucky. If the company is good and worthy, I would love to invest in it post listing.
(Note: Safir Anand is a well-known individual investor on Dalal Street. He is not a SEBI-registered analyst. All the stocks mentioned in the interview are for information purpose only.)
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