Rahul Arora, CEO of Nirmal Bang Institutional Equities told CNBC-TV18 that 2023 is likely to be a very volatile year with flat headline returns. He, however, added that it could be a great time to make money when the market corrects.
“The tough challenge is that the economic impact of the rate increase hasn’t been felt yet. So I think 2023 is going to be a challenging year and we may well land up closing next year at very similar levels of 18,500-19,000 on Nifty. There is a genuine case for the Nifty to revisit 15,000-16,000 but you will see very aggressive buying there. So, 2023 is likely going to be a very volatile year with flat headline returns but that is not to say that you won’t make money in stocks. I think it could be a great time when the market corrects,” Arora said.
According to Arora, alternate asset classes are emerging as strong contenders in 2023.
Arora said, “Alternate asset classes are emerging. You could put your money into a 10-year G-Sec today and get a 7.5 percent return. Fixed deposit rates for different age groups are between 7.25 and 8.5 percent depending on which bank you pick up. So these are now emerging as very credible alternates to equity markets.”
On a stock-specific basis, Arora prefers the State Bank of India
and Bank of Baroda from the PSU banking space.
“From a valuation standpoint in the PSU banking space, the State Bank of India
(SBI) and Bank of Baroda (BoB) still have a play. For SBI the last quarter's return on assets (RoA), and return on equity (RoE) was at multi-year highs. So because the return ratios are improving, people are now ready to pay the kind of increase in price,” Arora said.
Dalal Street slipped for the second week in a row, as recession fears and hawkish stances by major central banks continued to weigh on sentiment. Both Sensex and Nifty dropped over one percent each over the week, tracking weak global cues.
Friday's session contributed to this loss, with Sensex and Nifty dropping over 0.5 percent each. They had fallen nearly one percent each on Thursday as well.
Watch video for entire discussion.