Three Sectors to Look out in 2023

 What an exciting year 2022 was! Nifty50 touched its all-time high of 18,887.60 amidst high volatility and impending economic recessions, and interest rate hikes. Domestic investors have voiced their confusion about the disconnect between the performance of the Indian markets and the current economic conditions. Despite this, stock prices have seen significant growth, setting the stage for a successful 2023.

1. Pharma and Chemicals

Talking about the sector that they are looking forward to in 2023, Divam Sharma, Founder and CEO of Green Portfolio, says, “Pharma and chemicals are the sectors we are very bullish on for the coming years. These two sectors have felt the wrath of high raw material prices in 2022. Export opportunities are immense for these sectors. Capex of the companies we have exposure to are now coming online, which will result in a rise in the top line, and with inflation stabilizing, we should see higher margin levels being reinstated”.

He further added, “Sentiments towards India are at a pivoting stage. With instability and regulatory uncertainty in the biggest emerging market, institutions are turning towards India. Being the fastest-growing large economy and being a strong consumer market, Indian markets are the place to be. Our markets are forecasted to grow at 7% annually when western economies are peering into a recession. And we see its reflection in the markets. When Nifty is up by 6% for the year, US indices are down by 21%”. 

Divam also says that “Valuations of the small and mid-cap stocks we follow have come to an exceedingly attractive level. The lower the price, the higher the upside – assuming business performance expectations remain the same, and this is the case with the stocks we follow. Yes, the mega caps and banking names have climbed, but the broader markets haven’t moved an inch. I strongly believe the good days for small and mid are yet to come, and 2023 will be the year of departure. ”.

Electric Mobility

According to Jiten Parmar of Aurum Capital, “Electric mobility is definitely a theme to look at. Adoption is improving, especially in the 2-wheeler sector. It has been the fastest adoption and will grow the most and the fastest. Followed by 3-wheelers and passenger vehicles. There are multiple ways to play this.”

“It could be OEMs (original equipment manufacturers), auto ancillaries, battery manufacturers, EMS manufacturers, and so on. Of course, amongst OEMs, time will tell who the winners are. Many big players are just testing the waters. As of now, it is difficult to judge whether the traditional OEMs will succeed or the incumbents will. But many incumbents have taken head-starts. This theme will definitely throw multibaggers in the future”, says Jiten. 

Defence

Vikas Gupta, the CEO and Chief Investment Strategist at Omniscience capital, says, “Defense is one of the strongest growth vectors that we identified, and it has rewarded the investors well. The outlook for this growth vector remains strong considering the sustained focus on Aatmanirbharta in Defence”.

He further added, “The industry is well positioned to achieve this year’s target of Rs. 90,000 cr. of domestic defence production (Rs. 42,800 cr. completed till September 2022) and Rs. 15,000 cr. of exports (~Rs. 8,000 cr. exports done so far). This trajectory sets the industry well to achieve the targets envisaged in DPEPP 2020 to achieve Rs. 1.75 lakh cr. domestic production and Rs. 35,000 cr. exports by 2025. The establishment of Uttar Pradesh and Tamil Nadu defence corridors at the cost of Rs. 10,000 cr. each is a significant step in boosting domestic production capabilities. More than Rs. 6,000 cr. have been invested, and 150+ MoUs have been signed”.