Year-end Special: Money-making Ideas! 7 investment themes for stock investors in 2023

NEW DELHI: Despite the elevated valuation levels at which the Indian equity market is trading amid all the global macro worries, investors are hoping that Nifty will scale new peaks in 2023 given the resilient Indian economy and robust domestic flows.

Hardly any analyst ETMarkets spoke to sees Nifty slipping below the 18,000 mark in the next one year. The most optimistic of bulls are expecting the index to even zoom past the 20,000 mark. Global brokerage BofA Securities has built a base case Nifty target of 19,500 while Morgan Stanley sees the Sensex at 68,500 in 2023.

Here are top 7 investment themes to watch out for in 2023:

1) India affluent consumption
Global brokerage BNP Paribas, which sees the Sensex at 66,000 in 2023, said resilient urban incomes as well as stronger job creation in urban areas and services sectors will lead to stronger consumption sentiment among the more affluent. The theme affects stocks in consumer discretionary, automobiles and telco. Stocks in the brokerage's portfolio include Maruti Suzuki, M&M, Sun Pharmaceutical, Fortis Healthcare and Bharti Airtel.

2) Rapid infrastructure ramp up
Throwing up new opportunities to investors is the Indian government initiative to augment infrastructure capacity across sectors like transport, sanitation access, cooking gas, electricity access, tap water coverage, piped gas and affordable housing, BofA said.

3) Capex cycle revival
With India being at the cusp of a multi-year capex cycle, analysts say industrial stocks may benefit. "Strong government capex and a nascent pickup in private capex plus inexpensive valuations drive our overweight," Morgan Stanley analysts including Ridham Desai said in an outlook note.

4) Improving digitisation & financial inclusion
The Indian financial services space seems to be in a sweet spot as foreign investors have made a net investment of Rs 14,205 crore in the sector in November amid strong credit growth and a manageable non-performing loan portfolio. BNP Paribas likes HDFC Bank, ICICI Bank, Axis Bank and SBI Life Insurance among financials.

5) Opening government monopolies
The Indian government aims to operate in only 4 strategic sectors and has stepped up capital recycling through $75 bn of planned brownfield asset sales by FY25 and opening of large monopolies across coal mining, defense, city gas distribution, airports, railways, etc. "Our analysis suggests, opening monopolies helps attract large private & foreign capital and with rapid capacity adds (>3x capacity adds in a short time)," BofA said.

6) Supply chain shifts
Equity strategists are bullish on India's manufacturing sector due to the structural push to manufacturing coming from the China+1 strategy and emergence of the Europe+1 theme due to the looming energy crisis in Europe. "PLI schemes and the next decade may probably see the rise of India’s manufacturing sector, filling the missing piece in India’s growth puzzle," Kotak Mutual Fund Managing Director Nilesh Shah said.

7) Consolidation
As the big is becoming bigger, consolidation is happening across industries such as banks, steel, cement, NBFC and aviation. "We are seeing consolidation resulting in big companies becoming bigger and strong companies becoming stronger. Survival of the fittest is the law of nature. It’s equally applicable in the corporate world," Shah said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)