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    ETMarkets Smart Talk: Railway ancillaries and MNC manufacturing stocks could do well in 2023: Pritam Deuskar

    Synopsis

    The falling yields helped equities rally in November. In terms of inflation, input prices rose the least in 28 months, far below their long-run averages, while charge inflation eased to a nine-month low.

    15753-01 (2).ETMarkets.com
    We do not know how many are repeated. People traded much more in the COVID era, with discount brokers on the rise.
    “MNC manufacturing stocks are trading at all-time highs, and they have worked quietly and smoothly this year. In my view, it will continue to do so,” says Pritam Deuskar, Founder of Wealthyvia.com.

    In an interview with ETMarkets, Deuskar, said: “I am extremely bullish on railway ancillaries. Like auto ancillaries from 2014 to 2017, where we had rallies, I expect that to happen with railway ancillaries,” Edited excerpts:

    As we are in the last month of the year 2022 – we have reclaimed all-time highs. Where do you see markets headed in 2023?
    In the month of November, markets reacted favourably to expectations that China is loosening its zero COVID policy following Beijing’s announcement that they are speeding up the rate of COVID injections to the elderly.

    The Nasdaq 100 Index advanced 5.6%, the Nasdaq Composite rose 4.5%, the S&P 500 gained 5.6%, the Dow added 6.0%, and the Russell 2000 rose 2.3%.

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    Currently, the market expects a 50-bps rate increase at the December Fed meeting. The yield on the benchmark 10-year U.S. Treasury now sits at 3.60%, below the October peak of 4.25%.

    The falling yields helped equities rally in November. In terms of inflation, input prices rose the least in 28 months, far below their long-run averages, while charge inflation eased to a nine-month low.

    Inflation, in my opinion, is nearing its peak. When there is a drop in inflation, surprisingly, markets will continue to cheer it. As far as uncertainty goes, we only have an uncertain waiting period for crude oil prices, and inflation figures to drop.

    The economy usually takes care of itself; it was evident that people with money in hand would spend, and the cost of living would rise.

    If there is no unexpected interruption to recovery and no large problem to deal with, I think markets will stay afloat. Nifty EPS estimates are still higher for FY24.

    The year 2022 was full of volatility and global events which impacted the Indian markets. Will the headwinds of 2022 continue to haunt equity markets in 2023 as well?
    Inflation, rising interest rates, a brief period of recession, bond prices, and yield fluctuations were all features of 2022. Balance sheet reduction and a drop in inflation will be noticeable triggers, and we can fully say that markets from this point on will stay better.

    The US and European worries are still not fully removed. China's lockdown is easing, the geopolitical tensions relating to the war are easing off, and the supply chain disruptions may come to an end during FY23.

    Which sectors are likely to hog the limelight in 2023?
    MNC manufacturing stocks are trading at all-time highs, and they have worked quietly and smoothly this year. In my view, it will continue to do so.

    Whenever markets don't perform, from last October 21 to this September 22, MNC companies act as safety nets and solace. The defense, logistics, and railways sectors are expected to do well in the midterm and long term.

    I am extremely bullish on railway ancillaries. Like auto ancillaries from 2014 to 2017, where we had rallies, I expect that to happen with railway ancillaries.

    If you despise the government as a client, then you should look at the cash conversion cycle of these companies, and you will be pleasantly surprised.

    Also, rather than just sectors, I am a firm believer in companies that have gone through entire management or promoter changes. I am also optimistic about branded consumption.

    Rate continued to rise in 2022 – do you see further rate hikes in the year 2023?
    It may continue with respect to inflation and balance sheet reduction. I do not think it will be a shocking change for markets.

    From 2003 to 2007, after the IT bubble crash and rate hikes in 2001, markets kept on rallying. It's not a direct correlation. I am more concerned about the world's future than about what it will provide, which are blue-collar and street jobs. Sustained and stable growth is equally important for the world.

    Amid rate hikes, global headwinds, and slowdown concerns -- how should one pick stocks in 2023?
    The first thing is not to cloud your mind with worries about market indices and macros. Focus on individual companies that are making consistent changes to increase their revenues and profits.

    Find out why these companies' products or services are preferred by customers in their industry. Is there an increased market and demand for its products or services so that it can fill more of the opportunity?

    Green stocks, ESG ratings, unique product launches, and alternate fuels are going to gain traction this year.

    How are earnings likely to pan out in 2023?
    Banks have come out of bad credit cycles, and new loans will not immediately create NPAs. Stocks that have been lagging in their contribution to Nifty EPS or Nifty 500 EPS will begin to contribute in Q4, particularly auto, cement, and telecom.

    Pressure on IT may bottom out soon, though growth may take some time. The second half of 2023 will be better.

    As we have already hit unchartered territory – what is the kind of fundraising you see for IPO? Do you see more SME IPO hitting the Street?
    It will continue to happen. The IPO trend is currently returning, and companies are choosing to list. Now more sensibility and consciousness have come to investors with new edge stocks.

    Tech stocks are not something to be feared but to be understood first. Secondary markets treating only earnings growth and profitability in a friendly way was a lesson learned for many.

    Factors like the anchor investors, their lock-in periods, and the season of high sales make considerable changes to company and stock performance too.

    On the SME front, it has already reached great heights. Though many stocks give crazy returns, investors should be careful when it comes to illiquidity and lack of cash flows.

    More and more micro and small companies are opting for the SME IPO route, and it's a great thing for fundraising for small companies. This ecosystem is a must.

    Mkt Cap of Cos. Listed on BSE SME till Date (Rs.Cr.) 65,301.18 is an all-time high.

    According to two depositories, NSDL and CDSL, the total number of Demat accounts is 9.28 crore as on April 30, 2022. This number is almost three times the number recorded as of March 2020. What is the kind of growth you foresee for retail investors in 2023?
    We do not know how many are repeated. People traded much more in the COVID era, with discount brokers on the rise. Definitely, more and more retail and the middle class are participating, which is a great achievement, but the pace may not be the same all the time.

    I'm not sure about 2023, but there will be a lot of awareness in society over the next decade. When I meet young minds in colleges or institutes, there is great curiosity and eagerness to invest in markets. The financialization of assets will continue to rise.

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





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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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