While retaining its bullish view on the domestic equity market, brokerage ICICI Securities believes that the BSE barometer Sensex may touch 71,600 level by December 2023. The target suggests an upside potential of 17 per cent over December 29’s closing of 61,133.88. For Nifty, the brokerage has a target of 21,500 level.

ICICI Securities predicted Nifty’s earnings per share to rise to Rs 950 level by FY24 from the projected Rs 785 in FY23 and Rs 515 in FY21.

“Nifty earnings are seen growing at around 15 per cent CAGR in FY22-25. This is primarily driven by improved asset quality and credit growth revival in index-heavy BFSI space, pick-up in capex activity and consequent execution in capital goods domain, margins & profit recovery in auto, FMCG, metals, pharma and oil & gas space,” ICICI Securities said in a report.

The story so far

Sensex and Nifty gained nearly 5 per cent each in 2022 so far. On the other hand, the broader index BSE Smallcap declined 3 per cent, while the BSE Midcap index rose 1 per cent during the same period.

Concerns over a slowdown in the US and Europe dragged information technology stocks down in 2022. The BSE IT index tumbled 24.10 per cent between December 31, 2021 and December 29, 2022. It was followed by the BSE Consumer Durables (down 12 per cent) and Healthcare (down 11.80 per cent). However, the BSE Power and BSE PSU indices jumped 26 per cent and 22 per cent, respectively.

Themes to watch out for in 2023

ICICI Securities said that investors should zero in on select investment themes to make money in calendar 2023.

This includes the electrification trend which is accelerating across categories in the auto space and banking sector which is poised for the next round of the re-rating cycle. It further advised investors to focus on themes related to capex.

“We expect central government allocation to capex to grow 18 per cent YoY in CY23 led by sectors like railways, defence, housing and roads, thereby exhibiting 23.5 per cent CAGR in capex allocation over FY19-24,” ICICI Securities said.

FMCG, retail, hotels, hospitals, defence, textiles, logistics and telecom are among the other sectors which may stay in limelight in 2023, the brokerage said adding telcos treading a robust growth trajectory in the medium term with an overall industry structure being favourable (two strong player market), along with a chunk of capex cycle, already done and under process currently.

Top stocks for 2023

For stock-specific investors, the brokerage suggested buying stocks like Kajaria Ceramics and Sterlite Technologies with an upside of 22 per cent and 28 per cent, respectively. It also sees 35 per cent and 26 per cent upside in Maruti Suzuki and Mahindra CIE Automotive.

Reliance Industries (upside: 20 per cent), Nesco (upside: 33 per cent), V-Guard Industries (upside: 19 per cent), IndusInd Bank (upside: 21 per cent) and HDFC AMC (upside: 20 per cent) are also among its top picks for 2023.