Sensex seen at 71,600 and Nifty 50 at 21,500 in 2023; these nine stocks are top picks

On Thursday, Sensex traded at 60,958.36 up by 30.93 points or 0.05% at around 11.47 am. Nifty 50 edged lower by 6.85 points or 0.04% to trade at 18,125.45. Overall, the performance is on a flat note after the previous 2-days rally.

However, it needs to be noted that both benchmarks have still performed well despite volatility on a global level due to macroeconomic uncertainties. A year ago on December 28th, the Sensex was below the 58,000 mark at around 57,897.48, while the Nifty 50 was even under 17,300 levels at around 17,233.25.

Since a year ago levels, Sensex has climbed by 3,034.92 points and Nifty 50 surged over 903 points to date. The yearly upside is more than 5% each.

In the current year, so far, Sensex has jumped by over 1,740 points and Nifty 50 higher by over 510 points. Year-to-date, the upside is nearly 3% each. Not to forget, on December 1st, the Sensex touched a lifetime high of 63,583.07 and the Nifty 50 hit a historic high of 18,887.60.

In its market strategy 2023 report, ICICI Direct said India fared well both relatively and in absolute terms with respect to economic and stock market performance.

Going ahead, the brokerage believes that H1 of 2023 may turn out to be volatile as investors around the globe would seek answers to key puzzles such as

– How fast interest rate hikes come to a halt globally,

– Damage to economic growth, more so in developed economies, 

– Lag effect of a rise in interest rates on demand cycle & corporate EPS in India, etc.

However, the brokerage also believes that such volatility will throw up attractive opportunities in domestic-oriented sectors like banks, capital goods, infrastructure, logistics, which will continue to be the beneficiaries of massive CAPEX spend by the government/private sector and recovery in margins/profitability. Also, it added that from these, domestic sectors like retail, real estate, and auto ancillaries (domestic focused) will also provide good opportunities for the medium to long term.

On Nifty 50, the brokerage’s note highlighted that post rebasing in FY22 and surpassing the stagnant earnings seen over FY18-21 at ₹450-500 levels, Nifty earnings are seen growing at ~15% CAGR in FY22-25E. Such is primarily driven by improved asset quality and credit growth revival in the 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.

Thereby, ICICI Direct values the Nifty at 21,500 i.e. 21x P/E on FY24-25E average EPS of ₹1020 with corresponding Sensex target at 71,600 — offering a healthy potential upside of ~19%.

Further, for 2023, ICICI Direct picks nine stocks. These are:

1. Kajaria Ceramics: From its 1-year low of ₹886.05 apiece, which was recorded on March 9th, 2022, the stock has advanced by nearly 25% on BSE to date. ICICI Direct has set a target price of ₹1,340 on the stock, which is an upside of nearly 22% from Tuesday’s price levels.

2. Sterlite Technologies: The stock has climbed by nearly 37% from its 1-year low of ₹128.60 apiece as of December 28th. The brokerage has set a target price of ₹220 on the stock which is an upside of 28% from Tuesday’s price level.

3. Maruti Suzuki: In this auto giant, the brokerage has set a target price of ₹11,200 which is an upside of 35% for the stock going ahead. Maruti stock has gained nearly 29% from its 1-year low to date.

4. Mahindra CIE: The brokerage sees an upside of 26% in the stock compared to Tuesday’s price level and has set a target price of ₹410. Mahindra CIE shares are currently near their 52-week high and have skyrocketed by nearly 109% from its 1-year low to date.

5. IndusInd Bank: In this private banker, ICICI Direct sets a target price of ₹1450 which is an upside of 21% from its Tuesday’s level. IndusInd Bank has zoomed by nearly 61% from its 1-year low as of now.

6. HDFC AMC: The HDFC-backed asset management company has rallied by nearly 28% on D-Street from its 1-year low as of now. Going ahead, the brokerage sets a target price of ₹2,600 on the stock which is an upside of 20% from Tuesday’s level.

7. Nesco: As of now, Nesco stock has zoomed nearly 22% from its 52-week low on BSE. ICICI Direct has set a target price of ₹800 on the stock which is an upside of 33% from its Tuesday level.

8. V-Guard Industries: In the household appliances company, ICICI Direct has set a target price of ₹310 which is an upside of 19% from Tuesday’s price level. V-Guard has jumped nearly 47% from its 1-year low on BSE as of now.

9. Reliance Industries (RIL). This Mukesh Ambani-backed RIL is the most valued company in terms of market share. ICICI Direct has set a target price of ₹3,050 which is an upside of 20% from its Tuesday level. RIL stock has soared by more than 16.5% from its 1-year low as of now.

Some of the themes that will stand out in 2023 as per ICICI Direct are:

– Electrification trend accelerating across categories in auto space

– Banks poised for next round of re-rating cycle

– Capex: Government to the fore with all guns blazin

– FMCG: Gross margins bottom out; volume recovery in sight

– Retail sector: Organised players to gain more prominence

– Hotels: Structurally well placed to gain further traction

– Hospitals structurally well poised for rounded growth

– Defence: Is the shift structural?

– Textile: Exporters to overcome near-term headwinds, expand global share

– NLP, Gati Shakti to help the logistics sector fire on all cylinder

– 5G: Huge opportunity for the telecom sector

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.