Indian equity market outpaced most of its global peers in 2022 despite uncertainties due to rising interest rates and the geopolitical crisis between Russia and Ukraine. Where the benchmark equity indices BSE Sensex and NSE Nifty gained nearly 8 per cent on a year-to-date basis till December 5, 2022, the BSE Midcap and Smallcap advanced 6 per cent and 2 per cent, respectively, during the same period. Meanwhile, the 30-share index Sensex and the 50-share index Nifty scaled their fresh all-time high of 63583.07 and 18,887.60, respectively, on December 1, 2022.
So, will the ongoing outperformance continue in the largecaps space in 2023? Business Today caught up with well-known investor Safir Anand to understand what investors should do to make money in the New Year. Edited excerpts:
BT: Indian equity market scaled a new all-time high before completing the year 2022. Where are markets headed in 2023?
Safir Anand: The market should be in a better position in 2023, especially if the global supply chain and logistics are sorted out and inflation which is showing some signs of easing gathers more ease than stress. Most of the US Fed impact will also be in the system and India should show a sweet capex uptick. I expect a 15 per cent rally in 2023 unless we have a black swan.
BT: Midcaps and smallcaps have underperformed the benchmark equity indices in the ongoing calendar year. Do you think they will follow large caps next year?
Safir Anand: Data shows that the mid and small caps have done well over time and even in December there is usually a sharper rally in mid and small caps for 15 of the last 19 years. Another interesting data, I read shows that re-classification of large into midcaps or small into midcaps brings a rally but not always mid to small. We have some excellent companies in both and some of these have braved the current inflationary and supply chain turbulence. I believe that they will catch up soon.
BT: Where do you see the next set of leaders coming from over the next 12-36 months? Why?
Safir Anand: Banking continues as it is in a sweet spot on the back of declining non-performing assets (NPA) and an impending capex cycle. A bunch of manufacturing players that are sharp on any edge such as technology transfer or making India a substitute hub for China or Taiwan or similar can benefit. Don’t forget most of them are also highly efficient with capital. Some have recently announced strong capex.
I also continue to like the hospital sector which is cleaning up. I also prefer niche small and midcaps, especially in sectors like logistics where there is a huge potential and railways which is seeing a huge investment.
Even some beaten-down infrastructure companies are looking healthier and do not remain with their historical baggage of not getting paid. The government has changed a lot for the good and seems very serious about the infrastructure sector.
BT: How your financial portfolio looks at the end of 2022? What is the composition of equity, debt, real estate and others?
Safir Anand: My portfolio is almost in equities and I intend to keep it that way for now.
BT: Which stocks have given you a handsome return from Covid lows in 2020 to an all-time high in 2022? How do you select such stocks?
Safir Anand: Firstly, I love reading and believe it empowers you with facts or to search for facts. Secondly, I also like to analyse facts over the noise. Stocks such as ICICI Bank, State Bank of India (SBI), Canara Bank, RACL, Lumax and Fiem Industries, among others have given me handsome returns since Covid lows.
BT: How do you see the IPO market in 2023? Any particular IPO(s) which you are looking forward to?
Safir Anand: I am not much of an IPO investor as allocation if you get lucky is small. If the company is good and worthy I prefer to invest in it post listing.
(Note: Safir Anand is a well-known individual investor on Dalal Street. He is not a Sebi-registered analyst. All stocks mentioned in the interview is for information purpose only.)
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