First Half Of 2023 Won't Be Easy For Indian Markets, Says HDFC Securities' Unmesh Sharma

Indian markets have performed better than world peers as global price pressures were offset by domestic investors, according to Unmesh Sharma of HDFC Securities.

"We had a breathtaking year. A lot has happened, but we find ourselves exactly at the same point where we were last year,” Sharma, head of institutional equities at HDFC Securities, told BQ Prime's Sajeet Manghat.

On a relative basis, the Indian market is in a much better position than the taper tantrum of 2013, he said. "Corporate earnings are coming through, while there are some disappointments and positive surprises," Sharma said.

However, he does not expect the first half of 2023 to be easy for Indian markets to navigate from a global perspective and he remains cautiously optimistic of the second half. “There is war, inflation, and geopolitical issues. Volatility will continue to remain high. We believe the second half of 2023 would be better than the first half."

Sharma does not expect more than double-digit correction in the Nifty 50 by end of 2023. “We will reassess the view in June, based on how the inflation fight goes on. The base case remains low to mid-single digit correction in Nifty for the next year."

According to Sharma, the key themes are industrials as the government continues to focus on it through production-linked incentives. "We believe that is where the momentum is.”

With valuations coming off, they have also turned positive on information and technology, pharmaceuticals and gas, he said.

Sharma is positive on large banks as they are expected to deliver earnings and "this cycle will play out".