India- The Oasis of Growth, that’s what Aditya Birla Sun Life Mutual Fund (ABSLMF)’s Annual Equity Outlook for 2023 views this year as.
We are back with another annual report in our #outlook2023 series where we summaries and give you the highlights from the annual outlook report of all the major Indian AMCs.
As usual, it starts with a quick recap of 2022:
2022 Recap
While global markets saw a correction in CY22; India was the exception?
Global valuations too saw corrections, but India remains elevated ?
2023 Outlook: World?
Global economy: Expected to slowdown. For the US, GDP is expected to be flat YoY as aggressive rate hikes by the Fed start to take a toll on demand
(For India, projections for FY’ for rest, CY. Source: Bloomberg, Goldman Sachs, ABSLAMC Research)
- 2023 Outlook: Eurozone
Expected to contract ? due to high energy prices and rate hikes by the ECB
- 2023 Outlook: China
Expected to rebound ↗ as Covid-related restrictions get relaxed, but new rise in Covid cases creating uncertainty?
- 2023 Outlook: India
Could remain largely immune from global headwinds with strong consumer demand and aggressive capex push driving 5.8% real GDP growth?
2023 Outlook: Inflation
Inflation has already peaked, but interest rates to remain higher for longer ⏳
For INDIA, easing commodity prices and normalization of supply chains should have a cooling effect.
2023 Outlook: Stock Markets
Last Hike effect: Data shows stock returns AFTER last rate hike > period immediately before the last rate hike.
? also tends to ease AFTER the last rate hike.
Reason why market performance likely to be better in the H2 of 2023 than H1.
2023 Outlook: Currency
The big news here is that the Dollar is expected to weaken…
2023 Outlook: Emerging Markets?
A weakening dollar could help Emerging Markets rebound ? in H2 of 2023.
2023 Outlook: Commodities – Oil?
– Aditya Birla Sun Life Mutual Fund (ABSLMF) expects oil prices to be in the range of $80-$100 for CY23.
– it says if prices are above $100/bbl, they will negatively impact India’s macro and earnings.
2023 Outlook: India Growth ?
GDP growth to remain strong in FY23 and normalize by FY24. Driven by:
?Resilience in discretionary consumption, recovery in rural economy
?Investment boost with uptick in real estate sector, private capex, govt spends on infra.
But, EXPORTS likely to come under pressure with global slowdown.
Other supports to economy:
? Significant digitization adoption
? Reduction in financial sector NPAs
? Govt reforms
?Govt spending ahead of General Elections in 2024
? Higher tax collections
2023 Outlook: Corporate India
? Corporate Profit to GDP is showing a turnaround
? Well-positioned to enter a new profit cycle.
? Improved ROEs with better productivity and efficiency (vs pre-covid levels).
? Expected to sustain in FY24.
Aditya Birla Sun Life Mutual Fund (ABSLMF) expects corporate earnings to grow at a healthy CAGR of 13-15% Over FY22-24.
?Banks expected to significantly drive Nifty earnings increase in FY23 and FY24…
… along with growth in ?Auto, ?Consumer, and Infra ? sectors
2023 Outlook: Domestic Inflows
Steady domestic flows in the form of SIPs and EPFO contributions to continue providing STABILITY to equity markets.
2023 Outlook: FPI
Aditya Birla Sun Life Mutual Fund (ABSLMF) expects flows to pick up
2023 Outlook: Expected returns of asset classes
Fixed Income 7% – 7.5%
Equity 8% – 10%
Gold 5% – 7%
Themes and sectors
Domestic-focused themes and sectors preferred to global cyclical.
Key themes and sectors of interest?
? Banking & Financial Services: Private Banks, select NBFCs
Discretionary Consumption:
Retail ?
QSR ??
Auto ?
Hotels ?
Rural recovery ? related etc.
Domestic Manufacturing
India to witness the fastest rise in working age population?♀️??
Govt. measures to boost domestic manufacturing?♂️
China+1 and Europe+1 opportunity playing out ?
Digital and New-age Tech
The Digitization Juggernaut continues driven by its unique public digital infrastructure
Aditya Birla Sun Life Mutual Fund (ABSLMF) identifies opportunities across ?
?EV
?Medical
?Telecom – 5G
? Manufacturing
♻Sustainability
That was a round-up of Aditya Birla Sun Life Mutual Fund (ABSLMF)’s Annual Equity Outlook titled “India – The Oasis of Growth in 2023”. Keep an eye on this space For more insightful summaries of annual reports.
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