We’ve been diving into how some of India’s largest AMCs are looking at 2023, what are their prediction for Indian economy and the various factor that will play a role in the economy’s performance.
Today we bring you the ” Economy and Markets ” , SBI mutual fund’s outlook for 2023.
As usual, we are going to do a quick recap of 2022:
2022: Review
Global equity and bonds – both out of favor
?End of cheap money -> rise in bond yields -> pressure on equity valuations
? Dollar?strengthened
?Energy prices surged ⏫
?Gold was flat ?
?Indian equity out-performed its peers ?
2022: Quick review / Inflation
Monetary policy tightened?globally.
2022: Quick review / Japan
Even Japan had to react to inflation.
Bank of Japan tweaked the yield curve control to a higher cap…
… and 10yr bond yield surged from 0.25% to 0.40%
?Yen appreciated against??
2023 Outlook: Inflation
Inflation may have ?peaked, but will stay above the desired level in 2023.
2023 Outlook: China
China’s growth could recover from COVID by 2H 2023
2022: Quick review / Global Bond Markets
Yields increased with monetary tightening
2022: Quick review / India Rates
Short-end yields sharply increased?in 2022 compared to a year ago
2022: Quick review / India Rates
Domestic Yield Curve flattens
2023 Outlook: Recession?
?US : A strong case of recession by the end of the year, or weak growth at the very least.
?Europe: Increasing consensus around a recession.
?China : Bumpy recovery from a very depressed base.
2023 Outlook: INDIA / Growth
Growth challenges from global headwinds?️
2023 Outlook: INDIA / Capex
Modest corporate capex recovery since mid-FY22….
… but global headwinds to corporate profit could dent near-term capex momentum
2023 Outlook: INDIA / Corp. Balance sheet
Balance sheet strength will aid growth once global headwinds subside.
2023 Outlook: INDIA / Real Estate
Residential real estate sector prospects improving
2023 Outlook: INDIA / Consumption
Aided by lower inflation & better low-end jobs, consumption to recover
2023 Outlook: INDIA / Growth
SBI MUTUAL FUND stays a tad bearish, pencils a 5% – 5.5% growth for FY24
2023 Outlook: INDIA / Inflation
SBI MUTUAL FUND expects CPI Inflation to moderate to ~5% in FY24 on lower fuel⛽ & core
2023 Outlook: INDIA / Bank Credit
?Growth could moderate; but to stay in double digits.
2023 Outlook: INDIA / Cost of Funds
Cost of funds likely to rise in the near-term despite policy pause.
2023 Outlook: INDIA / Balance of Payment
Widening trade deficit will burden BoP deficit in FY23; INR to come under further pressure.
2023 Outlook: INDIA / Earnings
While near-term challenges persists; medium-term earnings will be robust.
2023 Outlook: INDIA / Equities
?Volatility to continue, at least in H1
?Mass consumption, benefitting from cooling inflation, may be better off
?Asset allocation: Diversification beyond equities into bonds and gold may help.
2023 Outlook: INDIA / Debt
?₹ liquidity suction in near term.
?BoP to stay in deficit in 2H FY23; to drive more foreign exchange sell
?Currency outflow likely ~₹ 1.5 trillion in 2H
?FX reserves likely to over the next few months
?Short-term rates could rise
?Credit to deposit growth gap has widened significantly, could drive down SLR investments by banks.
?SDL supply and hence spreads could stay anchored even in Q4 with multiple tax and non-tax transfers pending from the Centre to States.
?State expenditure likely to undershoot budgeted targets by a wide margin.
SBI MUTUAL FUND is positive on debt products.
G-sec valuations are attractive in absolute terms and relatively better than other investment options.
That was a roundup of SBI MUTUAL FND’s outlook on 2023.
For more insights on annual reports from other major AMC’s click here.
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