Top stock picks by brokerages for calendar year 2023

Indian equities outperformed other global markets in 2022. This is largely thanks to the Indian economy being in a much better shape compared to the other economies globally. Below are the top picks from broking firms for 2023.

UBS on India Market Strategy

UBS has a target of 18,000 for the Nifty, as expensive valuations could limit upsides. India is still trading at a hefty premium to other emerging markets even after the recent underperformance vis-a-vis China.

UBS does not expect the government to step up spending in the run-up to the 2024 elections. The brokerage remains overweight on the Banking, Consumer Staples and Auto sectors. It is neutral on Telecom, Industrials, Energy and Utilities. On the underweight list are Metals and Mining, IT Services, and Consumer Discretionary.

Nomura on Indian Market Strategy

The broking firm sees Nifty at 19,030 in 2023 in the backdrop of uncertain global cues and sticky inflation. It expects the medium-term growth in earnings from a high-margin base to be largely dependent on broader economic growth.

The brokerage expects flattish market return through 2023 on the back of earnings risks and elevated market valuations, and prefers sectors with a domestic focus.

The brokerage remains overweight on Financials, Consumer Staples, Infra/Construction and Telecom. It remains neutral on Healthcare, Oil and Gas. It has retained underweight rating on Metals, Consumer Discretionary and IT Services.

Credit Suisse

The brokerage prefers domestic cyclicals: Financials (SBI, BoB), Cement, and Construction (L&T). It prefers Staples over Discretionary, and are underweight on Industrials, IT and Metals.

The brokerage has focused on sectors that are cheap, based on two-year forward earnings estimates, and has a lower risk of earnings per share (EPS) downgrades. It continues to remain overweight, both on banks and NBFCs. State Bank of India, Bank of Baroda, IndusInd Bank and ICICI Bank are its top picks. The brokerage also is overweight on cement despite negative impact of USD/ INR, primarily due to the expected turnaround in construction.

Motilal Oswal

The brokerage expects two themes to play out for CY2023: credit growth and capex. It expects sectors like BFSI, Capital Goods, Infrastructure, Cement, Housing, Defence, and Railways to be in focus.

Axis Securities

The brokerage expects domestic-oriented themes such as Banks, Domestic Industrials, FMCG, Auto, Hospitals, and Discretionary Consumption to continue outperforming the Cyclical + Export-oriented theme, as has been the trend since the lows of June 2022.