Moneycontrol Survey | Nifty may give 10-15% return in FY23, investors should continue investing: Experts

Moneycontrol Market Sentiment Survey : Conflict in Eastern Europe, high energy prices and US Federal Reserve’s tough stance on interest rate hike did not affect the earnings of Nifty50 companies much in FY23 can do. However, if the fight drags on and fuel prices remain above $100 a barrel, earnings could drop to some extent. This is revealed in the findings of this edition of Moneycontrol’s domestic fund managers.

Four of the seven fund managers polled expect some moderation in corporate earnings growth in FY23, while two are yet to decide whether it will have an impact. However, Tata AMC does not see any impact on earnings.

Tata AMC and Mirae Asset Management are the most optimistic fund houses, seeing 15-20 per cent growth in Nifty50 companies in the next financial year. The rest of the fund managers are expecting a slightly lower ie 10-15% earnings growth.

The total asset under management (AUM) of the fund managers polled in this edition of the survey is Rs 3.90 lakh crore.

The threat of inflation-induced recession on the world

Commodity and food prices have risen significantly globally due to the Russia-Ukraine war, at a time when many global economies are facing the threat of an inflation-linked slowdown. Big global investment banks and experts have also expressed similar apprehensions. Inflation-induced recession is a situation when inflation is accompanied by problems of high unemployment and stagnant demand in the economy.

Kaushik Basu, former Chief Economist of the World Bank and former Chief Economic Advisor to the government, said in an interview two months ago that apart from global economies like America and Europe, the Indian economy is also going towards inflation-induced recession. According to him, it is more difficult and requires careful systematic policy interventions.

He said, 15 years ago inflation was close to 10 per cent, but at that time India’s real time growth was 9 per cent. This means that with inflation, the average per capita income was also increasing by 7-8 per cent.

He had said that the present situation is worse as the per capita income has fallen in the last two years with inflation at around 6 per cent.

Most of the fund managers who participated in the survey see the global inflation-induced slowdown as a major concern for equity investors. Only two fund managers differed in opinion and did not believe that the inflation-induced slowdown would have any significant impact on India.

How will the next rupee move

Keeping in view the current global scenario, US Fed has started raising interest rates and it may do so several times this year. However, fund managers believe that given global developments, the Fed will not be able to hike interest rates much.

Rising energy prices have pushed up India’s fuel bill, as it is dependent on imports for 80 per cent of its oil needs. Due to this the rupee is weakening, although the opinion of fund managers is divided on the weakening of the Indian currency. Three said that the rupee would remain stable at current levels, two said that it may depreciate by 2-5 per cent. At the same time, two fund managers are not clear about the movement of the rupee.

Continue investing for 10-15% returns

All the managers suggested that investors should continue investing in a systematic manner with an expected return of 10-15 per cent in 2022 and take it as an investment opportunity in case of a fall in Nifty.

Banks, IT and auto are the most recommended sectors for the next one year, while he has advised investors to avoid FMCG, consumer staples and consumer discretionary sectors.