Emkay Institutional Equities, part of Emkay Global Financial Services Ltd, on Wednesday said that Nifty50 could hit fair value of around 19,000 by end-FY23, despite increasing crude and commodity prices, policy tightening pose major challenges for the market in the next 12 months.
Sharing the outlook on markets for FY23 in the backdrop of escalating tensions between Ukraine and Russia, Sanjay Chawla, Head - Institutional Research, Emkay Global Financial Services, said Emkay expects aggregate profit growth of Nifty50 to be fairly resilient at about 20 per cent in FY23.
Steel cos to boost Nifty cos PAT
In FY22, Emkay estimates Nifty50 PAT to increase by ₹1,80,200 crore to ₹6,04,800 crore. Tata Steel, JSW Steel, RIL, ONGC, SBI and Airtel expected to contribute two-third of Nifty50 PAT increase in FY22. Nifty profit increase in FY22 is led by Oil and Gas and Metals sectors
On the way forward, Emkay estimates Nifty50 PAT to increase by ₹1,24,600 crore to ₹7,29,400 crore in FY23. Following the pattern seen in FY22, six stocks are expected to dominate the Nifty50 PAT increase in FY23; however, the financial year may see influence from few new companies. Tata Motors, RIL, ONGC, Airtel, SBI and HDFC Bank are expected to contribute two-third of Nifty50 PAT increase in FY23E, according to Chawla.
Nirav Sheth, CEO – Institutional Equities, Emkay Global Financial Services, said the movement of oil prices continues to be a cause of concern due to the geopolitical tensions. The rise in oil prices may impact the terms of trade (ToT) and thereby GDP. The CAD-to-GDP ratio may hit 3 per cent in FY23, if oil sustains at an average of $100/bbl.
“We expect the RBI to remain accommodative – at least in H1FY23 instead of reacting to supply-shock driven inflation. However, if commodity prices remain higher for longer, the RBI will have to worry about inflation expectations even as growth gets impacted by second/third-order channels,” Sheth said.