As we step into FY23, the next two quarters are going to see a sharp margin impact, and corporate commentaries will worsen before they get better. Secondly, while the Nifty has not seen much earnings downgrade so far, the broader universe is clearly bearing the brunt of commodity cost inflation – a trend which was visible even in 3QFY22 corporate earnings season. However, so far, with de-escalation in Russia-Ukraine conflict and strong recovery in economic parameters, the market is expected to remain in a consolidation mode with positive bias, points out a note from brokerage Motilal Oswal Broking and Distribution.

Providing an insight into the stock market for FT23, Motilal Oswal expects market volatility to remain high in the near term amid global developments. However, economic recovery, coupled with government focus on capex and domestic manufacturing, would drive overall growth in FY23. “We are positive on IT, select BFSI, commodities, retail, real estate, defence and telecom for FY23. Also one can consider FMCG, autos and cement as contra plays and accumulate them gradually for the long term, adds the brokerage’s note. 

Equity market ended FY22 with an impressive 19 per cent gain despite challenges on multiple fronts. In fact, Nifty recorded the second-best returns in the last seven years led by factors like reopening of the economy, healthy macroeconomic data and strong corporate earnings, which lifted the Nifty to new high of 18,604 in October 2021, adds the note.