Emkay Institutional Equities , a part of Emkay Global Financial Services Limited, shared an outlook on markets FY23, earnings, currency, monetary policy, and the impact of geo political tensions and subsequent economic effect of crude oil prices. Largely, the increase in Nifty-50 profit after tax in FY22 is led by Oil & Gas and Metals sectors. Two-thirds of the Nifty PAT increase in FY22E is likely to come from six stocks: Tata Steel, JSW Steel, RIL, ONGC, SBI, and Airtel. A similar pattern is expected for FY23—six stocks may account for 2/3rd of the estimated PAT increase for Nifty-50, however, the leaders of this influence will change.
While crude oil price remains to be the key factor, that may impact markets given the escalating tensions between Ukraine & Russia, currency worldwide, monetary policy tightening, and liquidity will be major things to watch out for. Mr. 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 and thereby GDP. The CAD-to-GDP ratio may hit 3% in FY23 if oil sustains at an average of $100/bbl. We expect RBI to remain accommodative – at least in H1FY23 instead of reacting to supply shocks driven inflation. However, if commodity prices remain higher for longer, RBI will have to worry about inflation expectations even as growth gets impacted by second/third order channels
