"Consider 2023 as a year to invest for long term !"

Markets have entered 2023-24(FY24) on a cautious note. In case markets rally from here on out will emerge from areas outside retailing and consumer staples, as these pockets continue to remain expensive in terms of valuations.

By and large, the Indian equity market is in a better position than it was in March 2022. Valuations are much more reasonable now and supported by robust domestic macros in the form of a lower current account deficit. Much of the rate-hiking cycle is behind us, even though market levels are where they were 18 months ago.

While global uncertainty prevails, on the domestic front, India is relatively well-placed. This is attributable to strong corporate and bank balance sheets, the government focus on building long term infrastructure that is likely to have multiplier effect and policies to help invigorate India’s manufacturing dream. This measures bode wealth for domestic markets . Hence, we are of the view that markets are in better shapes for long term. Investors should consider 2023 the year to invest for the long term, without worrying about the near term outlook.

The markets may rally from here on out-will emerge from areas outside retailing and consumer staples, all these pockets continue to remain expensive in terms of valuations. In most other areas valuations have corrected meaningfully. Except for select pockets in mid and small caps, this space too ,appears reasonably valued.

Foriegn Institutional Investor (FII) inflows will pick up meaningfully when the US Federal Reserve shifts towards pause on rate hike. Furthermore, if the economy does well there is no reason why FIIs will not invest, in a delivering economy like India. In the last financial year, while FIIs sold out of Indian markets, domestic investors went on buying ,thereby offsetting most of the selling pressure .In terms of domestic flows, the systematic investment plan book held steady above Rs. 13000crore, in the face market volatility - a trend we believe is likely to persist.

We believe that corporate earnings growth will be robust and will not be a source of worry in the foreseable future. The worst of the margin pressures are behind us as input price pressures are abating.

In conclusion, 2023 is a great year to invest for the long term. By investing in companies that are well-positioned to take advantage of these trends, investors can potentially earn significant returns over the next several years.