The best of FII flows is yet to come; heavy stocks like RIL, banks look attractive for FY23: Yes Securities | Daily News Byte

“India has a concrete advantage over other markets and Indian manufacturing will benefit from production-related incentives (PLI) and global resumption,” the note said.

Moderate retail participation in the market (thanks to reduction in demat accounts) indicates that the market is not in an overheated zone. In such a scenario, heavyweight stocks like Reliance Industries (RIL), banks and IT services look attractive, it added.

According to the report, central banks will soon freeze rates, while governments will encourage growth by offering incentives through infrastructure spending and loan guarantees, among other things. It also hints that the RBI will not necessarily raise rates to curb inflation, but to match the rates raised by the Fed. In this regard, the brokerage sees a 0-25 basis point (bps) hike by the Reserve Bank of India (RBI) to the 6.25-6.50% repo level.

Foreign portfolio investors sold a net $18 billion of Indian assets this year, but became buyers in November and December. Meanwhile, Yes Securities is bullish on equities and says the Indian stock market has shown remarkable resilience for most of the past three years. During the Nifti’s journey to new highs, markets are largely sector agnostic, however midcaps and smallcaps tend to outperform the Nifti.

The Nifty 50 hit a record high in December and is up 5% this year, joining an exclusive group of markets around the world that have risen despite rising interest rates and slower growth. By contrast, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 19%. Global stock performance has helped India double its weight in MSCI’s emerging market index to 16% since 2019, according to Reuters.

The views and recommendations given above are those of individual analysts or brokerage firms and not of Mint.