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- India’s benchmark indices Sensek and Nifti50 managed to outperform most global markets in 2022.
- Driving growth in the Indian markets were shares of companies from the Adani group, banks, oil and gas and FMCG sectors.
- On the other hand, IT and new age companies saw a decline in 2022.
India’s benchmark Sensex and Nifti50 have been among the best performers this year against the world’s major bourses, with gains of nearly 5% year-to-date. The gains were driven by stocks in key sectors such as banks, oil and gas, fast moving consumer goods (FMCG) and public sector companies.
The top ten best-performing stocks in the Nifti100 universe include Adani Enterprises and Adani Transmission, which also emerged as leading all-round wealth creators between 2017-22, according to a Motilal Oswal report.
Adani Group shares dominate
Overall, four Adani Group companies feature in the list of top ten stocks in the Nifti100 this year, with their share prices rising between 54-135%.
Other top-performing stocks this year include Hindustan Aeronautics, the state-owned aerospace and defense company, which reported a 44% rise in Q2FY23 profit to Rs 1,221 crore and a strong order book of nearly ₹ 8,400 crore.
Coal India is another public sector company on the list with gains of 58% as the company benefited from an increase in domestic demand for coal.
Overall, the oil and gas sector saw a drastic expansion in its gross margin to 19.6% in FY22 from 3.4% in FY21, and is estimated to contract only marginally to 16.1% in FY23, according to Motilal Oswal .
Best and worst stocks of 2022 on Nifti100
On the other hand, IT stocks and new-age companies dominated the list of worst performers in 2022 in the Nifti100 universe.
Topping the list is One 97 Communications, the Paitm operator, down 62% as it battles Google Pay and PhonePe on one side (in terms of UPI payments), and the upcoming challenger to Mukesh Ambani’s Jio Financial Services, which could to emerge as the fifth largest financial services company in India in terms of net worth, which has slowed Paitm’s financial services business.
Other notable losers for the year include Zomato, Nikaa operator FSN E-Commerce and IT companies Wipro, Tech Mahindra, Mphasis and LTIMindtree.
Interestingly, research firm Jefferies has Zomato among its top picks, calling it a “favourite stock” and its valuation is now justified after the stock has seen a 60% correction from its peak.
“We also see a consistent improvement in profitability in food delivery despite a strong growth rate of 30% year-on-year in the period 22-25,” said the Geoffrey report.
What is in store for 2023?
Analysts recommend investors to be cautious in 2023 when it comes to Indian equity markets.
“We expect the weakness in tech stocks to continue due to weak growth prospects.” FMCG stocks are expected to perform well due to fall in commodity prices and improvement in demand,” said Siddhartha Khemka, head of retail research, Motilal Oswal.
Analysts at Jefferies believe that the Nifty50 will remain in the range between 18,000-19,000 in 2023.
“With India among the world’s best performing markets in 2022 and recently hitting new highs, valuations at 20k PE and 225 basis points yield gap move above the 1 standard deviation level and remain a key asset for market performance in 2023,” said Mahesh Nandurkar, head of research at Jefferies.
Overall, the research firm says it is “overweight” on stocks in the telecoms, consumer staples and discretionary, real estate and utilities sectors. It remained “neutral” in the financial services sector and said it was “underweight” in the IT, energy, healthcare and materials sectors.
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