'Keep booking profits when market makes fresh highs'

'We suggest investors with suitable risk appetite to consider allocating 40-50 per cent in large-caps, 25-30 per cent of funds in quality mid and small-caps and the rest in debt and high yield products.'

Prashanth Tapse, Research Analyst, Senior VP (Research), Mehta Equities Ltd, tells Prasanna D Zore/Rediff.com what 2023 holds for traders and investors. The first of a series of information investors could use interviews:

How is the market likely to pan out in 2023?

Indian markets in 2023 would again remain volatile to global headlines around COVID, RECESSION and INFLATION, but we believe India would remain a buy on dips market.

Year 2022 was an eventful year with geopolitical tensions, recessionary and inflationary headlines keeping world-wide markets volatile.

2022 was the year to test INDIA's capability to sustain the global pressure and as a result we saw the Nifty almost touching near to 19K levels at 18,887 levels (ALL TIME HIGH) which is up by 3.3 per cent from last financial year.

Despite FIIs being net sellers for the full year FY22, DIIs along with retail investors managed to win the tug-of-war to keep Indian markets outperforming the global stance.

What are the reasons for your bullishness on India?

Despite global uncertainty and headwinds, we remain bullish on the India growth story because of:

1. Improved domestic fundamentals, lower crude price, lower commodities leading to lower inflations and higher growth.

2. World expects faster than expected GDP growth in the next 5 years.

3. Healthier growth in GST M&M collections

4. Benefits of business swift from CHINA + One and EUROPE + One strategy (a technical term meaning global industries from the US and Europe which are manufacturing out of China and Europe would look upon India as a major supplier to the world given the COVID scare in China and energy crisis in Europe due to Russia-Ukraine war).

5. Politically stable environment for FIIs.

How soon do you think will the global markets bottom out?

Historically if we analyse, globally stocks won't bottom out until the US Fed starts cutting rates.

We believe going forward in 2023, we would remain volatile but with supportive news flows like end from the side of Ukraine-Russia war leading to cooling down of crude, energy and commodity prices followed by interest rate peak out which would eventually help inflation to get under central banks' control range and boost the global economy.

Fundamentally, India stands out to be better placed in the global market and would outperform with healthy ROI.

What fundamentals will help India outperform global equities in 2023?

For fundamental reasons we need to go back to pre-COVID economic reforms that led the foundation for self-sustainability in the long run.

Defending inflows from retail investors, supportive Indian government policies, strong corporate earnings, healthy banking system and strong growth visibility significantly better than the rest of the world along with India overtaking the UK to become the fifth largest economy in the world has helped it outperform stock markets of most large economies.

Despite all supportive factors, India continues to be one of the most expensive markets in the world.

Important levels to watch out for...

Technically, market trends are looking positive with the Nifty goalpost range between 20,450 and 22,000 with strong support near 17,000 levels.

Can investors take a long term bet on the markets with stop loss at 17,000?

17,000 acts as crucial level for a trader in the current market volatility, while for a long-term investor 15,555 acts a physiological level as stop loss. 

Your advice for retail investors...

Retail investors' focus in 2023 should be on proper asset allocation with a good mix of cyclical and defensive stocks. We are optimistic about the market for the coming year.

Going ahead, the ground-level reality of the economy will drive the stock market momentum and traders are advised to keep booking profits as and when the market makes fresh near-term highs.

We suggest investors with suitable risk appetite to consider allocating 40-50 per cent in large-caps, 25-30 per cent of funds in quality mid and small-caps and the rest in debt and high yield products.

Going forward, the Indian market will be tracking global markets and earnings growth.

On a close above 19,000 levels -- a psychological resistance -- traders can expect a surge in the Nifty to see a goalpost of 20,450-22,000 in the long term with strong support near 17,000 levels.

Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this interview to influence the opinion or behaviour of the investors/recipients.

Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.