Sensex at 71,600 in 2023! ICICI Direct bullish on auto, BFSI and IT stocks

While retaining its bullish view on the domestic equity market, brokerage firm ICICI Direct believes that the BSE Sensex may touch the 71,600 level by December 2023. The target suggests an upside potential of 18% from the current Sensex level of 60,900. For Nifty, the brokerage has set a target of 21,500 levels.

“Incorporating the revised estimates, our Nifty earnings do not undergo any major change. We continue to value the Nifty at 21,500 i.e. 21x PE on FY24-24E average EPS of Rs 1020/share. The corresponding target for the Sensex is placed at 71,600,” said ICICI Direct.

The government proposes to spend a record Rs 10 lakh crore (3.3% of GDP) as capex in FY24E (up 33% YoY) with a tangible multiplier effect, which could potentially drive broad-based economic growth, the brokerage said.

Incorporating Q3FY23 results, the brokerage is bullish on sectors like BFSI, auto, and IT. While the metals, telecom & pharma space witnessed a downgrade with aggregate Nifty earnings remaining broadly unchanged.

“On the earnings side, Nifty EPS for the quarter came in at Rs 205/share, an outperformance of 5% vs our expectations. It was up 11% QoQ, and 8% YoY. Outperformance was witnessed across the auto, capital goods, FMCG and pharmaceuticals space while the metals and oil & gas space underperformed,” ICICI Direct said in a report.

Meanwhile, Sensex and Nifty declined nearly a half per cent each so far in 2023. On the other hand, the broader index BSE Smallcap declined 4%, while the BSE Midcap index fell 3% during the same period.

“Management commentary was more upbeat on domestic demand vs exports given the global macroeconomic uncertainty. With a progressive Union Budget, capex cycle revival and healthy credit growth & asset quality in the banking space, we retain our positive stance on domestic markets. We believe any dips should be used to build a long-term portfolio of quality companies that have lean balance sheets, are capital efficient in nature and possess growth longevity,” the brokerage said.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)