2023 Will Be Good To Build Portfolios And Book Profit, Says Quest Investment's Aniruddha Sarkar

The market will remain very range-bound this year and too many factors would affect investor sentiment, according Quest Investment Advisors Pvt. Chief Investment Officer Aniruddha Sarkar said.

"We don't see the market (Nifty) going below 17,000 points and beyond 19,000 points," Sarkar told BQ Prime's Niraj Shah. "The way we have entered into the market this year is very different from last year," he said, pointing out that there was a lot of optimism in 2022 as the previous two years were "really good".

The year 2023 will be very good in terms of building portfolios and booking profit for investors who are planning to go for a long run, according to Sarkar.

The index has been very one-sided over the past year and beating it is almost next to impossible. Portfolio managers are having a really tough time, according to Sarkar.

"In the last 16–17 months, nothing in terms of returns has happened as from Sept. 2021, the index returns are flat. Only a handful of 10–15 stocks are giving returns," Sarkar said.

Sarkar said they do not try to be in line with the benchmark index sector allocations and focus more on earnings rather than index hugging. "Even within the same sector, we would be happy to switch between companies depending on their relative risk reward and margin of safety at any point in time."

"Sector rotation is something we follow in all our portfolios," Sarkar said. "It is very important to go with the sectors where earnings are present and avoid those sectors where investors feel there could be weak earnings."

Sarkar's top three bets are auto and consumption, industrial and energy, and banks and financial Institutions. "With capex-driven economic activity in focus, these sectoral gainers would not be very different in 2023," he said. "With rising credit growth, banks and financials could continue to lead from the front."

Sarkar is underweight on the information and technology sector. He said "the drags of 2022, namely information and technology, and pharmaceuticals, though attractive on valuations, but I feel have some time before they would be out of the woods.".

Sarkar is not very confident on the agriculture consumption even though there is a push from the government in terms of infrastructure. He pointed out that the outlook on monsoon is "not very great". "We will wait for some more time to bet on agriculture consumption."

On urban consumption, Sarkar said the focus is on different baskets like hotels, restaurants, business and malls.

The recent hotel sector rallying up is because of earning-lead growth and India will witness this growth for the next eight to 10 years, according to Sarkar. "Hotel sectors continue to see the rally despite peak season factor or off-season factor with no change in room rates."

Sarkar said there was big optimism and investors were estimating the next four–five years of earnings.

"Defence is a sector where we will continue to bet," he said, pointing out that more long-term money was entering.

The defence sector will not be a short-term or 24–30 month opportunity, but this is the area that will continue to give earnings upside, he said.

Sarkar sees investment opportunities in both value and growth parts of the market and hence advises to find a fine balance of value and growth style in their portfolios.