Best Sectors to Invest in Equities in 2023

Equity saw a tepid low single-digit return in 2022 mostly because the market remains in the high valuation zone. Also, with FD returns touching nearly 7%-8%, equity looks less appealing. However, that being said, some sectors should do well going forward. Let’s have a look:

i) Industrials should do well in 2023 supported by the government’s pro-manufacturing policies such as the PLI scheme, factors around China, Atma-nirbhar Bharat, etc. which should lead to billions of dollars as CapEx in sectors such as green energy, chemicals, pharma, auto (electric vehicles), electronics, etc. Capital goods companies should do well. However, you need to be careful of the valuation of stocks you invest in as the overvalued sectors can see some correction.

ii) Banks and financials have done very well in 2022 and should continue to do well with increasing profits. Stocks have come out of their bad debt cycle and now mostly have clean balance sheets. PSU banks, private banks, NBFCs, all have good prospects. Insurance and AMCs which have seen some price correction are another good bet.

iii) Healthcare and IT which have seen some price correction have pockets of value. These are the areas where India has a strong global competitive advantage as well as evergreen sectors. They also have strong cash-generating abilities with pharma having a huge growing domestic market.

iv) Media and Infra stocks which have been beaten down sectors are also good bets in 2023.

I would stay away from sectors that have high valuations as the risk of drawdown is possible as Indian markets remain much more expensive than other emerging and developing markets. Also, given the global geopolitical issues and economic slowdown equity might not be the best investment asset. Click here to know more about investing in:

Fixed Deposits in 2023 and Gold in 2023.