Where is the Nifty 50 headed in 2023? Is the US headed for a recession? If so, what kind of a recession will it face? When will the US Federal Reserve finally start cutting rates? Top global banks have tried answering these questions as we head into the new year.

Share Market Live

NSE

While there is consensus over the fact that the US is headed towards a recession, most of the major global banks are predicting that the recession will be a mild one.

Let us first take a look at what is the consensus on what kind of recession the US is likely to face. Most analysts are projecting the fact that the US will enter a recession either in the first or second quarter of calendar year 2023, followed by a recovery thereafter.

The ones who are predicting a recession say it would be a mild or modest one while some state that the US economy may avoid a recession altogether.

Where will the Federal Reserve take a breather on interest rate hike?

After hiking rates at the fastest pace in its history the Federal Reserve indicated that while rate hikes will continue, they may happen at a slower pace. Since March, the Federal Reserve has hiked rates by 375 basis points. While some experts do not see a rate cut at all through 2023, some expect that to take place during the second half of the calendar year.

However, most of them agree to the fact that the US Central Bank will pause once benchmark rates reach the 5 percent mark.

Will the Nifty 50 scale new highs in 2023?

After a tumultuous 2022, the Nifty 50 is set to scale new peaks in 2023, at least that is what the street is projecting. However, the rally is unlikely to be a runaway one and the trend of single-digit returns may most likely continue.

Timothy Moe, Chief Asia Pacific Strategist at Goldman Sachs believes that although India's long-term strategic prospects are the best, if not among the best, 2023 will be a challenging year for investors looking for outsized profits.

Moe finds valuations in China and South Korea to be more compelling. China trades at 10 times forward earnings, with headroom for faster earnings growth as well.

Similar sentiments were echoed by Amisha Vora of Prabhudas Lilladher who told CNBC-TV18 that India will continue to see a positive market even in 2023 despite the current valuations. "I don’t see huge cuts but a rangebound market," she said.

First Published:Dec 29, 2022 2:16 PM IST