Will Market Crash in 2023???

Recently we have seen Market has made its 52 week high and then a stiff correction seen in the market. Now, there is a buzz in the market that the market could crash in upcoming 2023 year.

What could happen in the market in the next 2023 year?

This blog will help you to understand actual facts of the stock market in the next 2023 year.

Table Of Contents

Reading Time: 6 mins read

WHAT HAPPENED IN LAST ONE YEAR

NIFTY 50 gives around 4.72% return in the last one year. But in this period only PSU Bank, FMCG etc. sector gives positive return.

Only few percentage of NSE listed stocks rallied in this last one year, even many of the NIFTY 50 quality stocks like Asian Paints, Bajaj Finance did not participate in that rally.

WHAT IS THE MEANING OF STOCK MARKET CRASH???

There is a thin difference between Market Fall and Market Crash. It needs a specific reason for heavy fall or market crash like Corona virus pandemic situation, Lehman brother’s crisis or Y2K.

In general, it refers to a very fast and significant decline. Investors lose their money as prices start to fall. It causes them to sell their assets for fear of losing more money, which drives stock prices down even further in a self-perpetuating cycle. It can be clearly understandable, when we look at NIFTY 50 chart of 2020(Corona virus), 2008(Lehman bros.) or 2000(Y2K). It needs a specific reason for market crash.

PRESENT FACTS & FIGURES

Global economic data

Although our Indian stock market shows a great retail investor’s strength in recent times, but economic factors always to be keep in mind.

Lets try to analysis this situation with marco economic data.

US Inflation trend
As per recent data, the annual inflation rate in the US slowed down for a fifth straight month to 7.10% in November 2022, the lowest since December last year and below forecasts of 7.30%.
US FED rate
The current Federal Reserve interest rate or federal funds rate is 4.25% to 5.50% as of 14th December 2022. On that day the Fed raised interest rates by 0.50%, the seventh rate hike in this year of 2022. The Fed decided to raise interest rates by 50 basis points, a step down from the 75 basis point pace seen over the previous four meetings. The Fed’s rate hikes of 4.25% this year is the fastest cycle in history, pushing down borrowing costs to a 15 year high.
US Unemployment
Recent numbers suggests that there is no such hike in last one year, compared to November 2022 data it is same in December 2022 as 3.70%. Hence we can see a quite opened job market in USA and that is not referred to a recession.

Our Domestic Factors

The yield on the Indian 10 years government bond eased slightly from the two-week high of 7.30% touched on 9th December 2022.
Retail price growth fell to 5.90% annually in the same period, slowing from 6.80% in the previous month of November and well below expectations of 6.40%.
In the latest meeting, the central bank (RBI) raised its key repo rate by 35bps to 6.25% and signaling for a slowdown in the hiking path.
The Story of IT Sector’s Layoffs

#Layoffs

  • The technology sector in US is witnessing a wave of layoffs including some of the biggest brands in the world which include Amazon, Meta, Twitter and more.
  • According to a survey by staffing and recruitment services firm Randstad, hiring activity in the Indian information technology industry is likely to pick up in the first quarter of 2023 despite of a hiring freeze and big tech layoffs.
  • As per that survey, seven in 10 IT companies are likely to increase their headcount during January-March 2023.
  • Factors like cost optimization and India’s stable geographical, political & economic foundation are contributing to firms looking to invest in the country.
FIIs/DIIs Activities

#Fii_Diis

  • We have seen a huge sell off from Foreign Institutional Investors (FIIs) starting from October 2021 and they have continued this sell off till July 2022.
  • Earlier, at the time of corona virus pandemic recovery period FIIs were aggressively investing in the Indian market till March 2021. After that they started withdrawing their money slowly.
  • On the other side Domestic Institutional Investors (DIIs) are showing their strength from that same period of March 2021 and started buying gradually.
  • Indian retail investors are also now showing their strength through several Mutual Fund houses, which is also consider as DIIs. Investment in MF in the Indian market crossed Rs 13000 Cr. mark on October 2022 for the first time in history.

Present Covid Scenario

  • In view of the sudden surge of COVID cases in different countries, Indian Medical Association (IMA) alerts and appeals the public to follow COVID appropriate behavior with immediate effect.
  • As per the available reports, nearly 5.37 lakhs new cases have been reported in last 24 hours from major countries like USA, Japan, South Korea, France and Brazil.
  • India has reported 145 new cases in last 24 hours out of which four cases are the new China variant – BF.7.
  • These sudden spikes of corona virus create some volatility in the market. Because of this, panic selling is now seen in the market.
We have discussed all the possible market factors in this article. Now what do you think about market direction in the upcoming year 2023? Write us in the comment box.

24 Comments

  1. Avatar photoKushabh Das Reply

    Great post! I really enjoyed reading it. The information was well-researched and presented in a clear and concise manner. I also appreciated the personal touches you added, as they made the post feel more relatable and engaging. Keep up the excellent work!

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