Given premium valuations and likely slowdown in FII flows, analysts at brokerage house Angel One believe that broad-based rally would likely to be witnessed like last year, and hence bottom-up stock picking will be the key to generating alpha going forward.

“Given the aggressive tightening by the US Fed, there will be a slowdown in FII flows next year though domestic flows should remain robust and make up for any shortfall in FII flow. Nifty P/E based on consensus rolling one year forward multiples have come down from around 23.0x to 20.7x, though it’s still at a 10% premium to 5 year historical average of 18.6x," Angel One said in a note.

The brokerage is positive on banking and consumer-facing sectors as it does not see any long lasting impact from Omicron and expect strong rebound in earnings for the sectors in FY2023. It also remains positive on chemicals and IT sector given high medium-term growth visibility for both the sectors.

Angel One's new year 2022 top stock picks includes Ashok Leyland with a target price of ₹175 per share, Sona BLW Precision (TP: ₹959), Ramkrishna Forgings (TP: ₹1,545), Suprajit Engineering Ltd (TP: ₹520) under autos, whereas in banks, it has recommended Federal Bank (TP: ₹135), HDFC Bank (TP: ₹1,859), and AU Small Finance (TP: ₹1,520) stocks that one can look to buy for the upcoming year.

Additionally, PI Industries (TP: ₹3,440) and HCL Technologies (TP: ₹1,363) are its top picks in the chemicals and IT spaces respectively. It has also suggested stocks like Carborundum Universal Limited (TP: ₹1,100), Stove Kraft (TP: ₹1,288), Safari Industries (TP: ₹1,126), Sobha (TP: ₹1,050) and Amber Enterprises (TP: ₹4,150).

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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