The sectors and stocks that brokerages are betting on and avoiding for 2023

Looking at how 2022 turned out, analysts across the street expect the new year to be very stock and sector specific as well. Let us first focus on the underperformers of 2022, which was the IT index, which declined 25 percent in 2022 and within the index, most of constituents declined 15-20 percent or even 40 percent.

JPMorgan expects IT companies to witness a reset in revenue growth from the mid-teens to mid-to-high single digits. The firm expects moderate recovery in growth, even beyond financial year 2024 and they remain cautious on the sector. In fact, JPMorgan does not have a single overweight within the IT sector and is neutral on four names. The list of underweights is a long one.

The other big underperformer last year was the Nifty Pharma index, which declined 11 percent in the year gone by. After a flat year for margins, they are likely to improve in the new year, according to Bernstein. Sector valuations too are back to their 10-year average.

Among Bernstein's top picks include Cipla, Sun Pharma and Gland Pharma.

Oil & Gas, autos and banking names were among the outperformers of 2022 and ensured that the Nifty 50 index managed to deliver positive returns for the year.

The Oil & Gas index gained 14 percent last year. Citi believes that there are a lot of tailwinds which can help the sector and hence they prefer city gas distribution (CGD) companies and gas transporters. Based on the macro backdrop, the firm also expects the OMCs to do well.

In fact, Citi has a 90-day positive catalyst on Indraprastha Gas and they also have some pair trades within the sector. They are overweight on GAIL and BPCL, while being underweight on Petronet LNG and Indian Oil Corporation (IOC).

Autos were the other big outperformers of 2022, with the index gaining nearly 16 percent and the trend may continue in 2023 as well, according to Jefferies. The brokerage expects strong returns this year due to the recovery in demand and a compounded annual volume growth rate of 12-18 percent until financial year 2025.

And within the sector, they're bullish on TVS Motor, Tata Motors, Maruti Suzuki and Eicher Motors.

Finally, lets turn our attention to the banks, where the Nifty Bank index gained nearly 21 percent last year, comfortably outpacing the low-single-digit returns from the Nifty 50. Brokerages believe that the momentum may continue in the new year as well.

According to a CLSA note, Axis Bank is its top pick, followed by ICICI Bank and State Bank of India (SBI). They've upgraded IndusInd Bank to a 'buy' as well. However, after its best annual performance in two decades, CLSA has downgraded Bank of Baroda to outperform.