Sensex, Nifty 2024 perspective, bourse tactic, pivotal elements to observe & more
Notwithstanding an 18 percent surge in the prior year, Nifty trades at a 12-month forward PE ratio of 19 times, a figure beneath its 10-year mean of 20 times.
In the year 2023, benchmark equity gauges Sensex and Nifty scaled unprecedented heights, with the BSE index surpassing the 72,000 mark and the NSE benchmark exceeding 21,600 points. Consequently, Nifty50 demonstrated a gain of 18.62 percent over the year, while the Sensex recorded a rise of 17.4 percent. However, analysts project that the year 2024 may witness fresh record levels for these indices. Indeed, alluring valuations might propel large-cap stocks to outperform mid-cap and small-cap counterparts in the forthcoming period, analysts opine.
Despite the notable surge in 2023, Nifty is currently valued at a 12-month forward PE ratio of 19 times, a discount relative to its decade-long average of 20 times.
The forthcoming year is expected to be influenced by several events in the domestic stock market, including the Lok Sabha elections scheduled for May and the inaugural Union Budget post-elections. On the global stage, factors such as potential Fed rate adjustments, inflationary trends, geopolitical tensions, and the US electoral cycle are anticipated to be closely monitored.
“Calendar year 2024 is poised to be a riveting period as developed economies may witness deceleration, although the likelihood of rate hikes remains low. The year could witness the Federal Reserve in the US implementing interest rate reductions by the mid-year juncture, thereby bolstering equity markets. However, both the Indian and US electoral processes are poised to introduce heightened volatility, potentially resulting in a contraction of market breadth and a shift in focus towards liquidity management and portfolio quality,” remarked Naveen Kulkarni, Chief Investment Officer at Axis Securities PMS.
Kulkarni suggests that the current juncture presents an opportune moment to realize profits from small-cap investments and reallocate them to high-quality large-cap stocks and public sector undertakings (PSUs). ICICIdirect has set a Nifty target of 24,200. Seasoned investor Vijay Kedia, in a recent dialogue with Business Today, put forth a Sensex target of 80,000 by December 2024.
Sampath Reddy, Chief Investment Officer at Bajaj Allianz Life Insurance, anticipates that domestic economic expansion will sustain its momentum in 2024, buoyed by robust domestic consumption, government expenditure, and a gradual resurgence in private sector investments.
“While uncertainties such as global interest rate movements, volatile crude oil valuations, and imminent domestic elections persist, the narrative surrounding India’s growth trajectory remains compelling, offering investors ample opportunities for wealth accumulation over the long haul,” he asserted.
Jitendra Gohil, Chief Investment Strategist at Kotak Alternate Asset Manager, observed that foreign portfolio investor (FPI) stakes in domestic equities are at a decade-low, and prospective foreign inflows into the debt market ahead of India’s anticipated inclusion in the JP Morgan Emerging Market Government Bond Index may inject some stability into the rupee’s valuation.
“Although the market appears to have factored in a majority of these near-term positives, we anticipate the Nifty to deliver high single-digit returns in 2024. Presently, the risk-reward dynamic favors large-cap entities over mid and small-caps, with PSUs still harboring latent potential for outperformance in our estimation,” Gohil remarked.
This analyst maintains a bullish stance on banking equities, select non-banking financial companies (NBFCs), real estate ventures, and pharmaceutical stocks. Long-term investors are advised to initiate positions in chemical and information technology (IT) equities during market downturns, Gohil recommended.
“India remains a beacon of hope and is anticipated to sustain its streak of outperformance. We anticipate a further strengthening of market sentiment, with the ongoing pre-election rally likely to persist. Any prospective rate cuts would furnish an additional tailwind to the market. Given the government’s steadfast commitment to long-term capital expenditure across key sectors, coupled with expectations of global rate cuts in 2024, growth-oriented stocks are poised to capture investor attention,” articulated Motilal Oswal Broking and Distribution.
This brokerage foresees promising prospects for the industrial, real estate, banking, financial services, and insurance (BFSI), automotive, and consumer discretionary sectors moving forward. “We posit that sectoral rotations may emerge as a pivotal driver of market momentum over the ensuing quarters, alongside the overarching uptrend in the market. Furthermore, we contend that valuations will emerge as a crucial determinant in stock selection, thereby fueling portfolio outperformance,” the brokerage concluded.
Rishabh Goel, Managing Director at Tailwind Financial Services, envisages the forthcoming year unfolding in two distinct phases. The initial half is anticipated to be dominated by electoral dynamics, while the latter half is expected to be shaped by monetary policy deliberations, including anticipated rate revisions, he expounded.
“The current upswing in the market has ostensibly discounted potential outcomes and the prospect of up to three rate reductions by the US Federal Reserve.