However, experts are sounding out a word of caution given crucial events such as the general elections in India in the early part of the year.
Here’s a summary of what experts have to say on the factors that could move the market, alter investment decisions, and impact flows into equities in 2024.
Vivek Goel, Managing Partner, Tailwind Financial Advisors
With the recent conclusion of state elections, we have seen the market turn positive on political outlook, with expectations rising towards a decisive outcome and policy continuity being maintained.
Along with this, US inflation has continued to fall, raising the prospects of a rate cut in CY24, helping FII flows in emerging markets.
While we acknowledge that markets are trading at rich valuations, we believe that positive events will provide tailwinds for markets to trade higher in the near term.
The large cap segment is one area that has underperformed relative to broader markets, accordingly, we are incrementally looking at allocation towards that segment. Further, with expectations of a rate cut in CY24, debt returns in the medium term can also increase. Balanced advantage funds and other hybrid funds can be considered where allocation in equity is towards largecap, along with short to medium-duration debt exposure.
Archit Singhal, VP – Portfolio manager, Centrum PMS
The overall view on markets remains positive in the light of strong earnings growth delivered by companies, easing of inflation/oil prices, FII flows returning to India and expectation of political stability in 2024.
One needs to be selective in terms of stock picking going forward and prefer names which offer good growth at reasonable valuations.
Vikram Sharma, head of equity research, Niveshaay
We are bullish on the India growth story and expect strong execution on the business side.
Valuations are not very reasonable, so we will try to identify reasonable valuation and high growth opportunities. I don’t see large fluctuations due to the election as BJP victory is most likely.
Sahil Dhingra, proprietary trader, Alvez Capital
With interest rates pegged lower for FY24, inflation circling towards acceptable levels and GDP showing resilience – equity markets are expected to make merry in 2024.
State elections have charted the course for what we can expect in the general elections and markets are pricing that in.
Higher government spending is expected to resume the uptrend in infrastructure companies enticing further investments. Banks, with softer valuations and thriving balance sheets,again offer a high reward to risk investment opportunities.
Neeraj Chadawar, head – fundamental and quantitative research, Axis Securities
With a strong catch-up by midcaps and smallcaps in the last couple of months, we believe their margin of safety at current levels has reduced in certain pockets as compared to that available in largecaps.
Keeping this in view, the broader market may see some ‘time-correction’ in the near term and the flows will likely shift to largecaps.
However, the long-term story of the broader market continues to remain attractive. On top of it, ‘Growth at a Reasonable Price’ looks attractive at the current juncture on account of domestic play, cool-off in commodity prices and inflation, and expectation of rural recovery in the upcoming quarters.
For 2024, we believe that the Indian economy stands at a sweet spot of growth and remains the land of stability against the backdrop of a volatile global economy.
We continue to believe in its long-term growth story, supported by the emerging favourable structure as increasing Capex enables banks to improve credit growth.
These factors will ensure that Indian equities will easily manage to deliver double-digit returns in the next 2-3 years with the support of double-digit earnings growth.
We foresee 14% CAGR growth in Nifty earnings over FY23-26. In our base case, we foresee the December 2024 Nifty Target at 23,000.
In our base case, we assume the continuation of the political stability and consequent visibility on the policy continuity after the 2024 general elections.
Siddharth Bhamre, EVP – research head, Religare Broking
Budget is just before the General Election, so it’s going to be an interim budget and it won’t make or break the economy so we don’t have too much expectation from the budget.
Post BJP’s win in 3 out of 4 states, the market has shown a sharp rally. This rally is factoring in the win for BJP in upcoming general elections.
So, the continuation of the government is getting discounted. Hence, if BJP wins there may be some upside but not euphoria because its getting discounted. And those chances are very slim that some other government forms, in that case the market may see a sharp correction.
All in all, markets have discounted the outcome of the general election and we don’t see any major volatility during the budget and election period.
Narendra Solanki, Head Fundamental Research, Anand Rathi Shares and Stock Brokers
There are no major negatives for the markets in the near term and domestic macros along with the US Fed pivot on rates have boosted the already positive sentiments. So, “buy on decline” should be the strategy.
Amnish Aggarwal, head of research, Prabhudas Lilladher
We expect the rally to continue amidst sectoral rotation from time to time.
We see the possibility of a strong 2024 if BJP comes to power post the Lok Sabha elections.
Demand trends remain mixed with some green shoots of revival in rural demand. Festival and marriage season has been good for 2W, jewellery, travel, real estate and select electronics.
Cricket World Cup has also added to demand in Q3. Strong announcements and order inflows continued in capex oriented sectors like engineering, railways defence etc. We remain positive on auto (PV), banks, capital goods, hospitals, discretionary consumption.
Pankaj Pandey, head of retail research, ICICIdirect
We expect markets to head higher and deliver upsides in line with the mid-teen growth in corporate earnings from current levels.
Rate cut expectations globally and domestically, subdued crude oil prices and higher FPI inflows should help the market sustain current momentum, although post elections some consolidation cannot be ruled out.
BFSI, IT, pharma, metal, PSU are our preferred sectors with large caps to catch up midcaps from hereon.
Sneha Poddar, Associate Vice President – President, Motilal Oswal Financial
Favourable macro environment, buying by FIIs, fall in bond yields and lower crude oil prices are helping the market scale new highs. Despite the upmove in 2023, Nifty is trading at a 12-month forward P/E ratio of 19x, which is at a discount to its 10-year average of 20x.
We expect market sentiment to strengthen further as the ongoing pre-election rally is likely to continue.
Given the government’s focus approach towards long-term capex across key areas, along with expectations of rate cuts globally in 2024, growth stocks will be in focus.
We expect BFSI, Industrials, Real Estate, Auto and Consumer Discretionary to do well, going forward.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
