The bull-run in Indian financial markets is likely to continue in 2024 as foreign interest remains robust, with heavy buying expected in both equity and debt markets, said several analysts and industry watchers.
Domestic equity benchmarks Nifty 50 and BSE Sensex rose around 20 per cent in 2023, their second-best year since 2017, and were among the top-performing stock indexes globally. The broader small- and mid-caps gained about 55.62 per cent and 46.57 per cent in 2023, far outperforming the blue-chip indexes despite valuation concerns.
On the last trading session of 2023, the Nifty 50 settled at 21,731.40 and Sensex closed at 72,240.26, snapping their five-day winning streak, on profit-booking in select heavyweights even as the mid and smallcap indices ended with healthy gains.
Going forward, markets are eyeing a potential upside of 15 per cent from the current levels as Nifty 50 is likely to claim the 25,000-mark by the end of 2024 and the Sensex target is set at 83,250, according to domestic brokerage firm ICICIdirect. Several greenshoot factors such as sustained domestic mutual fund inflows, return of foreign buying, better-than-expected economic growth, and healthy corporate earnings will contribute to the market’s rally in 2024.
Nifty 50 fair value pegged at 25,000: ICICIDirect
Corporate earnings recovery has been healthy in the recent past with Nifty earnings growing at 22 per cent compound annual griwth rate (CAGR) over FY20-23. ‘’Going forward, introducing FY26E, we expect Nifty earnings to grow at a CAGR of 16.3 per cent over FY23-26E,” said ICICIdirect.
‘’Our December 2024 target for Nifty is set at 25,000 wherein we have valued Nifty at 20x PE on FY26E EPS of ₹1,250/share with corresponding Sensex target set as 83,250; offering a potential upside of ~15 per cent from current index levels,” it added.
Nifty earnings has grown more than 30 per cent in H1FY24 on absolute basis. In 2023, the domestic economy was resilient all across this time frame with revival in private capex cycle, robust infrastructure spending by government, record goods and services tax collection (GST) and most importantly margin expansion led healthy high double digit corporate earnings growth, said analysts.
‘’As we embark on CY24, there are greenshoots in the form of continued corporate earnings momentum domestically, healthy gross domestic product (GDP) growth, benign commodity prices outlook as well as likely rate cut globally. There seem to be more positive than negatives ahead. Amidst this setup, India is in a sweet spot vis-à-vis global peers with macroeconomic stability and corporate earnings in sight,” said the brokerage.
Here’s what keeps ICICIdirect bullish on Indian markets —
1.Resumption of FPI flows to propel markets further: Indian Indices made fresh life highs and retained its the best performing market helped by resumption of foreign flows.
The net flows for the current calendar year is nearly of $17 billion while rest of the emerging markets have seen nominal flows. In the post covid era, while most of the markets are still reeling below their 2021 highs, Indian indices have given significantly higher returns than the rest.
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Published: 29 Dec 2023, 09:13 PM IST