NEW DELHI: Brokerage firm Kotak Securities on Tuesday said benchmark Nifty50 may fall to 16,515 by the end of CY2023 in a bear case scenario while in a bull case scenario, the 50-share index could reach 20,919. In a base case scenario, Kotak has set Nifty target at 18,717 for 2023.
On Tuesday, Nifty closed at 18,385. In CY2022 so far, the index has gained over 4%. “At 18,610, Nifty is trading at a PE (price-to-earnings) of 22.8x FY23E, 19.6x on FY24E and 16.9x on FY25E. Base case: we value NIFTY at 17x on FY25 EPS of `1,101, and arrive at Dec’23 NIFTY target of 18,717. Bull Case: we value Nifty at 19x and arrive Dec’23 Nifty Target at 20,919. Bear Case – we value Nifty at 15x and arrive Dec’23 Nifty Target at 16,515,” said the brokerage firm.
This assumption by Kotak comes amid fear of a looming recession in the west, rising benchmark interest rates, cut in India’s GDP growth forecast among other downside risks. Kotak noted that downside risks are increasing from global factors and the lagged impact of monetary tightening. Kotak estimates Central banks will likely act a lot faster and harder on incipient inflation in the future after their humbling experience of the past two years.
“In addition, we expect them to target positive real rates in the long term. In this context, it would be interesting to see where multiples settle as and when the market adjusts to this ‘new’ reality of higher interest rates,” the brokerage stated.