NEW DELHI: India’s benchmark indices (BSE Sensex and Nifty) may touch new milestones in the calendar year 2024 after making double-digit gains in CY2023.
According to market analysts and brokerage firms, strong corporate growth earning outlook and increased foreign institutional investors (FII) participants may push Sensex well above the 80,000 mark and Nifty has all the possibility to hit the 25,000 level.
Gaining about 20% each, Sensex closed 2023 at 72,240 while the 50-share pack Nifty signed off at 21,731. Domestic brokerage firm ICICIdirect believes that the two benchmarks are eyeing a potential upside of 15% from the current levels. It anticipates the Nifty 50 to claim the 25,000 mark by the end of 2024 and the Sensex target is set at 83,250.
“As we embark on 2024, there are greenshoots in the form of continued corporate earnings momentum domestically, healthy GDP growth, benign commodity prices outlook as well as likely rate cut globally. Thus, there seems to be more positives than negatives ahead. Amidst this setup, India is in a sweet spot vis-a-vis global peers with macroeconomic stability and corporate earnings in sight,” ICICIdirect said in its 2024 outlook note.
The brokerage said that corporate earnings recovery has been healthy in the recent past with Nifty earnings growing at 22% compound annual growth rate (CAGR) over FY20-23.
"Going forward, introducing FY26E, we expect Nifty earnings to grow at a CAGR of 16.3% over FY23-26…Our December 2024 target for Nifty is set at 25,000 wherein we have valued Nifty at 20x PE on FY26E EPS of R1,250/share with corresponding Sensex target set as 83,250; offering a potential upside of 15% from current index levels,’’ said ICICIdirect.
The net FII inflow in the Indian market in 2023 stands at nearly $17 billion while rest of the emerging markets have seen nominal flows.
Besides the corporate earnings forecast, the market is likely to benefit from interest rate cuts by the US Federal Reserve. The market is also optimistic about the outcome of the 2024 general election following a clean sweep by PM Modi-led BJP in three state elections.
However, the key risks for the markets in CY2024 remain global growth slowdown, escalated Geopolitical tensions and negative surprise from Covid erupting once again.
Few analysts also believe a correction in midcap and small-cap stocks is inevitable as a large of these stocks are overvalued.
Brokerages bullish on Indian market
Analysts at Standard Chartered also remain bullish on the Indian market and have upgraded Indian equities to Overweight. “India’s strong domestic growth momentum, up trending earnings cycle and robust fund inflows are likely to off-set above average valuation premiums,” Standard Chartered said