Nifty 50 likely to touch 23,200 by end of 2024, ICICI Securities forecasts; check out top picks

The Indian stock market is entering a classic bull market and the Nifty 50 index is targeted to reach 23,200 next year, according to . The upbeat domestic GDP growth with the rising capex cycle, the cyclical factors are expected to accelerate next year, which would drive the markets higher. “We expect favourable cyclical factors to accelerate in CY24 driven by capex-cycle firing on all cylinders (reflected in Q2FY24 GDP print), thereby triggering the corporate re-leveraging cycle,” ICICI Securities said in a report.

It expects listed corporate profit to approach around 5% PAT of GDP with RoE moving into a value-creating zone of more than 15%. In CY24, uncertainties related to general election outcome and further interest rate hikes would largely be over with no major shocks likely as per the trends so far. Meanwhile, the foreign portfolio investors (FPI) holdings of Indian stocks are at a decadal low but showing signs of a reversal while Domestic Institutional Investors (DII) inflows continue.

“As we enter a classic bull market, we emphasise risk management and are guided by the principle – a rising tide lifts all boats. As the undiversifiable market risk lifts all boats during the approaching bull market, the real skill would be to focus analytical efforts towards finding ‘what not to buy’,” ICICI Securities said. Cyclicals to drive growth The brokerage remains Overweight on cyclicals and Underweight on defensives.

It believes the capex-driven stocks, such as in infra, manufacturing, commodities, utilities etc. , may be the biggest beneficiaries. Moreover, the current capex cycle may have additional drivers in the form of new-age sectors such as data centres, AI infrastructure, EVs, EMS manufacturing, green energy etc.

“Empirically, it is not possible to have a rising GDP trajectory driven by a capex cycle without re-leveraging cycle in the economy; hence, this area (large banks) may provide maximum alpha as it is yet to show signs of revival and valuations remain reasonable due to skepticism. In general, financial services can benefit,” ICICI Securities said. The brokerage also believes the pockets of discretionary consumption related to auto, retail, leisure, gaming, entertainment, internet etc.

may continue to rise structurally. However, defensives are stuck in a high valuation and slow growth outlook environment, as per ICICI Securities. Rural and agriculture sectors are likely to be weighed down by El Nino effects that may continue into next year, thereby impacting broad-based consumption.

IT exports could see challenges as developed economies slow down next year, although a sharp recession-like situation seems to have been averted, it noted. Top Picks ICICI Securities’ target for Nifty50 in CY24-end stands at 23,200. Its top picks in the large caps include Larsen & Toubro (L&T), Bharti Airtel, , ONGC, M&M, , HDFC Bank, and State Bank of India (SBI).

In the mid and smallcaps, its top picks are HPCL, CIE Automotive India, InfoEdge (India), Inox, , , and . Livemint tops charts as the fastest growing news website in the world to know more. .