Investors celebrated a prosperous year in 2023, witnessing a substantial addition of Rs 81.90 lakh crore to their wealth. The robust performance was attributed to a combination of factors, including India’s resilient macroeconomic fundamentals, political stability following the BJP’s success in recent state elections, an optimistic outlook for corporate earnings, and signals from the US Federal Reserve hinting at three potential rate cuts in the coming year.
As the curtains close on a record eight-year winning streak in 2023, the outlook for Indian equities in 2024 appears even brighter. According to an informal Bloomberg survey, seven out of 10 fund managers and strategists anticipate a positive trajectory for the NSE Nifty 50 Index in the upcoming year. While two foresee a gain exceeding 10%, two anticipate a drop.
2024 Nifty 50 Predictions: Number of Respondents
- Up more than 10%: 2
- Up 0-10%: 5
- Down 0-10%: 0
- Down more than 10%: 2
The Nifty 50 benchmark demonstrated a remarkable 20% increase this year, surpassing MSCI’s Asia Pacific and emerging markets indexes. The Indian market’s valuation has now exceeded $4 trillion for the first time, outpacing concerns over the outlook for its major rival, China.
Strategists in the survey highlighted several factors that could fuel the growth of Indian stocks in 2024. These include Prime Minister Modi’s infrastructure initiatives, a strategic diversification of supply lines beyond China, and what was described as “multiple tailwinds” by Arun Chulani, an emerging market strategist at First Water, in a Bloomberg report. The prevailing sentiment is that these factors should create significant opportunities for wealth creation.
The survey also pointed to key drivers, such as overseas investors injecting over $20 billion into local stocks on a net basis this year, a reversal from the record withdrawal experienced in 2022. Additionally, the growing appetite for stocks among domestic retail investors has been identified as another positive factor for the market in 2024, with mutual fund investments surging by 28% in November compared to the previous year, as reported by the Association of Mutual Funds in India.
Earnings projections for Nifty 50 companies indicate a potential 15% rise in 2024, marking a fourth consecutive year of double-digit profit growth, according to Bloomberg.
While optimism prevails, concerns about valuations loom, with the Nifty 50 currently trading at 20.2 times estimated earnings, compared to a 10-year average of 17.6 times. Despite this, the consensus suggests a positive outlook for Indian equities in the coming year, underpinned by various favorable factors and growth opportunities.
