27 Nifty 50 stocks recorded new all-time highs this year; will the rally continue in 2024?

The Nifty 50 is poised to conclude 2023 with a remarkable double-digit gain, extending its streak for the eighth consecutive year with positive returns. Contrary to initial analyst expectations, the index has exceeded projections, showcased substantial rallies and broken multiple record highs this year.

This year so far, the Nifty 50 has achieved a notable 16.8% gain and registered a historic pinnacle of 21,593 points. The period between November 24 and December 19 witnessed a remarkable surge of 1,659 points, or 8.3%, attributed to factors such as the BJP's victory in three key state elections, signals of US Federal Reserve rate cuts in 2024, and consistent FPI inflows.

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This impressive rally prompted investors to book profits, resulting in a 1.41% dip in the Nifty 50 on December 20. However, analysts anticipate this minor setback to be short-lived, with expectations of a rebound towards the year's end.

Despite subdued performances from heavyweight stocks like Reliance Industries, HDFC Bank, and Infosys, the index's rally found support from the automotive and financial sectors in 2023. Notably, 27 constituents of the index achieved new all-time highs this year.

Major Tata Group stocks, including Tata Motors, Titan, and Tata Consumer Products, achieved new all-time highs. Titan crossed the ₹3,00,000 crore market cap on November 23, while Tata Motors marked an exceptional 83% return this year, ranking as its third-best yearly performance in the last two decades.

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Bajaj Group stocks also demonstrated outstanding performance this year, with Bajaj Auto delivering a return of 74.16% so far, reaching a new all-time high of ₹6,486 per share on December 18. Britannia Industries and Bajaj Finance also achieved returns of over 13% and set fresh all-time highs.

Other auto group stocks, including Mahindra & Mahindra, Eicher Motors, and Maruti Suzuki India, recorded new all-time highs. Among pharma stocks, Cipla, Dr Reddy's Laboratories, and Sun Pharmaceutical Industries reached peak values. In the IT sector, only HCL hit a new historic high this year.

Banking stocks, including SBI, ICICI Bank, and Axis Bank, registered new highs, while power names like NTPC and Power Grid Corporation of India also reached new heights.

Also Read: 2023 in Review: Nifty Metal gains for 4th straight year; two stocks turn multibaggers

Additionally, other Nifty 50 stocks, such as UltraTech Cement, Nestle, Grasim Industries, Larsen & Toubro, ITC, JSW Steel, Bharti Airtel, Adani Ports & Special Economic Zone, and SBI Life Insurance Company, performed well and achieved new all-time highs this year.

Will the rally continue in 2024?

According to domestic brokerage firm HDFC Securities, the valuations of Indian stock market indices are rich and leave little room for any large upside next year. The brokerage expects Nifty 50 to see another 8–10% upside from the current levels.

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The Nifty 50 index is now trading at 23x FY24 and 20x FY25 consensus EPS, indicating limited upside potential in the next 12 months, said the brokerage house. It believes growth hereon will be volume-led while the margin expansion story is largely over.

HDFC Securities preferred sectors are large-cap banks, industrial and real estate, power, autos, pharma, OMCs, gas, and capital markets. It remains underweight on consumer (staples and discretionary), metals, chemicals, and small banks/NBFCs.

The brokerage listed stocks to accumulate over 2024. These stocks are Infosys, Axis Bank, GAIL India, Adani Ports & SEZ, JSW Steel, Grasim Industries, Bajaj Finserv, Info Edge (India), and Pidilite Industries.

Vinod Nair, Head of Research at Geojit Financial Services, said," We expect Nifty50 to provide a return of 10-12% in CY24. Currently, we are positive on H1CY24 in anticipation of a pre-election rally as the domestic political and global market environment is aptly placed. The final performance of the second half hinges on the election outcome and the final budget, which is also forecast to be stable. While challenges are the EL-Nino effect on food inflation and the recent far-stretched performance of global markets in anticipation of a deep cut in interest rate, which is a challenge when CPI is forecast to be above the long-term average. We suggest a multi-asset investment strategy, as both equity and non-equity can provide a moderate return as valuations are inexpensive."

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.