Nifty 50 may hit 23,400 in pre-election rally; expect PSU banks, IT, power stocks to lead gains, says ICICI Securities

The Indian stock market is likely to see a pre-election rally and the benchmark Nifty 50 is expected to hit 23,400 by June this year, ICICI Securities said in a report.

The frontline indices witnessed a sharp rally on February 2 with the Nifty 50 hitting a record high of 22,126 during the day.

“Empirically, in the General election year, Nifty has a tendency to bottom out in February - March, followed by a minimum 14% rally towards the General election outcome in each of seven instances over the past three decades,” ICICI Securities said.

It expects public sector banks, IT, capital goods and power stocks to lead gains in the run-up.

“Usual bull market corrections in Nifty are around 8% (multiple cycle average) followed by new highs,” ICICI Securities said.

The Ratio of Nifty / Nifty500 is at the bottom of the cycle. Over two decades, ratio bottomed out at 1 on two occasions, followed by Large caps performing in subsequent quarters. Additionally, the percentage of stocks above the 200-day moving average continues to sustain above 80% even in the corrective phase indicating strong underlying strength.

Also Read: Indian stock market all set for an election rally. Know why

Moreover, global equity market setups are robust and support further rally over few quarters, said the brokerage firm.

Taking cognizance of the above factors, ICICI Securities expects Nifty 50 to head for 23,400 by June 2024 and meanwhile form a durable bottom in February - March period wherein 20,500-20,800 to act as strong support.

“Therefore, volatility from hereon should be embraced as a buying opportunity,” it said.

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