Will the Indian market continue its strong run? Here’s where experts see Nifty by 2024-end

After a stellar 17 percent return delivered by the Nifty in 2023, market experts and brokerages have mixed views on the index's performance in the year 2024. 

In 2023, the Nifty marked its eighth consecutive year of positive performance, showcasing its resilience in the face of challenges.

Despite experiencing major headwinds like global monetary tightening, particularly US Fed rate hikes, the Indian economy and market demonstrated remarkable resilience in 2023. The year commenced with elevated inflation, geopolitical uncertainties, and Foreign Portfolio Investor (FPI) outflows, contributing to a cautious market sentiment. However, as the year progressed, these pressures gradually eased, bolstering investor confidence.

Going ahead, the outlook for India's economic growth remains optimistic driven by robust domestic consumption, government spending initiatives, and a gradual rebound in private investment. While challenges such as fluctuating global interest rates, volatile crude oil prices, and impending domestic elections persist, the Indian growth story continues to be compelling, offering investors significant potential for wealth creation over the long term.

Read here: Wealth Destroyers of 2023: These 7 stocks eroded 80-95% investor wealth this year

Let's take a look at where various brokerages and experts see Nifty by 2024 end.

Mohit Ralhan, CEO, TIW Capital

Nifty valuation is marginally on the higher side compared to its last 10-year average of 19x forward earnings. It is currently trading at 19.6x FY 2025 earnings. Movement in Nifty over 2024 should track earnings expectations, which are forecasted to grow at 12 to 14% in FY 2026. Ideally, one would expect Nifty to deliver a 10 to 12% return over the next year but given that foreign ownership of Indian stocks is light, India can very well trade at a premium to its historical multiples when FII flows return.

As the Fed embarks on rate cuts, global investors will look towards emerging markets and given India’s positive macroeconomic backdrop and political stability, India will remain in favour despite rich multiples. 19x FY 2026 EPS gives Nifty a target of 23,800. If it trades at a 5% premium, which is highly likely, the benchmark could very well cross 25,000 by next year's end.

Sampath Reddy, Chief Investment Officer, Bajaj Allianz Life Insurance

India's strong macroeconomic fundamentals, marked by robust GDP growth, moderating inflation, and a stable rupee, played a crucial role in this resilience. This, coupled with improving global conditions like softening inflation, central bank pauses on rate hikes, and continued earnings growth led to a market rally across Indian indices. Nifty50 is on track for a 20 percent gain, with mid-cap and small-cap indices delivering even higher returns.

Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities

We believe that the index is likely to continue this uptrend going forward. We are heading into Lok Sabha Elections in the next six months. Nifty generally performs positively six months prior to election results. In the last 25 years, there have been five general elections. Nifty has never given negative returns in any of these periods before elections. The average gain of Nifty during these five elections is 26.4 percent six months before the results are announced. The highest return was before the 2009 election results - 61.1 percent. The lowest return was 8.7 percent before the 2004 elections. With US bond yields slipping below 4 percent and only six months remaining for the election results, we are poised for the up-move to continue in 2024. The target for the Nifty is placed at 24,500.

ICICI Direct

ICICI Securities is bullish on the Indian markets and has a target of 24,200 for Nifty 50 in the calendar year 2024 driven by foreign fund inflows. 

Read here: Nifty PSU Bank index jumps 28% in 2023. Can PSBs sustain the rally in 2024?

Vinod Nair, Head of Research at Geojit Financial Services

We expect Nifty50 to provide a return of 10-12 percent 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.

Jyoti Roy, Head of Equity Research at Sanctum Wealth

At current levels, Nifty is trading at P/E multiples of 21x one year forward EPS estimate which is slightly higher than the last ten one-year average of 20.5x. This indicates that while markets are not cheap, they are not expensive either and we can expect an 8-12 percent upside for the markets over the next one year given earnings growth expectations of 13-15 percent for FY2025e. Given reasonable valuations, stable earnings growth and a high probability of a favorable outcome of the general elections, we believe that India will be an attractive destination for FIIs in 2024.

Neeraj Chadawar, Head - Fundamental and Quantitative Research, Axis Securities

For 2024, we believe that the Indian economy stands at a sweet spot of growth and remains the land of stability against the backdrop of a volatile global economy. We believe in its long-term growth story, supported by the emerging favourable structure, as increasing capex enables banks to improve credit growth. These factors will ensure that Indian equities will easily deliver double-digit returns in the next 2-3 years with double-digit earnings growth. We foresee 14% CAGR growth in Nifty earnings over FY23-26. In our base case, we foresee the December 2024 Nifty Target at 23,000. In our base case, we assume the continuation of the political stability and consequent visibility on the policy continuity after the 2024 general elections.

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

HDFC Securities

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

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.

Goldman Sachs

Goldman Sachs has upgraded the target for the 50-share index, Nifty, to 21,800 by December 2024. This is a 10.7 percent rise from the previous close. The rationale behind the increase in the target is the robust earnings growth witnessed by India Inc. in Q2 and better valuations. Earlier, the target was pegged at 20,700 up until June 2024.

Goldman Sachs has iterated that stocks' valuations have become relatively cheaper after the sell-off amid continued FII selling. Further, it pointed out that most sectors are trading at a 15 percent discount to their peak multiples. Goldman Sachs sees corporate profitability to register 15 percent growth in FY24, while the same is seen to be 14 percent in FY25.

Read here: Overvaluation a key risk, says Kenneth Andrade of Old Bridge Capital

Kotak Securities

While presenting the market outlook, we have to consider the 1-year forward outlook of EPS, and based on that, our base case target is 21,834, which is 18 times the FY26 estimated EPS of ₹1213. We are of the view that equity and other asset classes, such as debt, real estate, or gold, may provide investment opportunities during the calendar year 2024, which would give a decent return in the coming 2 to 3 years. We can consider CY24 as the year of investment across various asset classes. We expect a great closure to FY24 with moderate growth and macroeconomic stability.

NIFTY base case target at 21,834 by CY24 end: We expect EPS of the Nifty-50 index at ₹964 in FY24E, ₹1,080 in FY25E and ₹1,213 in FY26E. At 20528, Nifty trades at 21.3x FY24E, 19.0x FY25E and 16.9x FY26E.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.