ICICIdirect’s Bullish Outlook : ICICIdirect, in its latest strategy note, paints a positive picture for the Indian stock market, foreseeing a robust outlook with the Sensex hitting 83,250 and Nifty reaching 25,000 by December 2024. The brokerage firm attributes this optimism to several factors, including sustained corporate earnings momentum, strong GDP growth, favorable commodity prices, and potential global rate cuts.
The strategy note introduces fiscal year 2026 earnings estimates, predicting a healthy recovery in corporate earnings, with Nifty expected to grow at a Compound Annual Growth Rate (CAGR) of 16.3% over the period from FY23 to FY26. The recent past has seen a significant rebound, with Nifty earnings registering a notable 22% CAGR from FY20 to FY23.
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ICICIdirect highlights the resilience of Indian stock indices, which have reached new all-time highs, making India the best-performing market, fueled by the return of foreign investment flows. Despite the challenges posed by the post-Covid era, Indian indices have outperformed their global counterparts, delivering substantially higher returns.
Looking ahead to 2024, ICICIdirect identifies positive indicators such as continued corporate earnings momentum, robust GDP growth, a favorable outlook for commodity prices, and the potential for global rate cuts. The brokerage believes that the macroeconomic stability and corporate earnings outlook position India favorably compared to global peers.
In addition to the positive market sentiment, ICICIdirect notes the potential inclusion of Indian bonds in major global indices, such as the Bloomberg Global Aggregate Index. This inclusion could result in substantial additional inflows, potentially ranging from $15 to $20 billion, further boosting the market.
The confluence of these factors, coupled with a global rate-cut cycle, is anticipated to drive down bond yields, reducing the cost of funds for Indian corporates. ICICIdirect identifies sectors such as cement, steel, automobile, banking, and real estate as promising investment themes for 2024, aligning with the anticipated capex cycle and growth trends.