The Nifty 50 index is set to close 2023 on a high note, marking its eighth consecutive year of double-digit gains. Contrary to initial predictions, the index has not only met but exceeded expectations, showcasing robust rallies and breaking multiple record highs throughout the year.
**Performance Highlights:**
– The Nifty 50 has achieved an impressive 16.8% gain this year, reaching a historic peak of 21,593 points.
– A remarkable surge of 1,659 points (8.3%) from November 24 to December 19 was attributed to various factors, including the BJP’s victory in key state elections, signals of US Federal Reserve rate cuts in 2024, and consistent Foreign Portfolio Investor (FPI) inflows.
– Despite a 1.41% dip on December 20 due to profit booking, analysts anticipate a short-lived setback, with expectations of a rebound by the year’s end.
**Sectoral Support and Stock Performances:**
– The rally found support from the automotive and financial sectors, compensating for subdued performances from heavyweight stocks like Reliance Industries, HDFC Bank, and Infosys.
– Notably, 27 constituents of the index achieved new all-time highs in 2023.
– Tata Group and Bajaj Group stocks, including Tata Motors, Titan, Bajaj Auto, and Bajaj Finance, delivered outstanding performances, setting new all-time highs.
– Other sectors, such as banking, power, cement, pharma, IT, and more, witnessed multiple stocks achieving new peaks.
**Outlook for 2024:**
– Domestic brokerage firm HDFC Securities suggests that Indian stock market valuations are rich, leaving limited room for significant upside in 2024.
– The Nifty 50 index is currently trading at 23x FY24 and 20x FY25 consensus EPS, indicating a cautious outlook.
– Expected upside is projected at 8–10% from current levels, with growth being volume-led, and margin expansion potential considered limited.
– Preferred sectors for investment include large-cap banks, industrial and real estate, power, autos, pharma, oil marketing companies (OMCs), gas, and capital markets. Consumer (staples and discretionary), metals, chemicals, and small banks/NBFCs are underweight.
– HDFC Securities lists stocks for accumulation in 2024, including 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, anticipates a 10-12% return from Nifty50 in CY24, with positivity in H1CY24 driven by pre-election expectations. Challenges include the EL-Nino effect on food inflation and global market performances in anticipation of interest rate cuts, presenting a balance for a multi-asset investment strategy given the current valuations.
