Indian stock market has more upside potential despite fair valuations, says Motilal Oswal; ITC, SBI among top picks

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Also Read: FPI flows into India may remain supportive for markets during 2024 feel expert Brokerage firm Motilal Oswal Financial Services believes the Indian markets have further upside potential which will be a function of US Federal Reserve’s stance on interest rates and continued earnings delivery versus expectations in the near term. Moreover, the market capitalization-to-GDP ratio is at 124% and the brokerage firm expects nominal GDP to increase 8.2% and 10.1% YoY in FY24 and FY25).

“As CY23 was marked by multi-year high interest rates, concerns about banking crises in the US and Europe, and geopolitical uncertainties, CY24 is likely to bring some moderation in these issues, especially on the interest rate front. (Exciting news! Mint is now on WhatsApp Channels Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!) “With global liquidity tightening nearing its end, a healthy domestic macro and micro environment, strong domestic and retail participation, and expected political continuity post- 2024 General Elections, bode well for policy momentum in India," Motilal Oswal said.

Further, the country is currently experiencing the highest growth among major economies. Hence, despite fair valuations, the above factors augur well with potential for further upside, it added.

It anticipates continued optimism in the market and maintains a positive outlook and overweight stance on sectors such as BFSI, Industrials, Real Estate, Auto and Consumer Discretionary. Also Read: Top 7 investment trends to look out for 2024 Meanwhile, both midcaps and smallcaps made a strong comeback in the second half of 2023 and these indices outperformed largecaps by a wide margin.