Lok Sabha election'2024: Stable outcomes and favorable pre-budget announcements could boost the markets- Anshul Arzare

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Also Read- Lok Sabha Polls trading strategy: Nifty may hit 24,600 in a year, says Jitendra Gohil of Kotak Alternate Asset ManagersDownside risks include a slowdown in the global or domestic economy, potential conflicts, rising inflation eroding consumer spending and corporate profits, and election results that do not yield a majority or deviate significantly from expectations, which could destabilize markets.Q4 results have largely met expectations, with notable outperformance in the Auto, Energy, Realty, and PSU sectors, especially banks. Conversely, IT, Private Banks, FMCG, and Media have lagged due to inflationary pressures and reduced discretionary spending.

Private banks have experienced slowed credit growth and potential pressure on Net Interest Margins (NIMs) due to insufficient deposit growth.Nifty valuations are at all-time highs, deemed "expensive" due to significant re-rating across all market segments. Earnings upgrades in sectors like infrastructure, energy, and capital goods have been driven by margin expansions and government public capex.

However, high overall valuations require continuous earnings growth across various sectors to be justified.Also Read- Multibagger J. Kumar Infraprojects share price rises 14% to all time highEarnings remain strong, with expectations of high single-digit to double-digit compound annual growth rates for the Nifty over the next few years.

Operating leverage delta in most sectors will further support earnings growth in the upcoming financial year.FIIs have not been the dominant force in the Indian stock market recently, with domestic institutional investors playing a larger role. The return of FII investments to India will depend on global economic conditions, India's