ICICI Securities. The upbeat domestic GDP growth with the rising capex cycle, the cyclical factors are expected to accelerate next year, which would drive the markets higher. “We expect favourable cyclical factors to accelerate in CY24 driven by capex-cycle firing on all cylinders (reflected in Q2FY24 GDP print), thereby triggering the corporate re-leveraging cycle," ICICI Securities said in a report.
It expects listed corporate profit to approach around 5% PAT of GDP with RoE moving into a value-creating zone of more than 15%. In CY24, uncertainties related to general election outcome and further interest rate hikes would largely be over with no major shocks likely as per the trends so far. Also Read: Nifty 50 hits record high for 4th straight day, just 41 points away from 21,000 Meanwhile, the foreign portfolio investors (FPI) holdings of Indian stocks are at a decadal low but showing signs of a reversal while Domestic Institutional Investors (DII) inflows continue.
“As we enter a classic bull market, we emphasise risk management and are guided by the principle – a rising tide lifts all boats. As the undiversifiable market risk lifts all boats during the approaching bull market, the real skill would be to focus analytical efforts towards finding ‘what not to buy’," ICICI Securities said. The brokerage remains Overweight on cyclicals and Underweight on defensives.
It believes the capex-driven stocks, such as in infra, manufacturing, commodities, utilities etc., may be the biggest beneficiaries. Moreover, the current capex cycle may have additional drivers in the form of new-age sectors such as data centres, AI infrastructure, EVs, EMS manufacturing, green energy etc. “Empirically, it is not possible to have a rising GDP
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