Nifty 50 valuations are rich, offer 8-10% upside in 2024, says HDFC Securities; lists out stocks to accumulate next year

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Also Read: Outlook 2024: How equities, gold and crude oil will perform next year “Indian economic growth will continue to be led by investments rather than consumption in 2024 indicating growth in industrial, manufacturing, real estate and allied segments. Projected earnings growth for HSIE coverage universe (~215 stocks): 29% and 8% for FY24 & FY25 respectively (Ex-energy 19% and 15% for FY24 & FY25, respectively, as FY23 was an exceptional low base year for energy)," the brokerage firm said in a report.

Earnings growth will be led by BFSI, industrials, autos, cement and pharma sectors. Margin benefits for commodity consuming sectors due to deflation in commodity prices are largely done, so any growth hereon must be volume led, it said.

(Exciting news! Mint is now on WhatsApp Channels Subscribe today by clicking the link and stay updated with the latest financial insights! Click here!) Large cap index to offer better risk adjusted returns vis-à-vis mid or small cap indices led by higher earnings growth and relatively better valuations. Meanwhile, Dhiraj Relli, MD & CEO of HDFC Securities said that the outcome of the general election will have a ‘limited impact’ on the market as investors have already started pricing in the incumbent BJP retaining power after the impressive win in the state polls, and political stability because of that.

Relli urged everybody to look at the market story beyond the election results as well and pointed to the softening of inflation and rate cuts by RBI in the second half of the year. Inflation will cool down to as low as 2.5% in the second half of the new year which will lead to a shift of stance by the central bank and also cuts of 0.50% in rates, the brokerage said.