Outlook 2024: Bullish on PSU theme, IT sector may face headwinds, says Naveen Kulkarni of Axis Securities PMS

livemint.com:

Livemint, Kulkarni said he expects 2024 to turn out to be a little more challenging than 2023. However, he believes the public sector companies (PSU stocks) will continue to benefit while the IT sector is likely to see challenges in 2024 as it will experience the most slowdown. Edited excerpts: A.

2023 was remarkable for Indian equities as the broader market delivered solid returns. Even as Nifty 50 beat the long-term average returns, the smallcap and midcap indices delivered astounding returns. Some of the key factors which were responsible for solid returns during the year were risk-taking rewarded throughout the year.

Time in the market rather than market timing was another critical factor for the strong returns, and last but not least, the PSU story continued, wherein they delivered another year of very strong returns. Also Read: Retail investor response to market swings a key challenge ahead, says Sunil Subramaniam of Sundaram Mutual Fund A. Volatility has been steadily inching up in the last month, notwithstanding the strong market returns.

In 2024, multiple factors are likely to play out. In general, growth worldwide is likely to taper down, but so will the challenges of rate hikes that we witnessed in early 2023. Nonetheless, volatility is bound to see a steady rise.

The rise in market volatility has an impact on the market breadth. 2024 is unlikely to see a repeat of the excellent performance in smallcap and midcap stocks seen in 2023. The market will focus on largecaps and quality themes.