Nifty to touch 24,000 by the end of CY24: Emkay Global

The brokerage reckons the small and mid-cap index will outperform the benchmarks in the calendar year 2024. It believes that small and mid-cap companies' earnings growth may exceed the Nifty's and drive further outperformance.

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Stock market today: Emkay Global expects Nifty50 to reach the 24,000 level by the end of 2024, which means an 11 per cent return for the benchmark. The brokerage reckons the small and mid-cap index will outperform the benchmarks in the calendar year 2024. It believes that small and mid-cap companies' earnings growth may exceed the Nifty's and drive further outperformance.

Below are the reasons why Emkay believes that the Nifty 50 can touch 24,000 in 2024.

Rate cuts: The brokerage expects the Federal Reserve to cut interest rates in 3QCY24 and the Reserve Bank of India (RBI) to follow suit almost immediately. This would drive a re-rating in the markets, which would be more visible in the small and mid-cap index than the Nifty.

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Election results: Emkay believes that the BJP's win in the April-May general election is almost a done deal, and the focus is on the FY25 budget, with manufacturing and infrastructure the key themes. It also sees the possibility of a recovery in mass spending.

The brokerage expects an 11 per cent return for the Nifty in 2024, with the index settling at long-term mean valuations. Good returns are predicted in the middle two quarters between April and September, while relatively subdued quarters are expected at both ends, that is, Q1 and Q4.

Also read: Market Outlook 2024: Will it be better than 2023? Here's what leading experts say

India would be relatively better off than most other countries, but absolute returns could still be marginally negative, as per the brokerage.

Emkay Global has given an underweight rating on financials, consumers, and technology, as it sees this being a year for high-growth sectors.

Meanwhile, it is overweight on consumer discretionary, primarily autos, among which some of their key picks are Hero Motocorp, Tata Motors, Zomato, UltraTech Cement, and Ambuja Cement.

On the small and mid-cap front, the brokerage has included JK Tyre, Aditya Vision, and Saregama in its top picks. On the other hand, Chola Finance, Jubilant FoodWorks, LTIMindtree, Britannia, and Colgate are on its 'Sell' list.

It sees a little risk to the 14.5 per cent FY25 Nifty EPS growth. Banks are vulnerable because of margin pressures after the RBI rate cuts, but this could be offset by manufacturing margins if commodity prices stay soft.

"FY26 forecasts are at 13.7 per cent, which we think is a little vulnerable—some sectors may see cyclical downturns by then and commodities are unpredictable that far out," it added.

As regards valuations, the brokerage believes that they are reasonable at more than 0.5x the historic mean. Small- and mid-cap valuations are ruling above the Nifty, and the trend will persist, though small- and mid-cap index valuations are unreliable due to granularity and a lack of reliable forecasts.

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