Indian equities have witnessed a remarkable rally in Samvat 20280, with the Nifty-50 reaching an all-time high of 26,277 in September 2024. The index has risen 26% from November 2023 to October 2024. Despite the recent 7% correction triggered by heavy FII selling, investors continue to view Indian equities favourably. According to experts, positive catalysts such as robust corporate earnings and favourable growth-inflation dynamics of India make it a compelling choice in the current global setup.
Despite some volatility seen around the general election, Indian stocks have consistently outperformed other Emerging Market (EM) economies. India has experienced stable and rapid economic growth in recent years and is poised to become the fastest-growing major economy over the next three years, with ambitions to emerge as the third-largest economy by 2030. While the global economic environment poses challenges, India is well-positioned to seize new growth opportunities, believe experts.
As Samvat 2081 approaches, analysts remain optimistic about sectors like banking, healthcare, hospitality, and renewable energy, which are poised to emerge as key drivers of potential growth.
Religare Broking: In Samvat 2081, the brokerage anticipates that banking would remain a top-performing sector, underpinned by an economic recovery and a favourable lending environment. Rising net interest margins (NIMs) and reduced non-performing assets (NPAs) continue to drive optimism, further supported by government initiatives to improve credit flow. This trend positions the banking sector for a potentially profitable year ahead.
The healthcare sector also shows promise, spurred by increased healthcare expenditures and advancements in medical technology. Key growth drivers include telemedicine, preventive healthcare, and pharmaceutical R&D. India’s healthcare industry continues to benefit from government support, with medical tourism and infrastructure investments contributing to a stable growth trajectory.
Meanwhile, the hospitality sector has rebounded significantly as tourism picked up, both domestically and internationally. Although rising operational costs and heightened competition pose some risks, the sector is projected to benefit from growing consumer spending on travel. Additionally, sectors such as pharmaceuticals and renewable energy are expected to see sustained growth due to governmental incentives and increased demand for clean energy solutions.
ICICI Direct: The brokerage projected a forward target for the Nifty at 27,500, favouring sectors such as capital goods, infrastructure, private banks, auto, IT, and pharma. It advised investors to maintain a focus on quality companies with strong earnings growth and stable cash flows.
Motilal Oswal: MOSL remains positive on sectors linked to structural and cyclical themes within India, including financials, consumption, industrials, technology, and healthcare, as these sectors offer robust earnings potential and attractive valuations.
Kotak Securities: Kotak Securities anticipates that after a solid 19.8% earnings growth in FY24, net profits for the Nifty-50 Index would rise by 6.7% in FY25, reaching an EPS of 1,042, and by 17.3% in FY26, achieving an EPS of 1,222. The firm projects more widespread sectoral growth in FY25, however, Oil Marketing Companies (OMCs) are expected to see moderate profits as their earnings normalise. Most sectors and stocks appear overvalued, with valuation degrees varying: low for large-cap consumer, IT, and pharmaceuticals; moderate for investment-related sectors; and high among certain lower-quality companies.
SBI Securities: The brokerage suggests that Samvat 2081 could be an ideal period for stock pickers to carefully manage wealth created since the COVID-19 pandemic. It advised new investors to adopt a gradual capital deployment strategy over the next few months to take advantage of opportunities in the latter half of the year. Key sectors to watch, according to SBI, are consumption, auto, BFSI, real estate, travel, engineering, renewable energy, and telecom.
In conclusion, as Samvat 2081 unfolds, the Indian equity market appears poised for selective growth across various sectors, supported by a stable macroeconomic environment and favourable government policies. While global economic conditions may bring in some challenges, India's strong GDP growth, coupled with sectoral opportunities in banking, healthcare, hospitality, and renewable energy offers a compelling landscape for investors in the year ahead.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
