Axis Securities expects Indian equities to deliver double-digit returns in next 2-3 years, pegs Nifty target at 23,000 by Dec 2024

With the beginning of the March series, domestic brokerage Axis Securities estimates Nifty to reach 23,000 by December 2024, as it sees the Indian economy at a sweet spot of growth.

Furthermore, it reckons Indian equities to deliver double-digit returns in the next 2–3 years, supported by double-digit earnings growth. With this, it expects Nifty earnings to post excellent growth of 15 per cent CAGR over FY23-26.

"In any case, we continue to believe in the long-term growth story of the Indian equity market," the report read. 

While backing up the claims, the brokerage gave the following reasons:

>>Increasing capex enabling banks to improve credit growth.

>>Increase in corporate earnings will be the primary driver of market returns moving forward. 

>>Bottom-up stock picking with a focus on ‘growth at a reasonable price’ and quality stories would be key to generating satisfactory returns in the next one year.

Giving a broader perspective for Nifty, in the bull case, Axis Securities valued Nifty at 22X, which translates into a December 24 target of 25,000, and in the bear case, it valued Nifty at 16X, which translates into a December 24 target of 18,500.

From a sectoral point of view, the brokerage has taken an 'overweight' stance on the banking and financials, telecom, and auto sectors.

For Information Technology (IT), Metals & Mining, oil & gas, pharmaceuticals, realty, speciality chemicals, capital goods, cement, consumer staples, and consumer discretionary, the brokerage has given an 'equalweight' rating. 

The brokerages chose eight stocks from large-cap, three mid-cap, and four small-cap stocks as their top picks. 

Further investors must keep an eye on multiple events that are lined up in 2024:

1) General Election 2024

2) Expectation of the FED rate cut around May-June 2024 

3) Full-year budget around July 24 after the formation of the new government

4) Expectations of interest rates cut by the RBI in sync with the global rate cut.

5) US Election in November 24.

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