InCred Equities 'overweight' on Indian market raises Nifty target; all details here

On Wednesday, Indian stock markets hit a record high with Sensex rising over 242 points at 77,418 whereas the Nifty opened at 23,629.80, up by 71.90 points.

Nifty bank indices opened at 50,607.90, up 167 points or 0.33 per cent whereas, the Nifty midcap 100 started with a new high of 55,679.20, up 189.10 or 0 34 per cent.

Following the development, InCred Equities raised its Nifty target to 25,683 from 24,084 for FY25 while maintaining an 'overweight' stance amid a major political event being well-braced by large liquidity benefits. Analysts at InCred also believe that positive macroeconomic conditions such as Q4 gross domestic product (GDP) above expectations and the Reserve Bank of India (RBI) raising its growth estimate for FY25F will aid the rally in Nifty.

"With the major political event being well braced by large liquidity benefits, we raise our bull case probability from 20 per cent to 25 per cent, factoring in favourable macroeconomic tailwinds, leading to an upgrade in our blended Nifty-50 target to 25,683 (from 24,084 earlier)," the report read. 

Meanwhile, the March 2024 quarter results were also marginally above expectations which is another positive.

Noting the Nifty earnings per share (EPS) growth outlook retained at a mid-teen compound annual growth rate (CAGR), FY25F-26F Nifty-50 Profit After Tax (PAT) CAGR of 12 per cent is expected to be driven by telecom, consumer staple, materials, consumer discretionary and capital goods sectors. 

Further, the brokerage believes that the Union budget, scheduled towards end-Jul 2024, will be keenly watched for how the government uses the fiscal headroom provided by the huge RBI dividend.

The brokerage prefers large-caps stocks and has added defensive stocks to its high-conviction ideas list and removed policy-risk stocks in the defence sector. 

Touching on the topic of risks, the brokerage said any delay or deviation in local state development priorities as demanded by the regional parties, and the upcoming three-state election performance in the next six months can increase the perceived political risk and volatility.

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