Nifty likely to hit 24,200 levels in CY2024; heavyweights to lead gains

Stock market news, Nifty target: As we are close to saying goodbye to 2023, brokerages and analysts are giving out their estimates for Nifty next year. Likewise, betting on higher FII inflow going forward as the US rate cuts will trigger increased flows to India, stable domestic currency, and reduced volatility, ICICI Direct has suggested the Nifty's target at 24,200 for CY24, an over 13 per cent upside from the last close.

Pankaj Pandey, Head of Research at ICICI Direct, believes that heavyweights should catch up with the performance of the broader market. Further, he held that heavyweights from BFSI, auto, cement, and healthcare should likely propel Nifty towards the said target.

The report by the brokerage mentioned that despite trading near highs and gaining almost 7 per cent in the December series only, Nifty has delivered approximately 16 per cent returns so far in the last 12 months, which is relatively at par with other markets.

Furthermore, Pandey is of the view that volatility will be sticky around current levels in the coming months, and hence he advises investors to adopt a ‘buy on dip’ strategy in the first half of CY 2024.

Reasons for optimism

India FPI flows share an inverse relationship with US rates

CY-23 saw a resumption in FII flows as the interest rate peaked and expectations of a rate cut set in. Earlier in CY-22, we saw a severe pullout from FPIs as the US Fed accelerated interest rates to historical highs, according to the report.

Weak dollar index should also drive capital flows into India

The dollar index is seen softening after the US Fed hit a pause button in September. Recently, as the Fed guided for three rate cuts in 2024, the brokerage said that the dollar index would weaken further, and amid such a scenario, capital flows would make their way into emerging markets, with India expected to be the major beneficiary of these flows. It also predicted that volatility would remain low for a long time.

Analysts at the brokerage see volatility in the market as being in a downward trend for a prolonged period, which, in turn, has been one of the best return periods for the Nifty.

“Both US VIX and India VIX have failed to sustain at higher levels, suggesting inherited strength in equity markets. Since 2021, India VIX has failed to sustain above 20 and has remained in a declining trend. We expect volatility upsides to be limited in 2024 as well and remain on the lower side,” noted the research report.

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