In a recent projection by Prabhudas Lilladher, the Nifty is expected to reach 22,819 within a year, driven by strong performances from the auto, banks, IT services, capital goods, and healthcare sectors. This projection comes as the Nifty is currently valued at a 15% discount over its 10-year average PE. Key stocks to watch include HDFC Bank, Navin Fluorine and ABB India.
A stable government post-elections continuing current economic policies could further boost the markets. However, Safari Industries (India), Titan, Greenpanel and Gujarat Gas have been removed from high conviction picks due to limited re-rating scope.
The projection also anticipates strong festive demand, with growth expected in travel, auto, media, durables and capital goods sectors. The impact of these factors will be reflected in Q2FY24. High discretionary spending on travel, tourism, and jewellery is expected despite the challenges presented by volatile monsoons and flash floods.
However, there are several risks that could potentially affect this projection. These include the impact of El Nino on crops and inflation, an unlikely Indian interest rate cut, a probable US interest rate rise, political uncertainty, the Israel-Hamas conflict and a spike in crude oil prices. The volatile global commodities market and the effect of poor spatial distribution and El Nino on agri commodities also present further challenges.
The projection also notes that demand varies across social classes, indicating that these factors may have different impacts on different sectors of the economy.
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