Goldman Sachs has revised upwards the December-2024 target for the benchmark Nifty 50 index to 23,500, implying a 9 per cent upside from current levels. The US-based brokerage had set a target of 21,800 earlier. The higher target comes on the back of an earnings upgrade and valuation re-rating.
“Better macro mix led us to raise our Nifty 2024-end target to 23,500 which implies a 9 per cent price and 12 per cent dollar total return, led by earnings. Our revised target incorporates a 2 per cent higher earnings per share (EPS) and a 6 per cent higher target price-to-earnings P/E (19.3x),” said Goldman Sachs in a note.
The brokerage says the global macro environment has turned more favourable compared to two months ago with expectations of stronger US growth and optimism around rate cuts by the US Federal Reserve.
While markets have partly priced this in, a better growth/rate mix recently led us to raise our Nifty index target, incorporating a higher ‘target’ valuation multiple. We now expect the Nifty to reach 23,500 by end-2024 led by mid-teen earnings. We retain our preference for domestic (over external) sectors and large caps (over mid/small caps), and refresh various cyclical and medium-term alpha ideas,” said Goldman Sachs’ equity strategists Sunil Koul and Timothy Moe in a note.
Among the key themes identified by the brokerage are Make-in-India, defence, and energy transition.
It expects companies in the MSCI India index to log earnings growth of 15 per cent in 2024 and 14 per cent in 2025. In 2023, the MSCI India universe had posted earnings growth of 20 per cent.
Goldman Sachs has observed that the domestic markets tend to rally for one to three months after the first Fed cut “but returns fade thereafter”.
“Lower sensitivity to US rates/Fed cuts than other cyclical Asian markets and a shallow RBI cutting cycle suggest limited equity impact,” it said.
Goldman Sachs’ US economists expect faster easing in the Fed funds rate – five rate cuts in 2024 versus the earlier expectation of just one— starting in March.
First Published: Jan 09 2024 | 4:01 PM IST
Note:- (Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor. The content is auto-generated from a syndicated feed.))
