Market Strategy: ICICI Securities suggests these themes, stocks for wealth creation in 2024

While maintaining its bullish view on the domestic equity markets, ICICI Securities said the benchmark equity indices may witness another double-digit rise in 2024. In its latest report, the brokerage said that there are green shoots in the form of continued corporate earnings momentum domestically, healthy GDP growth, benign commodity prices outlook as well as likely rate cuts globally. Thus, there seem to be more positives than negatives ahead.

ICICI Securities sees the NSE Nifty index at 25,000 by December 2024 and the BSE Sensex at 83,250, indicating a potential upside of around 15 per cent for both of the indices. Considering the present setup, the brokerage suggests zeroing in on themes such as capex cycle, cement, steel, auto, banks and real estate for wealth creation.

Capital expenditure (Capex) spending remains the key priority with government capex allocation CAGR of 30 per cent over FY20-FY24. “The capex to GDP is pegged at an all-time high of 3.3 per cent. This is in stark contrast to the FY14-FY18 average of 1.8 per cent. The two sectors that stand out in terms of allocation are railways and roads. Both the segments have seen allocation rising by 6 times and 3.3 times over FY18-FY24,” ICICI Securities said.

For stock-specific investors, ICICI Securities suggested buying stocks such as UGRO Capital (target price: Rs 350), SBI Cards (Rs 950), NMDC (Rs 250), Uno Minda (Rs 810), Greenply Industries (Rs 295), Birla Corporation (Rs 1,755) and Grindwell Norton (Rs 2,700) with a potential upside of up to 30 per cent.

Sharing its view on the cement sector, the brokerage said that cement companies are slated to add around 35 million tonnes of capacity annually during FY23-27 (against 20 MT added during FY17-22). The capacity expansion will entail fresh capex investment worth Rs 1.1 lakh crore during FY23-27.

“Government spending on infra projects and revival of the housing sector to keep utilisation rates healthy,” ICICI Securities said.

It further added that sales of commercial vehicles set to pass a lifetime high in FY24. Passenger vehicle (PV) and tractor sales have already surpassed their pre-covid peaks.  However, the two-wheelers segment, a price-sensitive segment, is lagging due to the impact of fuel efficiency and insurance norms-driven price hikes.

On the other hand, ICICI Securities believes that 2024 is likely to witness a sharp slowdown in major economies like the US and China while growth in Euro region is also likely to be sub-optimal. The same poses a risk to the otherwise resilient domestic economy especially on exports front.

 

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