Nifty target at 24,200! ICICIdirect says these stocks may lead index rally in 2024

Nifty could hit a level of 24,200 in 2024, ICICIdirect said in its Quant Yearly Outlook 2024. The domestic brokerage believes heavyweight stocks from BFSI, automobile, cement and healthcare sectors to Nifty to the level. Banking sector, it said, has the largest headroom to absorb FPI inflows.

On Friday, the 50-pack index was trading at 21,324.95. ICICIdirect's Nifty target suggests a 13.5 per cent potential upside over the prevailing level. While Lok Sabha elections in India and presidential elections in the US may trigger near-term volatility in the market, declines are likely to be limited, the brokerage said.

"Financial Services have been relative underperformer in the market and they have received reduced flows compare to their sectoral weight in market. However, recent data suggests change of trend as Financials seems to attract higher flows. We expect in declining interest rate cycle, stocks from Financial space should garner more interest from FPIs," ICICIdirect said.

Healthcare stocks, ICICIdirect said, have seen good reversal as they witnessed significant allocation from FPIs since the third quarter of calendar 2022. Even during the outflows, the sector saw minimal outflows in the past few months, ICICIdirect said. "We expect fresh flows should continue in the healthcare space which should trigger further out performance in the months to come," it said.  

Construction-related stocks have seen continued outflows and heavyweights from the sector have relatively underperformed the market. But due to interest rate cut expectations, fresh flows are likely to be seen in 2024, ICICI Securities said, which should propel the outperformance from this sector.

"Metal as a sector has been significantly underperformer and witnessed continued outflows. The volatility in Chinese growth was a reason behind reduced exposure in the metal segment. With expectations of rate cut, we expect flows to be back in the Metal space. The underperformance so far seen by the sector may turn into outperformance in the next year," it said.

ICICI Securities expects volatility to be sticky around current levels in coming months. In the first half of 2024, it advised investors to adopt “Buy on dips” strategy.

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