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2024 : Large caps to shine

The Indian markets expect to end the year 2023 in double digit, despite witnessing a rollercoaster ride. At the start, it was already struggling with geopolitical issues between Russia-Ukraine and inflation worries and additional factors such as rising crude prices, slowdown in consumption, Banking crisis in US, selling pressure from FII as well as conflict between Israel-Hamas too impacted sentiments over the year. However, towards the second half factors such as an improving macro environment like moderating commodity prices and inflation, steady interest rates as well as the state election outcome remained in-line with market participants and healthy inflow from DII and FII, brought back confidence in the market.

Consequently, the benchmark, Sensex & Nifty continued reaching multiple records and gained nearly 20-22% in the last one year. We are entering the year of 2024, with the index at record high, along with optimistic sentiments such as moderating inflation, steady interest rates, GDP growth picking up as well as healthy inflow from FII & DII continues to be the net buyers, keeping the sentiments positive for the Indian markets.

Moreover, there is high anticipation that the Indian economy will continue to emerge as the fastest growing economies as compared to others because of its resilient performance in the past as compared to global challenges, steady policy action, robust demand environment and continuous investment towards infrastructure and boosting economic growth. Meanwhile, we expect domestic markets to be highly volatile so investors as well as participants are advised to keep their focus on specific sectors and stocks into mid to large-cap space

TECHNICAL OUTLOOK

Markets have delivered a strong performance in the calendar year 2023 and gained nearly ~20% so far. Though the beginning was not very encouraging, Nifty reversed after making a low at 16,828 in March and staged a steady up move thereafter. It also reclaimed its record high levels in June and gained momentum in the last two months, after registering a decisive breakout from a consolidation range. However, the major highlight of the year was the outperformance of the broader indices as both midcap and smallcap index rose ~44% and ~53% respectively.

Currently, Nifty is trading at a life-high, with upward momentum in sync with global markets. From the medium to long term perspective, Nifty has the potential to scale to 22,650, followed by the next target at 24,100. On the other hand, we expect the index to find support at 20,250 first and major at 19,000 levels, in case of a decline.

Considering the scenario, we have hand-picked a list of the top 5 stocks to invest from our universe of fundamentally sound counters based on their relative strength and price action.

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