Journey of Indian Stock Market in 2023 and Outlook for 2024

Market in 2023

The Indian stock market had an incredible year in 2023, breaking through global challenges and reaching all-time highs. For the first time, the market capitalization of the Indian stock market has surpassed $4 trillion, setting a new record which positions India as the fifth-largest equity market in the world, which is an important milestone.

The Sensex and Nifty fell 4.12% and 3.03%, respectively, in the first quarter of the year due to concerns about an upcoming global recession and possible rate hikes. But in April, things drastically changed. The April showers brought in a deluge of Foreign Portfolio Investor (FPI) inflows in addition to a literal monsoon. The surge was further driven by the Reserve Bank of India’s decision to pause rate hikes and a sharp decline in the price of crude oil. The indices closed the first half with a solid 6% gain, having surpassed them and reclaimed lost ground by June.

The second half witnessed some consolidation with rising global interest rates, geopolitical tensions, and profit-booking, but the market saw a significant surge, particularly in November and December due to three major state elections that the BJP won efficiently, a notable rise in foreign investment, and 7.6% growth in the Indian economy in the September quarter. Investor confidence was also bolstered by encouraging signals from the US Federal Reserve on possible interest rate reductions in 2024, a spike in industrial production in October, and upbeat comments from the RBI regarding India’s GDP projection. By the year end, BSE Market Capitalization crossed $4 trillion mark and both Sensex and Nifty surpassed significant milestones, ending the year with 18.38% and 19.68% gain so far respectively.

Outlook for 2024

Going forward, India’s economic growth is expected to be supported by strong domestic consumption, government expenditure programs, and a steady recovery in private investment. The Indian economic story is still appealing and presents investors with substantial long-term wealth creation potential, despite ongoing challenges including changing crude oil prices, fluctuating global interest rates, and upcoming Lok Sabha elections.

In 2024, the stock market is expected to rise before the election results, but there may be subsequent corrections as there would be less or delayed capex related fiscal spending. The overall outlook suggests that the market may be consolidating in 2024 as a result of continued expectation and discounting of election-related matters. Recent rally in the market is already exhibiting indications of considering the upcoming election into account. Key industries showing positive outlook for the year 2024 include domestic cyclical sectors such as capital goods, autos, industrials, and the rebounding pharmaceutical and healthcare sectors.

Overall, there is short-term volatility in the Indian market both before and after elections; however, long term trajectory remains vibrant and investors should approach the stock market from a long-term perspective, concentrating on fundamentals and diversification.

New Year Stock Recommendations 2024

Company	Sector	CMP (Rs.)	Target (Rs.)	Upside	Allocation	Time Horizon
Bharat Electronics	Electronics	182	220	21%	8%	12 months
C.E. Info Systems	IT-Software	1959	2300	17%	8%	12 months
Cipla	Pharmaceuticals	1245	1500	20%	8%	12 months
GSFC	Fertilizers	241	280	16%	7%	12 months
HDFC Bank	Banks	1711	2050	20%	8%	12 months
Hero MotoCorp	Automobile	4150	5000	20%	9%	12 months
ITC	FMCG	463	550	19%	9%	12 months
Kaynes Technology	Electronics	2590	3200	24%	9%	12 months
Kotak Mahindra Bank	Banks	1895	2300	21%	9%	12 months
Ramkrishna Forgings	Forgings	725	905	25%	9%	12 months
Siemens	Electric Equipment	3986	4800	20%	8%	12 months
Sula Vineyards	Breweries	490	600	22%	8%	12 months

New Year Stock Performance 2023

Company	Recommended Price (Rs.)	Target (Rs.)	Target Status	High + Dividend	52 Week High	Gains from High*
Asian Paints	3115	3675	Position Closed	3593	3567	15.4%
Bharat Electronics	99	125	Target Achieved	187	185	88.6%
Cipla	1088	1300	Target Almost Hit	1292	1283	18.7%
DLF	373	450	Target Achieved	728	724	95.2%
HDFC Life Insurance	571	700	Target Almost Hit	713	711	24.8%
ICICI Bank	908	1100	Position Closed	1051	1043	15.7%
Infosys	1518	1775	Position Closed	1656	1620	9.1%
Mahindra & Mahindra	1262	1450	Target Achieved	1755	1739	39.1%
Redington	182	250	Position Closed	203	196	11.6%
Reliance	2543	3200	Position Closed	2904	2635	14.2%
SKF India	4541	5500	Target Achieved	5569	5529	22.6%
State Bank of India	612	750	Position Closed	672	660	9.8%

*High + Dividend

Outlook:

BEL has established a strong competitive position in both defence and non-defence segments in the Indian and International markets. The company has shown growth and diversification over the years following the trend in electronics technology. It is emerging as a key beneficiary of the increase of defence capital expenditure. Company’s strategy to diversify into non-defence areas and focus on increasing exports and services would support its long term growth. The TTM EPS of the company is Rs.4.55 and it is trading at PE of 39.99x at the current price of Rs.182. Hence, we recommend to buy the stock at the current price for the target price of Rs.220 with the time horizon of 12 months.

Outlook:

Cipla’s US business is expected to perform well further on the back of launches of gAbraxane, gAdvair, peptide and complex generics. MR additions in braded generics, strong position in trade generics and new product launches across segments would drive India business growth going forward. In the SAGA segment, company is focusing on developing a strong brand franchise in the OTC and private markets in addition to the new launches. We remain positive on the stock among its peers due to its strong product pipeline and gain in market share. On the performance front, the TTM EPS of the stock is at Rs. 44.07 and is trading at the PE of 28.26x at the current price level of Rs.1,245. We recommend buying of the stock at the current price level for the target price of Rs.1,500 with the time horizon of 12 months.

Outlook:

GSFC is a leading fertilizer manufacturer in India, with a diversified portfolio of products including urea, phosphatic fertilizers, and organic fertilizers. The company has a strong presence in western and central India, and it is an important player in the country’s agricultural sector. The management of the company is thoroughly analysing the ongoing geo-political tensions and is continuing to optimise the product mix to mitigate the impact. It is expected to have reasonable margins going forward and poised for growth in top line and bottom line in the coming years. GSFC would benefit with the increased demand for fertilizers and favourable government policies in the coming years. On the performance front, the TTM EPS of the stock is at Rs.26.51 and is currently trading at the PE of 9.26x. We recommend buying of the stock at the current price level for the target price of Rs.280 with the time horizon of 12 months.

Outlook:

HDFC bank has shown strong performance over the years despite the pandemic led disruptions. After the merger, bank’s mortgages account for 60% of the retail loan book which would benefit the bank with steady stream of income and risk minimization over the long term. Further, Bank’s NIM is expected to improve in the coming quarters on behalf of removal of ICRR and increase in deposits. India’s under penetrated credit growth, demographic advantage along with growing demand of financial products would further the bank’s growth in the longer run. The current P/B ratio of HDFC bank stands at 3.28 while the P/E stands at 23.73x. Hence, we remain long on the stock with target price of Rs.2050 for period of 12 months.

Outlook:

The management forecasts progressive recovery in rural demand (particularly in the entry-level category), new product introductions in premium motorcycles and scooters, and a ramp-up of the EV product portfolio to help drive double-digit revenue growth in FY25, owing to the strong Indian economy. Going forward, the business expects EBITDA margins to be in the region of 14%-16%. We are bullish on the company notwithstanding a rise in rural demand and Harley volume, a solid dividend yield (3.7%), and a reasonable value. We recommend to buy the stock for the target price of Rs.5000 with the time horizon of 12 months.

Outlook:

Since 1995, MapmyIndia has led the B2B and B2B2C markets in India and paved the way for the nation’s digital mapping environment. The company unveiled cutting-edge technology, such as the N-CASE mobility suite designed for digital vehicles and an AI-powered 4D high-definition digital map of the real world. The company can sustain premium valuations as it possesses distinct advantages in the Indian market that are not easily imitated by competitors. These advantages serve as significant barriers for other companies entering the map and navigation business in India. The TTM EPS of the company is Rs.22.74 and is currently trading at the PE of 87.85x. Hence, we recommend to buy the stock at the current price for the target price of Rs.2300 with the time horizon of 12 months.

Outlook:

We expect ITC will continue to grow rapidly given its efforts to strengthen its core business, launch value-added products, expand its footprint in emerging regions, and open up new distribution channels. The cigarettes business continues to deliver strong volume growth and derive market share gains from illicit trade. The hotel and FMCG-others segments are also performing well across all markets and portfolios. The TTM EPS of the company is Rs.16.14 and is currently trading at the PE of 28.3x. Hence, we recommend to buy the stock at the current price for the target price of Rs.550 with the time horizon of 12 months.

Outlook:

Kaynes is a leading end-to-end and IoT-enabled integrated electronics manufacturer, with strong order book growth and a higher share of Box Build (~40% in 1HFY24) and PCBA (54%). In the upcoming quarters, we anticipate higher revenue and PAT growth, which will be fuelled by a robust order book growth trajectory and an improved margin profile (growing percentage of high-value orders). The TTM EPS of the company is Rs.18.95 and is currently trading at the PE of 137x. Hence, we recommend to buy the stock at the current price for the target price of Rs.3200 with the time horizon of 12 months.

 

Outlook:

KMB is aggressively entering the semi-urban and rural areas with new savings account offerings. The deposit growth outpaced the credit growth during the September quarter. The expansion of credit stayed widespread and is anticipated to continue in the future. Kotak Securities was one of the first few brokers to have launched the BSE F&O and has already taken a reasonably decent market share in the last 2.5 months since it launched the BSE F&O. We assume the securities business will see more traction on the back of increasing retail participation in the Indian securities market. The current P/B ratio of KMB stands at 3.2x while the P/E stands at 22x. Hence, we remain long on the stock with target price of Rs.2300 for period of 12 months.

Outlook:

RKFL is a major player in the Indian forging market with presence across industries and it is going to benefit from the CV upcycle across geographies with better CV prospects in India. Company’s focus on expanding its manufacturing capabilities along with diversification strategy with increasing focus on non-automotive categories and increasing revenue share of EV business will help improve realisations and EBITDA margins further. The TTM EPS of the company is Rs.16.05 and is currently trading at the PE of 45x. Hence, we recommend to buy the stock at the current price for the target price of Rs.905 with the time horizon of 12 months.

Outlook:

Siemens is going to benefit with the government as well as private capex drive across India. Emerging opportunities from new areas such as semiconductors, batteries, and EVs also create positive outlook for the company. The general election schedule could have an impact on order inflows in the near future, but long-term order inflow prospects from transmission, railroads, data centers, industrial automation, etc. remain strong. The TTM EPS of the company is Rs.55.06 and is currently trading at the PE of 72x. Hence, we recommend to buy the stock at the current price for the target price of Rs.4800 with the time horizon of 12 months.

Outlook:

SVL stands out as one of the fastest-growing alcoholic beverage companies in India, consistently focusing on its own brands and premiumization of its product portfolio. Also it is increasing the penetration in the tier-1 and tier-2 cities in India. The wine market in India is expected to grow at a CAGR of 20%-25%. Indian population is experiencing a shift that is normalizing the drinking culture, especially in metro cities. Hence, SVL is a good buy for long term. The TTM EPS of the company is Rs.10.70 and is currently trading at the PE of 46.5x. We recommend to buy the stock at the current price for the target price of Rs.600 with the time horizon of 12 months.

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