Outlook 2024: From capex cycle to PLI boost, here are the 6 key themes for Indian markets in 2024
Sensex closed 379 points, or 0.53 per cent, lower at 71,892.48 while the Nifty 50 settled at 21,665.80, down 76 points, or 0.35 per cent. BSE Midcap and Smallcap indices hit their fresh record highs of 37,193.29 and 43,196.17 respectively during the session but failed to hold gains and ended almost flat.
The frontline indices rose around 20 per cent in 2023, their second-best year since 2017, and were among the top-performing stock indexes globally. The broader small- and mid-caps gained about 55.62 per cent and 46.57 per cent in 2023, far outperforming the blue-chip indexes despite valuation concerns.
According to market experts and industry analysts, the bull-run in Indian markets is likely to continue in 2024 as foreign interest remains robust, with heavy buying expected in both equity and debt markets.
Markets are eyeing a potential upside of 15 per cent from the current levels as Nifty 50 is likely to claim the 25,000-mark by the end of 2024 and the Sensex target is set at 83,250, according to domestic brokerage firm ICICIdirect.
In the current market scenario, the brokerage has listed the key themes for stock markets in 2024, which includes both industrial and technical themes to watch out for in the next few months.
Key themes for Indian markets in 2024 by ICICIdirect:
Let’s take a look at the top six themes for Indian markets in 2024 by brokerage ICICIdirect:
1.Capex cycle – combination of core sectors, green growth
The capital expenditure (capex) spending remains the key priority with government capex allocation CAGR of 30 per cent over FY20-FY24E. The capex to gross domestic product (GDP) is pegged at all-time high of 3.3 per cent. This is in stark contrast to FY14-FY18 average of 1.8 per cent, said ICICIdirect.
With cost of production expected to come down, India looking for potential production of 10 MMT green hydrogen by 2030, eyeing around 10 per cent global share. Green hydrogen presents total opportunity of nearly ₹14 lakh crore for the next six-seven years.
2.Cement – Healthy utilisations likely amid expanding capacity
Cement companies slated to add nearly 35 million tonnes (MT) capacity annually during FY23-27E (compared to 20 MT added during FY17-22). The capacity expansion will entail fresh capex investment worth ₹1.1 lakh crore during FY23-27E. The government spending on infra projects and revival of housing sector to keep utilization rates healthy, according to the brokerage.
3.Steel – capacity to double amid green focus
The National Steel Policy has set a target of 300 MT of crude steel capacity in India by 2030 compared to 158 MT as of 2022. The capacity expansion envisages a capex spend of almost ₹10-11 lakh crore over the next eight years.
The nnnual capex by top five steel manufacturers seen doubling, going forward over next few years. The industry is traversing towards low carbon emissions with incremental focus on green steel production (utilising renewables an green hydrogen), according to ICICIdirect.
4.Auto Sales – premiumization trend getting stronger
The passenger vehicle and tractor sales have already surpassed their pre-covid peaks. The commercial vehicle sales are also set to pass life time high in FY24, according to the brokerage. Two wheelers, a price sensitive segment, is lagging due to the impact of fuel efficiency and insurance norms driven price hikes, said ICICIdirect.
5.PLI Scheme boost for domestic manufacturing
The government has rolled out Production linked incentive (PLI) schemes with targeted expenditure of nearly ₹2.65 lakh crore (excluding semi conductors). PLI is aimed at increasing the manufacturing output by $ 520 billion over the next five years and to drive exports as well as imports substitution.
Mobile manufacturing PLI has led to total mobile manufacturing of over ₹2 lakh crore (likely to reach ₹5.5 lakh crore by FY26) and it includes exports of ₹80,000 crore already over the last two years.
6.Real Estate experiencing decadal revival
Real estate sales have remained robust driven by the industry getting formalised – big developers with better balance sheet gained market share post RERA implementation (type of regulation which is absent in even giant economy like China). Strong end user housing demand has also led to the strong revival of the sector, according to the brokerage.
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Published: 02 Jan 2024, 08:03 PM IST
