Daily Voice | Why this market veteran is bullish on Nifty at 25,000, and banks outpacing autos

Nifty will hit 25,000 mark by end of 2024

For Amit Jain, who co-founded Ashika Global Family Office Services, it won't be a surprise to see the Nifty hitting the 25,000 mark by the end of 2024 since the Indian market is poised for a structural bull run on the back of the demographic and democratic dividend it enjoys.

In the second qurter, he believes, the corporate earnings will remain healthy for all the sectors, except for agri-commodities. Except banking, most sectors have priced in its growth at current levels.

"We believe there is good opportunity to invest in banking sector stocks at current levels," the market veteran who has served the Indian banking and financial services sector for over 18 years shares with Moneycontrol in an interview. Excerpts from the interview:

It is very much possible that the Nifty will hit the 25,000 mark by the end of calendar year 2024. If for a moment I believe I'm a global fund manager, then I have no choice but to invest in India as in other parts of the world I will not get a dual combination of GDP growth and democratic set-up along with one of the highest saving rates in the world.

The Indian stock market is well poised for a structural bull run due to its demographic and democratic dividend.

In my view, the inflation in India will cool down in the next 6 to 9 months, as most of the vegetable prices have started to cool off from now onwards. Also, RBI stance on rate of interest will be more governed by US Fed action in their September policy review. It will also be governed by the Bank of Japan and other central European banks’ actions.

Also read: NSE rejig: ACC, Nykaa, HDFC AMC to be out of Nifty Next 50 from September 29

The Q1FY24 earnings of Indian corporates had been fantastic with growth in both topline and bottomline. Banking sector earnings have outperformed from all other sectors far miles ahead.

We have seen some slowdown in FMCG and auto space which will recover going forward due to upcoming elections. Even in Q2FY24, we believe the earnings will remain healthy for all the sectors except agri commodities. This upward trend of earning will continue for the upcoming financial year 2023-24.

However, except banking, other sectors have already priced in its growth at current levels. Hence, we believe there is good opportunity to invest in banking sector stocks at current levels.

As of now, yes, in Q1 we are disappointed with the earnings of FMCG and IT sectors. At current levels, the IT sector looks fairly valued with most of the positives being priced in, especially for mid-cap IT companies.

Also read: Bharat Forge: Propelling India's economic momentum through defense, e-mobility

For the FMCG sector, Q1 had been disappointing, but is now available at a good entry point for long term investors. However, banks and PSUs would be my favorite picks from here on.

Since the post-Covid period, we have seen a sudden spurt in real estate activities across the world. This momentum in the real estates as an asset class has had a positive impact on the Indian Real Estate market as well. In my view this momentum in real estate will persist for at least the next three years.

The NSE Real Estate index has given a return of almost 33 percent in the last 6 months. This reflects a strong earnings growth for real estate companies across India. Even going forward we are bullish on housing finance companies particularly in the affordable housing segment from a medium to long term view.

The NSE Auto Index has given a return of 17 percent in the last six months. Hence in my view, this sector will pass through some consolidation and time correction in at least short to medium term.

At this moment of time when inflation is high and most of the Indians are paying higher EMIs for their home loan it is difficult for Indian household to spend more on discretionary consumptions.

Also read: RBI Bulletin: Headline inflation to average 'well above' 6% in July-September

Hence, in my view this sector has run up too fast and too early. Therefore, any consolidation will give opportunity for long-term investors. At this moment I will prefer the banking sector over the auto sector.

Yes, from the data available in the public domain. It looks like the Chinese economy is moving in a deflationary cycle which is unheard of in the last 20 years. If the Chinese economy won't recover from this cycle early, then it will have a ripple effect across all economies of the world.

Recently the Chinese central bank has cut the rate of interest by 15 bps to boost the economy, which will have a positive impact in the medium to long term.