Informist, Monday, Nov 20, 2023

--Goldman Sachs: Expect Nifty 50 to reach 21800 points by 2024-end 
--Goldman Sachs: Expect corporate profits to grow 15% in 2024 
--Goldman Sachs: Expect corporate profits to grow 14% in 2025 

--Goldman Sachs: Growth in corporate profits to be broad-based

--Goldman Sachs: Overweight on domestic sectors like bks, auto, cement 

--Goldman Sachs: Overweight on sectors like industrials, utilities 

--Goldman Sachs Sengupta: RBI may cut rates from Oct-Dec 2024 
--Goldman Sachs: See real GDP growth in FY24 at 6.2%, FY25 at 6.5% 
--Goldman Sachs Koul: See FII flows in equities weak in near term 
--Goldman Sachs Koul: See FII flows prominent post General Elections 
--Goldman Sachs: Expect pvt capex to pick up post General Elections 
--Goldman Sachs: Expect private capex to peak in early 2026 

MUMBAI – Goldman Sachs expects the benchmark Nifty 50 to reach 21800 points by the end of 2024 on expectations of 15% growth in profits of corporates during the year and higher foreign inflows post General Elections, according to a report released at a media briefing today.

"We expect Nifty to reach 21800 by end-2024, implying 12% INR price/15% USD total return," Goldman Sachs said in the report. "Returns are likely to be back loaded given the tough global backdrop and political uncertainty as the election approaches in 2Q24 (Apr-Jun)."

Moreover, it expects corporate profits to grow at 14% in 2025. Over these two years, it expects growth to be broad-based across sectors.

The brokerage prefers domestic sectors such as banks, automobiles, cement, industrials, and utilities and maintained overweight rating on these sectors for a medium term. 

Among stocks, Asia Pacific Equity Strategist Sunil Koul said that they are overweight on commercial non-banking financial services, while underweight on consumer-related NBFCs, especially after the Reserve Bank of India increased risk weights on personal loans.

On foreign inflows into Indian equities, Koul said the near term outlook remains weak and expects these to pick up post General Elections as global investors are very keen to increase exposure to India. He said that the current outflows by foreign investors are not due to any negative reason related to India, but are on account of high bond yields and strong dollar making emerging markets unattractive to foreign investors.

"We therefore remain tactically conservative over the next 3-6 months and expect stronger market performance once election uncertainty fades," it said.

On India's growth story, the brokerage believes that India's GDP growth is likely to be at 6.2% for the current financial year and 6.5% for 2024-25 (Apr-Mar) on the back of resilient domestic fundamentals and as it is less sensitive to external shocks.

Goldman Sachs said that investors in the Asia Pacific region will need to adjust to a new era, with moderating global growth, higher global rates, persistent dollar strength in the near term, greater geopolitical uncertainties and lower growth in China, which could potentially lead to elevated market volatility. However, India is relatively less exposed to these external shocks given its domestically driven growth, the brokerage house said.

Growth in the first half of 2024 is likely to be driven by election-related spending, which should boost consumption demand, and post-elections, the private sector would have to pick up the slack of capital expenditure.

Chief India Economist Santanu Sengupta said that the private sector will be able to pick up capital expenditure next year and expects the momentum to peak in early 2026.

On inflation, Goldman expects India's headline inflation to average 5.1% in 2024, with core inflation averaging 4.5% in 2024. On policy rates, the brokerage believes that the RBI will likely keep interest rates at elevated levels in line with other Asian countries, excluding Japan and China.

"...we expect a shallow rate-cutting cycle in India, with higher long-term policy rates," the report said. Sengupta said that RBI is likely to cut interest rates by 25 bps from Oct-Dec next year. 

"The "higher-for-longer" global scenario and elevated inflation domestically will mean continued hawkish guidance and tight liquidity from the RBI."  End

US$1 = 83.34 rupees

Reported by Anshul Choudhary and Subhana Shaikh

Edited by Maheswaran Parameswaran

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