Market experts anticipate Nifty to dip further but close near current levels by year-end

Following post-election, both the Nifty 50 and Sensex have recently achieved new peaks, from 21,884.50 on June 4, 2024 Nifty touched 23,501.10 and Sensex reaching 77,209.90. These milestones indicate strong investor confidence and bullish sentiment in the market. Will the current highs be sustainable amidst concerns of a market bubble?

A poll indicates that market experts anticipate further declines in the Nifty index over the course of 2024. However, a recovery by year-end is widely expected, reflecting cautious optimism despite underlying risks.

As of now, Nifty hovers around 23,232, and the broader market shows mixed signals: BSE Midcap rose by over 1%, while BSE Smallcap surged by more than 2%. The poll, encompassing 24 market professionals from diverse segments including brokerages, mutual funds, PMS, AIF, and traders, reveals a consensus towards a temporary dip before a year-end recovery.

Key Insights from the Poll

Downside Risks and Recovery Expectations:

67% of the experts foresee the Nifty hitting a new low for the year, suggesting further short-term declines.

66% believe that the Nifty will close the year above the current 23,000 level, indicating confidence in a recovery.

Valuation and Market Performance:

46% of respondents deem current market valuations as expensive.

54% consider valuations reasonable, with no experts finding them cheap.

Year-End Nifty Predictions:

50% forecast a year-end Nifty range between 23,000 and 25,000, implying a potential return of up to 9%.

16% anticipate a closing above 25,000.

17% expect the Nifty to end between 21,000 and 23,000, indicating a possible 9% decline.

12% predict a close below 21,000.

Sector Performance and Investment Trends:

FMCG, pharma, private banks, auto, capital goods, and IT remain preferred sectors.

A significant 83% of respondents are cautious about increasing exposure to the PSU segment, despite its recent volatility.

Midcaps and Small Caps Outlook:

65% believe midcaps and small caps are unlikely to outperform large caps in the current year.

Foreign Investment Perspectives:

The previous week Indian stock markets witnessed a day of contrasting performances as certain stocks surged while others faced significant declines. Bharti Airtel and Infosys emerged as top gainers on the BSE, while UltraTech Cement and L&T struggled, ending notably lower. Similarly, on the NSE, Bharti Airtel and LTIMindtree led gains, whereas UltraTech Cement and Adani Ent were among the top losers.

Market Indices and Sectoral Movements:

The broader markets showed weakness with Nifty MidCap slipping 0.08% and SmallCap declining by 0.17%.

Sectorally, Nifty Media emerged as the top gainer, rising by 0.95%, followed by IT, which gained 0.76%. Conversely, FMCG recorded the highest loss, down by 1.20%.

Key Market Events:

Technical View: Analysts suggested a potential short-term decline for the Nifty towards 22,750 amidst current indecisiveness and volatility.

Monsoon Impact: Profit booking was observed due to concerns over slow monsoon progress, particularly affecting FMCG stocks, while consumer durables saw increased interest amid a Northern India heatwave.

Global Influence: Weak guidance from Accenture led to profit booking in US tech stocks, impacting global sentiments.

Stock-Specific Highlights:

Sector Performances: Railway stocks, including RailTel and RVNL, surged on new orders, while sectors like IT continued to attract investor interest despite global tech sector challenges.

Company News: Premier Explosives saw a significant stock rise post-ex-split, while GE Power surged following a substantial order win from NTPC GE Power Services.

The market is divided on foreign investment prospects: 52% expect FPIs to end 2024 as net buyers, while the rest are skeptical.

Factors Influencing Market Sentiment

Experts identify policy paralysis and earnings disappointments as major risks that could impact market performance. Conversely, political stability, policy continuity, and earnings growth are seen as potential catalysts for a market rally.

Market Sentiment Moving Forward

The current environment suggests that while the immediate future for Nifty appears uncertain, the overall sentiment leans towards recovery by the end of 2024. Investors should prepare for volatility but may find opportunities as the market navigates through the post-election landscape.

Disclaimer: Users are advised to consult certified professionals before making any investment decisions.