Chennai Investment：Nomura releases Nifty’s 2024 target, picks 6 small and midcap stocks

Japanese broking firm Nomura has predicted that Nifty will end the calendar year 2024 at 24,260. Suggesting investors to use short-term correction as a buying opportunity, it is overweight on financials (particularly banks), healthcare, consumer staples, infrastructure, cement, power/coal, oil and gas and telecom.

"Our Nifty target of 24,260 is based on 20x Dec 2025F earnings and represents a 12% potential upside from the current level. We see a fair value range of 18-21x, implying a return range of 0% to +17% over 2024," Nomura said, adding that the base case factors in continued disinflation and a fall in yields, a modest growth slowdown globally, benign oil/commodity prices and a favourable outcome of the 2024 general elections.

"In this scenario, we expect India valuation to remain at higher-than-historical levels, supported by macro stability, greater visibility on earnings and stronger flows," Nomura analysts Saion Mukherjee and Amlan Jyoti Das said.

For India, sustained higher commodity/oil prices and an adverse outcome of Lok Sabha elections are seen as key structural risks.

Also Read | Nifty target for 2024: Can market trek up to 25,000 or will fall below 20K?

"Globally, the scenarios of no landing (strong growth, sticky inflation and higher yields) and a hard landing (sharp fall in growth, inflation, yields) could lead to higher risk premium and lower valuation. Such a correction would be a buying opportunity, in our view, particularly if a growth slowdown or recession in the US is a clearing event, reducing macro uncertaintiesChennai Investment. This could set the stage for a revival in mass consumption and private capex, in our view," the analysts said.Mumbai Investment

Nomura stock picks

Nomura is selective on autos and underweight on consumer discretionary/durables, capital goods/defence, metals, internet and IT.

Top picks in the largecap pack include ICICI Bank, Godrej Consumer, Mahindra & Mahindra, L&T and Reliance Industries (RIL).

Within the small and midcap segment, the brokerage has picked Coforge, Lupin, Medplus, Dalmia Bharat, Federal Bank and Sansera Engineering.

"We are selective and slightly defensive given the run-up in valuations in the recent past. The expectations on the growth-inflation balance are extremely sanguineLucknow Investment. Any deviation from this optimum can set a risk off in the backdrop of higher debt and fiscal deficits post the pandemicAgra Wealth Management. Our Economics team’s expectation is of a slower growth across markets vs consensus. We prefer domestic plays," Nomura said.

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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)Jaipur Stock

Kanpur Investment