Come 2024, Nifty Seen To Hit 24,100! Largecaps To Shine, Kotak, Eicher, Asian Paints, 2 Other Stocks Top Picks

Indian market is expensive, and it is only going to touch new peaks even in 2024 owing to its positive factors like cooling in inflation, steady key rates, resilient economic growth and healthy FIIs and DIIs flows. Amidst a robust environment, large-cap stocks are expected to shine. Brokerage Religare Broking has selected 5 large-caps as hot to buy, while it expects Nifty to touch the 24,100 mark in 2024.

In its New Year 2024 picks research report, Religare Broking said, "We are entering the year of 2024, with the index at record high, along with optimistic sentiments such as moderating inflation, steady interest rates, GDP growth picking up as well as healthy inflow from FII & DII continues to be the net buyers, keeping the sentiments positive for the Indian markets."

Moreover, it added, "There is high anticipation that the Indian economy will continue to emerge as the fastest growing economy as compared to others because of its resilient performance in the past as compared to global challenges, steady policy action, robust demand environment and continuous investment towards infrastructure and boosting economic growth."

In 2024, the brokerage's note said that Nifty has the potential to scale to 22,650, followed by the next target at 24,100 from the medium to long-term perspective. On the other hand, we expect the index to find support at 20,250 first and major at 19,000 levels, in case of a decline. Currently, the 50-scrip benchmark is already trading at a life-high, with upward momentum in sync with global markets.

Furthermore, the brokerage expects domestic markets to be highly volatile so investors as well as participants are advised to keep their focus on specific sectors and stocks in mid to large-cap space. Here is the list of 5 stocks that Religare Broking has recommended to buy and its investment rationale:

1. Kotak Mahindra Bank: (TP: Rs 2060-2180)

Kotak Bank has been trading in a broader consolidation range i.e. 1650-2000 for over two years and currently seeing recovery after retesting the lower band of that range. The existence of a long term moving average i.e. 200 WEMA around the lower band is added positive.

The fourth largest bank in terms of market share has recorded healthy credit demand in the retail segment as well as significant portion of its loan book is secured which places the bank well amongst its peers. Also, the recent appointment of Mr Ashok Vaswani as MD & CEO will play
out well for the bank.

In a stable interest rate environment, Religare Broking expects the bank's topline and margin to improve along with its deposit growth which has remained strong as compared to the industry led by the floating rate saving account and term deposits.

Looking ahead, the bank also remains focused on technological advancement to improve customer experience and cost efficiencies as well as expect it to continue maintaining the industry's best asset quality.

2. Asian Paints: (TP: Rs 3590-3900)

This FMCG player is among the best performers within the paint space, maintaining a steady long uptrend since 2009. As per the brokerage, the stock has been witnessing consolidation in a broader consolidation i.e. 2550-3570 for over two years, forming higher lows on the weekly timeframe. Also, it is inching gradually towards the upper band of the range and is likely to surpass the same in its third attempt.

Religare believes industry tailwinds such as government spending towards infrastructure & housing and demand from real estate along with robust festive demand and marriage season will aid growth.

It pointed out that the company plans to innovate products in its large contributing segment i.e. decorative, expand its home décor business as well as focus on highly demanding Automotive and coating segments, focus on increasing premium products in the mix.

Despite the competition from new entrants, Asian Paints has been able to maintain its market leadership as well and it enjoys a premium valuation led on the back of its product portfolio, strong presence in decorative space and its foray into allied segments as well as healthy distribution reach.

3. Eicher Motors: (TP: Rs 4550-4800)

The brokerage said it is seeing noticeable traction in the auto space and Eicher Motor is trading largely in tandem with the trend. The stock has reclaimed the record high after spending nearly over a year in a corrective phase. And, it is currently hovering in a narrow range around its record high, forming a base around its previous breakout zone.

Hence, this consolidation is a fresh buying opportunity for those who missed the chance earlier.

"With the industry witnessing a gradual shift towards the 125+cc category of motorcycles, Eicher will be a direct beneficiary of such a trend. Also, in line with the growing EV demand, Eicher will leverage its Stark Future investment which is aimed to accommodate the EV demand in the commercial vehicle segment," the brokerage's note said.

Also, Eicher has been able to withstand steep competition from its peers in its core segment mainly due to the demand for the premium motorcycles segment which has resulted in overall YTD volume growth of ~13.4%. Recently, the company also launched 2 motorcycles in the 450cc category while it has a few more launches which shall strengthen its position in its category, aiding in volume and realization growth.

4. United Spirits: (TP: Rs 1210-1325)

This stock has been gradually inching higher since then, finding support at its short-term moving average i.e. 20 WEMA. Following price action and positioning of the momentum indicator, the brokerage expects the stock to maintain the prevailing tone.

According to the brokerage, the softening of input costs has enabled the company to post healthy margins in recent quarters. It intends to achieve ~15% EBITDA margin in the medium term while aiming at ~16%/16.5% in the long term. Additionally, it is virtually a debt-free company and has started distributing dividends to its shareholders while it also maintains healthy return ratios making it an attractive proposition in its segment.

5. Mphasis:

The IT stock has recently ended the 2-year-long corrective phase, with a breakout from a bullish Cup and Handle price pattern. Post the initial surge, it is forming a fresh buying pivot around the support area of the previous swing high. Additionally, its chart pattern combined with recent buoyancy in the IT space suggests buying interest at elevated levels.

Given the macroeconomic challenges in the American region and the slow start to the banking and finance sector this fiscal, the management focus remains on acquiring deals from other geographies like Europe & Middle East as well as sectors such as technology, telecom and Insurance.

Meanwhile, Mphasis aims to win large and long-term deals, develop strategic partnerships for technology, explore opportunities in areas of growth in hi-tech, insurance, healthcare, logistics, etc.

Besides, the brokerage said that there is a healthy demand for AI, cloud and transformation deals, a strong order pipeline which is yet to get converted to revenue and also are investing in technology. So, all this is playing well for the company and has maintained its EBIT margin guidance band of 15.25% to 16.25% for FY24.

In 2023, Sensex and Nifty continued reaching multiple records and gained nearly 20-22% in the last year. However, the major highlight of the year was the outperformance of the broader indices as both midcap and smallcap indices rose ~44% and ~53% respectively, as per brokerage's data.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.