Nifty Seen To Hit 25,810 By Dec-End, Bull Case At 28,564; Prabhudas Makes Major Upgrades, Downgrades In Stocks

Prabhudas Lilladher is estimating Nifty 50, the mainboard of NSE, to touch 25,810 by the end of December 2024. This will be a new all-time high for the benchmark. Furthermore, the brokerage's 12-month target is at 26,820 for Nifty, however, it estimates a bull case probability of 28,564. In the bear case scenario, Nifty's 12-month target is set at 24,407. Following this, Prabhudas Lilladher has upgraded and downgraded its rating on a host of stocks including BEL, BEML, Ambuja Cement, and Titan Company among others.

In its latest report, Prabhudas Lilladher said, NIFTY gave positive 1.6% returns since our last report despite rising volatility amidst the deteriorating geopolitical situation as Indian markets were supported by 1) Normal monsoons raising hopes of demand revival in festival season. 2) Inflation at 3.54% came below the RBI hurdle rate improving prospects of a 2H25 rate cut if FED bites the bullet and cuts rates 3) benign crude and commodity prices and 4) sustained capex-led investments in the economy despite maintaining fiscal prudence.

Year-to-date, Nifty has rallied by 3,496.45 points or 16.09%. While in a year, the benchmark skyrocketed by 5,895.50 points or 30.5%. Earlier this week, the benchmark also touched its record high of 25,258.80.

Prabhudas expects liquidity to remain strong, as domestic inflows have far exceeded FII flows, providing a cushion to markets.

The brokerage added, "We believe expectations of strong festival season demand; rural revival and interest rate cuts will provide support to markets. We believe US elections are the most important factor to watch out for given rising geopolitical tensions globally (including SE Asia)."

Further, Prabhudas expects some tilt towards defensives like consumer, Durables, Building materials, IT services, Pharma and Telecom, given rich valuations in some growth sectors.

It also believes that Capital Goods, Infra, Logistics/ Ports, EMS, Hospitals, Tourism, Auto, New Energy, E-commerce etc. are great themes, but investors needs to be cognizant of valuations.

Accordingly, Prabhudas raises its base case NIFTY target. The brokerage recommends selective buying on dips, but quality focus needs to be a key criteria.

PL Capital values Nifty at a 15-year average PE (19x) with March 26 EPS of Rs 1,411 and arrives at the 12-month target of 26,820, revised higher from an earlier target of 26,398. In a bull case scenario, PL Capital values Nifty at a PE of 20.2x and arrives at a target of 28,564. In a bear case scenario, Nifty may trade at a 10% discount to a long-period average with a target of 24,407.

Following this, here are the top picks of Prabhudas Lilladher.

Model Portfolio: The brokerage is cutting weights on ICICI, KMB, Maruti, ABB, L&T, HDFC AMC and ITC. While it increased weights on M&M, Ambuja Cement, Ultratech, Interglobe Aviation, Britannia Inds and LTI Mindtree. Also, the brokerage is adding Indusind Bank to the model portfolio while removing Apollo Hospitals. Further, the brokerage is increasing weights in Consumer, Cement, IT and Banks while cutting weights in Capital Goods, Healthcare and AMC.

Additionally, there were 16 rating upgrades and 13 rating downgrades. The capital goods sector had eight rating upgrades while Consumer and Logistics had three downgrades each by Prabhudas. These are:

Major Rating Upgrade: Bajaj Auto, Bharat Forge, BEML, BEL, Cummins, Triveni Turbine, Voltamp, Britannia, Lupin and Jindal Stainless.

Major Rating Downgrade: CERA, CUMI, Avenue Supermarts, HUL, Marico, PVR, Delhivery, Indian Oil and Torrent Pharma.

Major Estimates Upgrade: Lupin Lab, Voltas, GE T&D, ABB, Bharti Airtel, Ashok Leyland, TVS, Jubilant Ingrevia.

Estimate Downgrade: Axis Bank, Green Panel, Astral, SRF, Thermax, Max Healthcare, TCI Express, PVR, JSL, SAIL, JSPL, Canfin.