February 18, 2024
Goldman Sachs: 10 Key Lessons from 2023 Relevant for 2024 Investors; Advises Continued Overweight on India
Finance Featured by VoM Stock Markets

Goldman Sachs: 10 Key Lessons from 2023 Relevant for 2024 Investors; Advises Continued Overweight on India

Goldman Sachs: 10 Key Lessons from 2023 Relevant for 2024 Investors; Advises Continued Overweight on India/Reuters

Goldman Sachs: 10 Key Lessons from 2023 Relevant for 2024 Investors; Advises Continued Overweight on India

Here are the key lessons learned in 2023 by Goldman Sachs that could be relevant for investors positioning in the market for 2024:

  1. India’s Compounding Potential: India remains one of the best compounding markets in the region, exhibiting a 20% annual return on the NIFTY, ranking in the 62nd historical percentile over three decades. This marked the 8th consecutive year of positive equity returns.
  2. Outperformance Trend: India recorded a record outperformance streak against the MSCI Asia Pacific Ex Japan Index, suggesting expectations for another strong year in 2024 with a continued overweight stance on India within regional allocations.
  3. Reduced Volatility: Intra-year realized volatility for NIFTY dropped to 10% in 2023, the second-lowest annual volatility in three decades, enhancing risk-adjusted returns. Retail flows’ stability mitigated risks during foreign selling bouts.
  4. Rapid Market Cap Growth: India’s listed equity market capitalization swiftly rose from $3 trillion to $4 trillion in less than three years, marking the fastest addition of a trillion-dollar market cap.
  5. Earnings Impact on Returns: MSCI India’s 20% US dollar gain in 2023 was primarily fueled by 18% EPS change, even amidst high starting valuations.
  6. Mid and Small Cap Performance: Small and mid-cap stocks saw exceptional growth, significantly outperforming large-cap stocks in 2023 due to substantial domestic mutual fund flows.
  7. Sector and Stock Dispersion: Wide sectoral and stock performance disparities suggest ample alpha opportunities for investors.
  8. Market Style Trends: ‘Size’ factor outperformed, led by mid and small-caps. Growth at a Reasonable Price (GARP) stocks excelled, while quality factors lagged.
  9. Foreign Inflows and Positioning: Foreign Institutional Investor (FII) inflows surged, yet overall foreign and mutual fund positioning in Indian stocks remains relatively low, suggesting conservative positioning.
  10. Steady Domestic Demand: Robust domestic institutional buying, coupled with consistently rising retail inflows, demonstrate stable and significant domestic demand.

These insights provide a comprehensive view for investors navigating the market in 2024, highlighting India’s market strength, reduced volatility, and the impact of both domestic and foreign fund flows.

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