Goldman Sachs Raises 2024 Nifty Target to 23,500 on Positive Global Economic Shifts

Goldman Sachs Raises 2024 Nifty Target to 23,500 on Positive Global Economic Shifts

Asif Iqbal | January 9, 2024 | 08:10 PM IST | Breaking News | Follow on Google News

Goldman Sachs Raises 2024 Nifty Target to 23,500 on Positive Global Economic Shifts

Goldman Sachs Raises 2024 Nifty Target to 23,500 on Positive Global Economic Shifts

Goldman Sachs has adjusted its Nifty target for the year 2024 to 23,500, citing positive shifts in the global macroeconomic landscape over the past two months. The investment bank attributes this revision to expectations of robust growth in the US, earlier-than-expected interest rate reductions in the US and Asia, and a projected mild depreciation of the dollar throughout the year.

Key driving factors for this revision include macroeconomic factors following the initial Federal Reserve rate cut. Despite the typical trend of diminishing returns after such cuts, Goldman Sachs notes that India’s equity market is less responsive to US rates and Fed cuts compared to other cyclical Asian markets. The relatively shallow rate-cutting cycle in India also suggests a constrained impact on the domestic equity market.

Some positive macroeconomic factors have already been factored into the Nifty50’s 15% surge from the October 2023 lows, according to the investment bank. Regarding interest rates, Goldman Sachs’ US economists now anticipate a swifter easing in the Fed funds rate, projecting five additional rate cuts in 2024, beginning in March, compared to the earlier expectation of only one cut in Q4 2024.

The investment bank predicts that the Reserve Bank of India will initiate rate cuts in the third quarter of 2024, as opposed to their previous prediction of cuts commencing in the fourth quarter. Goldman Sachs expects India’s GDP growth to maintain resilience at 6.2% in 2024, supported by favorable external balances.

In addition to favorable macroeconomic conditions, Goldman Sachs emphasizes that robust earnings growth will be a key driver of market returns in 2024. The bank anticipates strong mid-teen corporate profit growth in India, with a 15% growth in MSCI India profits in 2024 and another 14% in 2025. This positive outlook on earnings growth is seen across various sectors.

Despite the current elevated valuation of MSCI India, trading at approximately 22 times its 1-year forward Price-to-Earnings (P/E) ratio, Goldman Sachs expects valuations to moderate over the year as underlying earnings catch up. The bank notes that the shifts in the macro environment, particularly the sooner-than-expected Fed easing cycle and better global risk appetite, warrant a higher ‘target’ multiple compared to previous expectations.

Anticipating a robust performance, Goldman Sachs foresees a 15% increase in MSCI India profits in 2024, followed by an additional 14% surge in 2025, with growth expected to be widespread across various sectors.

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Asif Iqbal

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