Global brokerage firm Bernstein predicted high single-digit or low double-digit returns for Nifty in 2024 if BJP wins more than 290 seats in the ongoing Lok Sabha elections. The brokerage said that there is a high probability of BJP winning 330-350 seats, adding, “We expect a short-term rally either leading into elections or the week after results potentially breach our 23K Nifty target and then a profit booking as the reality of execution and valuations emerge. In our view, sectors that will lead are Infra, manufacturing, domestic cyclical, a bit of financials, and state-owned enterprises (PSUs) in general. Consumer and IT will lag. Small and midcaps may do better than largecaps for a few days.”
It added, “Continuity of power was known to equity markets, which is why we had a rally in Nov/Dec last year – playing again and again on the same theme leads to absurd outcomes for valuations – hence, we believe the focus will eventually return to macro, earnings growth, reasonability of valuations etc. The overanalysis brd self-induced stress the markets have seen over the past month is the only reason for the relief rally we call for.”
The brokerage said, “This year’s returns would likely stay at high single digits, with a possibility to remain low only in case of a frantic policy shift that can come with a change in government. The expectation building and revisions should continue.”