Global brokerage Morgan Stanley has upgraded the target for the 50-share index, Nifty, to 21,800 by December 2024. This is a 10.7 per cent rise from the closing in the previous session. The rationale behind the increase in the target is the robust earnings growth witnessed by India Inc. in Q2 and better valuations. Earlier the target was pegged at 20,700 up till June 2024.
The brokerage has iterated that valuations have become relatively cheaper after the sell-off amid continued FII selling. Further, it pointed that many of the sectors are trading at a 15 per cent discount to their peak multiples. Morgan Stanley sees corporate profitability to register 15 per cent growth in FY24, while the same is seen to be 14 per cent in FY25.
Going ahead, trajectory of Indian equities will depend on several factors including key interest rates in the US, dollar index value, geopolitical situation, and elections in the home market. For the next 6 months, the brokerage has a conservative view, nevertheless, it sees a promising future for Indian equities post Lok Sabha elections.
Foreign portfolio investors’ exposure in the Indian equities is very low and it shall further be impacted given the valuations at which stocks are trading, noted the brokerage.