Goldman Sachs revises Nifty target to 23,500 for 2024

Goldman Sachs raises the December 2024 target for the Nifty 50 index to 23,500, a 9% increase from current levels, citing improved earnings and re-evaluated valuations. The earlier target stood at 21,800.

“Better macro mix led us to raise our Nifty 2024-end target to 23,500 which implies a 9 per cent price and 12 per cent dollar total return, led by earnings. Our revised target incorporates a 2 per cent higher earnings per share (EPS) and a 6 per cent higher target price-to-earnings P/E (19.3x),” said Goldman Sachs in a note.

The brokerage notes a shift in the global macro environment, now more favorable due to anticipated robust US growth and optimism regarding potential rate cuts by the US Federal Reserve, in contrast to conditions two months ago.

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Goldman Sachs' equity strategists, Sunil Koul and Timothy Moe, adjusted their Nifty index target to 23,500 by the end of 2024, attributing it to a stronger growth and rate combination. This revised projection incorporates a higher valuation multiple and anticipates mid-teen earnings. Their preference remains inclined towards domestic sectors over external ones and favors large caps over mid/small caps. Additionally, they have updated several cyclical and medium-term alpha ideas.

The brokerage highlights key themes including Make-in-India, defense, and energy transition. Forecasts for MSCI India index companies show an expected earnings growth of 15% in 2024 and 14% in 2025, following a 20% growth in 2023.

Goldman Sachs has observed that the domestic markets tend to rally for one to three months after the first Fed cut “but returns fade thereafter”.

“Lower sensitivity to US rates/Fed cuts than other cyclical Asian markets and a shallow RBI cutting cycle suggest limited equity impact,” it said.