Goldman Sachs predicts 12% upside for Nifty; Overweight on resilient fundamentals

In a recent report, Goldman Sachs outlined an optimistic outlook for the Indian markets and expects the Nifty to reach 21,800 by the end of 2024, implying a 12% return in rupee terms. However, the brokerage suggests that returns are likely to be back-loaded due to the challenging global backdrop and political uncertainty leading up to the elections.

Goldman Sachs forecasts corporate profits in India to grow by 15% in 2024 and an additional 14% in 2025, with the expected growth appearing to be broad-based across various sectors. The note highlights a preference for domestic sectors, including banks, autos, cement, industrials, and utilities.

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Considering India to have the most promising structural growth prospects in the region, Goldman Sachs acknowledges potential external macroeconomic challenges such as prolonged high-interest rates, persistent dollar strength, lower growth in China, and heightened geopolitical uncertainty. However, the note asserts that India is less sensitive to these external shocks.

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Expressing optimism about India’s economic resilience in the fiscal year 2024, Goldman Sachs anticipates a steady growth rate of 6.3% year-on-year. Despite facing elevated headline inflation, the central bank is expected to refrain from monetary easing until October of the next year.

The forecast suggests a bifurcated narrative for 2024, with pre-election government spending driving growth in the first half of the year. Post-elections, the note anticipates a re-acceleration of investment growth, particularly from the private sector. Looking ahead to fiscal year 2025, Goldman Sachs estimates a GDP growth rate of 6.5%.

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The projection acknowledges challenges posed by repeated supply shocks, likely keeping headline inflation above the target at 5.1% year-on-year on average throughout 2024. Government intervention is expected to play a role in curbing food inflation, especially in the context of an election year. Core inflation is predicted to moderately decline to 4.5% year-on-year on average in 2024, down from the estimated 5.1%. Come from Sports betting site VPbet

Goldman Sachs remains optimistic about India’s economic prospects too, emphasising its resilience amidst global challenges and positioning the country for robust growth in the coming years.

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