Banking and IT are two promising sectors that have delivered relatively muted returns so far but have the potential for improvement in earnings trajectory in 2024, according to Quantum Mutual Fund.
Moreover, investors need to be selective this year as most sectors have seen a favourable earnings cycle along with stellar returns. “The trajectory of consensus earnings estimates of a sector along with recent return profile can provide insights to identify the next set of market drivers,” said Thomas.
Note:
Companies with a listing history of atleast 5 years is sorted by market cap (Highest to Lowest)
Median EPS CAGR is computed for stocks with meaningful EPS growth values within the category
On the back of relatively lower historic returns compared to earnings growth, large caps appear favourable on a risk-reward basis, noted Thomas.
What should an investor do?
Some of the key investment themes for the calendar year 2024 as per ICICI Direct are:
• Capex Cycle – a combination of Core Sectors, green growth and PLI
• Cement – Healthy utilisations likely amid expanding capacity
• Steel – capacity to double amid green focus
• Auto Sales – premiumization trend getting stronger
• Banks – back on strong footing
According to Axis Mutual Fund, investors can expect the strong performance of domestic cyclicals to continue for the remainder of FY24, driven by better-than-expected margin improvement in automobiles and stable NIMs for banks. Consumption-based sectors would remain under pressure given the lacklustre rural recovery.
JM Financial Asset Management is bullish on banking, real estate, automotive, electricity and PSUs. It believes flexicap funds for long-term investors and SIPs in mid cap funds will continue to perform well.
Satish Menon, Executive Director, Geojit Financial Services is keen on capital goods, infrastructure, cement, and renewables sectors, driven by the manufacturing story in India. For the long term, Menon is bullish on export-centric sectors such as pharma and chemicals.
FII inflows are poised to overshadow DII inflows in 2024, with expectations ranging from $40 to $50 billion. “The transformation away from China and Fed rate cuts are pivotal factors driving these inflows. Power, banking, technology, future mobility, and infrastructure emerge as the top sectors for investors in 2024,” said Dr Vikas Gupta, CEO and Chief Investment Strategist, OmniScience Capital
For 2024, Gupta recommends a flexicap portfolio allocation to banking, technology, power, railways, and future mobility. “Hedging with a global portfolio of US and global technology stocks offers resilience against election outcomes. Direct investments in thematic portfolios, focusing on power, railways, technology, EV, and others, provide added diversification and potential rewards,” noted Gupta.
First Published: Jan 03 2024 | 1:39 PM IST