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Where to Invest in 2024 😕

Did you know that 2023 was a year where none of the sectors gave negative returns? If you were invested in the markets throughout the year, you would have surely made money (you must’ve really messed up if you didn’t)!

Even so, with the Nifty 50 up 20% through the year, beating the market would have happened only if you were placed in the right sectors.

It is no surprise that the defence sector came out victorious as the best-performing one. After all, India increased its spending on defence, focused more on capital outlay, peddled hard on indigenisation and even scored some export contracts, propelling the sector to mind-blowing returns.

In hindsight, it seems pretty easy to predict which sectors will do well, whether it was pharma in 2020 (thank you COVID) or metals in 2021-22 due to inflation, but foresight is what really gets you the returns you dream of.

So, what does 2024 look like?

What’s in Store for 2024?

In 2024, we expect the upward trend to continue, given its structural nature. However, we don’t expect 2024 to be as good a year as 2023:

  • At 24x one-year forward PE, the Indian markets are already trading higher than historical averages, and at a premium against global and emerging equities, which is at its highest ever

  • With positives around political stability and central bank policy already priced in, there seems to be a lack of surprise for more triggers to help a re-rating

With these factors in place and a re-rating potential diminished, performance for the market would be hinged on corporate earnings, which at 12-14% growth for next year could mean equivalent appreciation.

Where to Invest in 2024?

If we had to make an informed guess on what could do well, we could spread our bets across a few sectors.

1. Chemicals

2023 was a bad year for chemicals due to the global demand slowdown, and prolonged Chinese recovery. In addition to demand woes, high inventories caused excess supply and pricing pressure. Volume and pricing together have resulted in depressed earnings and de-rating.

The underperforming sector has the potential for a massive rebound, led by:

  • Demand recovery, with a recession being averted in the West, and with the potential of China coming back

  • Accelerated earnings, driven by the heavy capex undergone by chemical companies, post the pandemic

  • Higher down-streaming revenue contributes to a better revenue mix, higher pricing and better profitability

2. Technology

Like chemicals, technology services have also been underperforming. With most of the revenue for IT services companies coming from the US and Europe, IT companies saw revenue growth deceleration.

However, the fate of these companies can change for the next year, led by:

  • Economic revival in the US, resulting in accelerated growth, higher IT spending, and higher revenue growth for IT services companies

  • Higher proportion of revenue for Indian IT companies from digital or non-discretionary spending could result in lower vulnerability and higher growth

  • Relative valuations for the sector still appear reasonable compared to the rest of the market

3. Manufacturing

While the first two ideas are more opportunistic, manufacturing as a theme is a structural bet for India, with long-term growth factors.

  • India has been focused on increasing the share of manufacturing, from the current 15% of GDP. This also turns out to be aligned with global dynamics, with the world looking for an alternative to China, making the sector poised for long-term growth

  • Government initiatives in the form of PLI, which incentivises companies for capex and export revenue work well in making investments more reasonable, and provide impetus for focusing more on exports

  • Several focus areas like electronic components, processed food, textiles, auto components and white goods open up multiple opportunities across sectors

4. Banking

A boost in manufacturing requires money to be spent, on capital expenditure. While the government has done its bit in the form of policy initiatives and incentives, the private capex cycle has begun, resulting in strong credit growth.

  • Throughout the last year, despite high interest rates, credit growth in India was in the mid-teens

  • PSU banks have been performing particularly well, led by a transformation in how they operate, lower NPAs (from 7.9% in FY18 to 1.3% in FY23), and access to capital. A continual transformation can keep the rally going

  • Private banks underperformed the markets in the last year, and their valuations seem reasonable relative to the broader markets

5. Power

Just like defence and PSUs, the power sector too is undergoing a massive transformation, throwing out opportunities for investing in 2024.

  • India aims to achieve 900 GW installed capacity by 2032. A projected Rs. 34 lakh crore investment is expected to fuel this push, and also take non-fossil capacity from 42% now to 70%

  • This also mandates augmented transmission infrastructure, for which Rs. 1.5 lakh crore is expected to be spent on grids, and efficiency improvement

  • The entire sector is getting an overhaul - right from generation to transmission to distribution, spurring opportunities in all directions

While foresight isn’t proven till it becomes hindsight, making calculated bets like these is imperative to making more money than your friends in the market (and ultimately, that is what everyone wants)!

Watch these sectors closely, and with your own research, you might just beat us too in the coming year (who are we kidding)!

Alphaware Advisory Services Private Limited (Brand Name - Rupeeting) makes no warranties or representations, expressed or implied, on products and services offered through the platform. It accepts no liability for any damages or losses, however, caused in connection with the use of, or on the reliance of its advisory or related services.

Past performance is not indicative of future returns. Please consider your investment requirements, risk tolerance, goals, time horizon, risk and reward appetite, and the cost associated with the investment before choosing a fund, or designing a portfolio that suits your needs. Performance and returns of any investment portfolio can neither be predicted nor guaranteed.

Investments in mutual funds, stocks, ETFs and any other investment products that you see Rupeeting's views being expressed on are subject to market risks. Please read all scheme related documents carefully.

The content and data available in the material prepared by the company and on the website of the company, including but not limited to index value, return numbers and rationale are for information and illustration purposes only. Charts and performance numbers do not include the impact of transaction fee and other related costs. Past performance does not guarantee future returns and performances of the portfolios are subject to market risk.

The information is only for consumption by the client and such material should not be redistributed.

Data used for calculation of historical returns and other information is provided by exchange approved third party vendors and has neither been audited nor validated by the Company. Detailed return calculation methodology is available here. Detailed volatility calculation methodology is available here.

Registration granted by SEBI, membership of BASL (in case of IAs) and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

Alphaware Advisory Services Private Limited [SEBI RIA Registration No: INA000015747] [Validity of registration: February 08, 2021-Perpetual] [BASL ID: 1610] [Address: 1 Janki Centre, Off Veera Desai Road, Andheri West, Mumbai 400053] [Principal Officer details: Mr. Sagar Lele, Email id:, Contact No. +91-9769770046] [Compliance Officer details: Mr. Sagar Lele, Email id:, Contact No. +91-9769770046] [Grievance Officer details: Mr. Sagar Lele, Email id:, Contact No. +91-9769770046] [Platform Partner: smallcase] [CIN – U74999MH2019PTC320573] [GST No: 27AARCA8847R1ZF]

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