Despite a recent decline, where small caps have shown no returns in the last 90 days and mid caps have experienced corrections recently, their performance over the past 12 months still surpasses that of large caps, with returns exceeding 50%, says market expert.
According to Equity market outlook - March 2024 report by Anand Rathi, the impressive progress over the last year can be credited to a recovery from the notable underperformance seen in 2018-19, as well as again in 2022. This recent surge is better understood as a catch-up rather than an abnormality.
Looking ahead, the report said that Nifty50 is expected to deliver 16% earnings growth in 2024-25 and Nifty large cap 100 is expected to register similar earnings growth. However, earnings outlook for small caps looks the best among all (large, mid, small) for 2025-26.
“The large cap indices are likely to deliver slightly better than average earnings growth in 2024-25. The small cap index is likely to deliver the best earnings growth in 2025-26. Mid cap earnings growth expectation is below its long-term average,” said the brokerage firm.
During Oct-Dec’23 results season, both Nifty 50 and Nifty large cap 100 delivered better than expected results. Earnings growth of both Nifty mid cap 150 and Nifty small cap 250 were slower than large caps. However, mid caps did better than small caps.
“Even if we assume fair PE multiples of the respective indices would be significantly lower than the average forward PE multiples during similar phases of business cycles in the past, we do not observe any major froth in the Indian equity markets currently. On the contrary, Nifty small cap 250 seems to be trading significantly below the fair valuation,” it added.
A major correction looks unlikely
The report further suggests that up to 10% correction within a year is common and such an event cannot be ruled out. On an average, market recovers from such corrections within two months.
“While relatively small short-term market corrections are possible, we do not see reasons for significant market correction,” it said.
Past data shows that within a year, market sometimes corrects sharply. Both FII and MF flows to the Indian equity markets have been substantial in March 2024, it added.
First Published:
20 Mar 2024, 11:05 PM IST
FAQs
According to forecasts, the rest of the market will gain ground through the fall and overtake the Mag 7 in the fourth quarter. Taking a broader view of earnings growth, small-caps are expected to hold their own for the full year in 2024 and grow faster than large-caps in all regions in 2025. See Figure 2.
What is the target of Nifty in 2024? ›
The Nifty 50 Trajectory
While some experts opine that the index is now fairly valued, others expect more minor declines. Nevertheless, the Nifty 50 target for December 2024 has been tentatively pegged at 24,600 (in a bearish scenario) and 26,000 (if we see a further bullish run).
What is the expected earnings growth for Nifty? ›
Motilal Oswal believes earnings growth may moderate to nearly 15 per cent over FY24-26. The brokerage firm underscored that the Nifty is trading at a 12-month forward P/E (price-to-earnings ratio) of 20.1 times, near its own long-period average of 20.4 times.
What is the Nifty50 prediction for 2025? ›
In the long-term, we foresee a target of 26,500 for December 2025. The market estimates a stable earnings growth of 12 to 14% for the next 2-3yrs in anticipation of the average 7% GDP growth of India. The volatility, which increased during the year, has drastically reduced with the formation of a stable coalition.
Do small caps outperform during recession? ›
Investing in small caps during recessions has generated superior investment returns, according to our back-testing of the data to the late 1980s (see Table 1, below).
What sectors will outperform in 2024? ›
In 2024, that means communication services, information technology and financials, as the best performers, are on their way to good things for the remaining 10 months. Meanwhile, the tail-end trio that will keep on with their losing ways are materials, utilities and real estate.
What is the stock market prediction for 2024 and 2025? ›
Overall, Yardeni Research forecasts S&P 500 operating earnings at $250 in 2024, up 12% vs 2023. He puts them at $270 in 2025 (up 8%) and $300 in 2026 (up 11.1%). These figures compare with analysts' consensus forecasts of $244.70 in 2024, $279.70 in 2025 and $314.80 in 2026.
What is the trend of Nifty prediction? ›
NIFTY Prediction
NIFTY (25,387) NIFTY is currently in Positive trend. If you are holding long positions then continue to hold with daily closing stoploss of 25199. Fresh short position can be initiated if NIFTY closes below 25199 levels.
What is the PE of the Nifty 50 today? ›
Nifty 50 PE Ratio
| Nifty 50 PB | 4.1 -0.02 (-0.49%) |
|---|
| Nifty 50 DIV | 1.2 0.00 (0.00%) |
| Nifty 50 EPS | 1,075.2 -1.37 (-0.13%) |
| Nifty 50 Price | 25,418.6 34.80 (0.14%) |
This long-term potential of the Indian stock market should evoke optimism and hope in the audience. Sumeet Bagadia of Choice Broking said that in the post-budget rally in 2026, we can expect the Nifty 50 index to touch the 30,000 mark.
Nifty 50 Total Return index Performance
The Nifty 50 TR index has returned 11.8% CAGR, 17.6% CAGR and 28.4% CAGR over the last 15 years, 5 years and 1 year respectively. Volatility has been 22% over the last 15 years, 18.2% over the last 5 years and 15.8% over the last 1 year. All data are as of December 15, 2021.
What is the target of Nifty 50 in 2030? ›
In an interaction with Business Today TV, the veteran market watcher said the benchmark equity index NSE Nifty could reach the 50,000 mark by 2030-31 and 75,000 mark in the next 10 years, citing a broad-based recovery in the economy which is happening right now.
What are stock market predictions for 2024? ›
As a whole, analysts are optimistic about the outlook for stock prices in 2024. The consensus analyst price target for the S&P 500 is 5,090, suggesting roughly 8.5% upside from current levels.
What is the future of small-cap growth? ›
The broadening of the market and the prospect for rate cuts during the rest of 2024 may serve as tailwinds for small-caps. In addition, small-cap earnings growth is expected to outpace large-caps as we head into 2025. With that in mind, we've honed our outlook for the asset class.
What is the financial outlook for 2024? ›
GDP growth probably will be lackluster in Q4 2024, expanding at a tepid pace of about 1 percent annualized. The slightly faster pace relative to Q3 reflects some expectation that falling mortgage rates might stoke modest increases in home sales, and a cheaper US dollar supports slightly faster exports growth.
Are small caps a good investment right now? ›
, as offering the “most compelling near-term investment case.” Lee reckons small caps can gain 50% in 2024, and given the category is up only 6% so far, there is plenty to go. “The astonishingly low June CPI, in our view, is giving the 'green light' for small caps to continue to rally,” he says.
