Bank Nifty will take the lead in 2024: ICICI Direct

Brokerage ICICI Direct anticipates continued growth in healthcare and financial stocks, attracting more foreign investment in 2024. Among all sectors, it expects the Bank Nifty to take the lead next year. 

"The Bank Nifty has been the major driver of the Nifty in the cycle of 2012 to 2020 bull run which is visible through price ratio. Earlier there was significant correction and time based consolidation seen for 3 years between 2008 to 2011. Similar kind of patterns and consolidation moves are visible in the last three years of 2020-2023. Considering price ratio hovering near major support of mean-2*sigma levels, we feel banking stocks should lead Nifty in the coming months," said Pankaj Pandey, Head Research at ICICI Securities. 

The firm's top picks for 2024 include Dalmia Cement, Federal Bank, GAIL India, Hindustan Copper, IPCA Laboratories, and Shriram Finance.

Nifty rebalancing expected in 2024

Shriram Finance and Bharat Electronics are likely contenders to replace UPL and BPCL in the Nifty50 index during next year's rebalancing.

"For the coming Nifty50 rebalancing, based on free float market capitalisation method, probable candidates to find the place in Nifty are Shriram Finance and Bharat Electronics replacing UPL and BPCL," said Pandey. 

The brokerage also expects PFC and Polycab to be a part of NSE100 whereas Adani Wilmar and Muthoot Finance would be excluded from the NSE100 basket.

"Adani Energy solution along with Hindustan zinc and IRFC continue to be the top contender for Nifty next50 inclusion. However, since they are not part of F&O, they may not be considered for inclusion," said Pandey.

ICICI Securities also predicts a bright future for the Nifty50 index, and has set a target of 24,200 by 2024. This growth is expected to be fueled by foreign fund inflows.

"Heavyweight stocks from BFSI, Auto, Cement, and Healthcare should lead Nifty toward 24,200 levels in CY-24," said Pandey.