Nifty 50 jumps over 24% since last Independence Day; Will it touch 29,000 in the next one year?

Independence Day 2024: Much has transpired since the last Independence Day, and 2024—undoubtedly one of the most exciting years ever—managed to break records in spite of a number of dramatic events on both the domestic and international fronts. The Nifty 50 has increased by 24.23% in the year since Independence Day 2023. The Nifty 50 ended the Wednesday, August 14, 2024, session slightly higher at 24,143.75, up 4.75 points or 0.02%. As many 26 Nifty shares ended lower while 24 advanced.

The Nifty 50 saw a very sluggish increase of just 1.05% from August 15, 2023 to September 29, 2023. But as the market as a whole along with the exit polls of Lok Sabha Elections of 2024, expected a record third term with a majority of more than 350 plus seats for the National Democratic Alliance (NDA) led by Prime Minister Narendra Modi at the Centre, during this period (October 3, 2023 to June 3, 2024), the Nifty 50 soared by almost 18.5%.

On June 4, 2024, however, the markets plummeted as the BJP failed to win the necessary 272 seats for a clear mandate—a first in three elections. The Nifty 50 has increased by 3.8% since then.

Following the twists and turns over the course of a year, investors now see stability to have been maintained, and the Indian stock market is once again tranquil thanks to the previous government's persistence and liquidity.

“Last one-year market rally was primarily driven by strong domestic macroeconomic scenarios when compared to other emerging markets (EM’s) as well as western markets, which makes India a resilient economy in the current global uncertainty. Despite extreme volatility in the global stage, it is very clear that Indian Retail investors are the reason for the market to stand up on every dip. India's large and young population, rising middle class income, urbanisation, changing consumption and investment patterns and favourable financial inclusion towards investment prove to be the growth engine for the capital markets,”said Prashanth Tapse, Senior Vice President of Research at Mehta Equities.

Top 10 outperforming stocks of Nifty 50

Kapil Shah, Technical Analyst, Emkay Global, and Technical Analysis Trainer at Finlearn Academy highlighted that in the past one year, out of 10 outperforming stocks on Nifty 50, five belong to Public Sector Enterprise, three from auto sector and one from telecom and service sector.

Coal India has the highest return at 115.69% over the past year, making it the top performer among the listed stocks. Bajaj Auto follows closely with a 111.19% return.

Stocks like NTPC, Adani Ports and Special Economic Zone, Bharat Petroleum Corporation Ltd (BPCL), Oil and Natural Gas Corporation (ONGC), and Power Grid Corporation of India have shown strong returns in the range of 81.76% to 85.99%. Mahindra and Mahindra (M&M) and Tata Motors also performed well, with returns of 78.02% and 74.74% respectively. Bharti Airtel has the lowest return among the listed stocks, but still a solid 69.21%.2024

What could be the biggest challenge for Indian Stock Markets going forward?

The founder of Kejriwal Research and Investment Services, Arun Kejriwal, voiced his concerns, noting that while markets have remained positively skewed in the current environment, earnings have not kept up. Earnings growth has not kept up with market growth. This is really unsettling and may turn into a roadblock in the future. If we look ahead to the next twelve months, this will most likely be the biggest challenge. If we must consider the bright side, nevertheless, it is the government's stability, the continuance of the policies of the first two terms, and the fact that the Indian economy is still expanding on all fronts. To achieve the kind of exclusive growth we saw last year, we need to strengthen corporate India's fundamental performance.

Will Nifty 50 touch 29,000 in the next one year?

According to Mohit Gulati, CIO and managing partner of ITI Growth Opportunities Fund, there are a number of market factors that make it hard to predict if the Nifty 50 will reach 29,000 by August 2025, the next Independence Day. These include global economic conditions (such as US recessions, UK degrowth), domestic economic indicators (like CAPEX cycles and job creation), corporate earnings (for justifying rich valuations with high double-digit teen growth), investor sentiment (considering risk versus no-risk), and market valuations.

“While we all hope for the market's upward momentum to continue, predicting a specific level depends on how these factors unfold. One certain thing is that reaching higher levels will be challenging if the government introduces regressive retrospective taxation. Therefore, the next 12 months will be interesting. There is a lot of work to be done in both the public and private sectors to achieve higher levels on the index,” highlighted Gulati.

Similarly, Prashanth Tapse stated that, given the global hurdles, the Nifty 50 Technical Outlook - One-Year Perspective - Nifty 50 achieving 29,000 by the next Independence Day appears to be an extremely fervent approach with very little chance.

“In the next one year, from a technical standpoint, we foresee a Nifty 50 to deliver an average ~12%-14% ROI in the best-case scenario, which translates to a target of 27,040-27,523 on or before or next independence day, August 2025. The assumption for this growth would be based on better-than-expected earnings forecasted on Nifty 50-based stocks,” explained Tapse.

However, Tapse stated that the fact that we have a stronger third-term BJP-led government for the next 5 years would continue to work and focus on growth along with growing domestic investors base pouring money for nation growth. Considering the facts, we continue to remain optimistic on India's growth story while we may see short-term hurdles to keep coming now and then.

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