Nifty will be around 21,000 by 2023 end, says Rakesh Arora of Go India Advisors

Rakesh Arora, Managing Partner of Go India Advisors, and the former Indian research head of global financial major Macquarie is bullish on Indian equities and believes that Nifty would be around the 21,000-mark by the end of the current calendar year. 

He also feels that there is still more upside left in the markets in the coming one year as the recent rally came at a time when few in the markets were expecting it and hence mutual funds are still under invested and have a lot of cash to deploy. 

“Retail inflows into mutual funds has been strong, SIP monthly inflows reached a new high ₹15,200 crore in July, up 26% YoY. Indian economy is holding up well and is a bright spot in global market meaning higher allocation of global capital,” says Arora. 

“At the same time valuations remain reasonable as it trades at long term average of 18.5x PER on FY25E. All this points to more upside in near term. Mutual fund inflows have been largely towards mid and small cap schemes and there is where most of the action is expected,” he adds. 

The Indian benchmark Sensex, which touched a record high of 67,619 on July 20, is currently trading around 65,100 levels. The Indian barometer is currently up nearly seven per cent in the current calendar year. 

The broader 50-share Nifty of the National Stock Exchange (NSE) is currently trading around 19,350 levels 

In the medium to long term, Arora believes it will be India’s decade on the back of strong support factors like demographic dividend, government reforms and fiscal prudence among other things. 

“India is bestowed with demographic dividend with more than 100 million people joining in workforce. Indonesia is a distant second with 17 million people. At the same time, Indian government has done some very strategic reforms like GST, Jan Dhan Yojna, direct bank transfer of subsidies etc. This has led to formalisation of the economy, financial inclusion of large proportion of population and stopped wasteful expenditure and leakages,” he says. 

“Additionally, Indian government has led the path of fiscal prudence and has directed funds for infrastructure built which reducing subsidies. This was reflected in government’s measured and targeted approach during covid period too. This fiscal prudence has meant that Indian economy has come out relatively unscathed and has inflation under control. India is well on path to growth at 7-8% and be $5trillion economy in next 2-3 years,” adds Arora. 

Meanwhile, in terms of headwinds facing the Indian stock markets, Arora lists deep recession in US & Europe, spike in oil prices, inflation, and adverse Indian state election results as the key risks. 

“Key states (are) coming up for election early next year. If BJP position is seen shaky, market can think of unstable government in 2024 general election,” he says. 

On the other hand, support factors include pre-election spends, capex cycle and interest rate cycle reversal, he says. 

Arora is bullish on sectors like infrastructure & capital goods, banking & financials, and real estate and building materials, while advises to be cautious on IT, metals, and chemicals. 

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