According to Prabhudas Lilladher, a domestic brokerage, the benchmark index Nifty is expected to reach a target of 22,584 in the next 12 months, indicating a 14% increase from the current level.
This price target was determined by applying a price-to-earnings (P/E) multiple of 17.3 times, which is a 15% discount to the 10-year average P/E of 20.4 times.
Amnish Aggarwal, Head of Research at Prabhudas Lilladher, stated that the Nifty is not in a bubble zone as it is trading at a 17.2% discount to the 10-year average, providing comfort.
He added, “Odds are evenly balanced as headwinds emanating from firm US interest rates, El Nino impact on crops and inflation, volatile crude and geopolitical uncertainty still abound.”
The brokerage mentioned that the market momentum leading up to next year’s Lok Sabha polls will likely be influenced by the state election results.
Prabhudas Lilladher is overweight on auto, banks, IT services, capital goods, and healthcare, and underweight on metals, cement, consumer, oil & gas, and diversified financials.
The brokerage has set a bull case target of 24,573 and a bear case target of 19,927. The bear case target values Nifty at a 25% discount to the 10-year average P/E, while the bull case target values it at a 7.5% discount.
First Published: Nov 22 2023 | 4:12 PM IST