Interim Budget 2024 trading strategy by CNI Research: Nifty may touch 23,000-24,000 before elections

Budget 2024: Kishor P Ostwal, CMD, CNI Research Ltd. expects budget taking Nifty towards 23000 to 24000 before elections. 

As per CNI Research Economy is Continuing to see positives on multiple fronts. 

FY25 earnings growth is expected to be over 30%, as per CNI Research

Nifty is trading at a price to earnings (PE) of 19(One year forward) as per CNI, while on the other hand Nifty 33 years average PE is 25.  

Hence valuations seem favorable. In CNI''s  view, budget shall take Nifty towards 23000 to 24000 before elections. 

With expected rise in the number of investors to 25 crores, small caps and mid caps will have special attractions, as per CNI Research

The threat of market distortion is very low as per CNI Research. This is because  Foreign Portfolio Investors (FPI), AUM (asset under management) is close to $750 billion whereas Domestic Institutions (DII) are also at $700 billion.  Further PSU of $700 billion is the largest stakeholder. PSU theme will continue. LIC alone holds $566 billion share in AUM.

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Key highlights 

Key highlights from the fiscal numbers as per CNI Research are 

The fiscal deficit is under control: Fiscal deficit is targeted at 5.9% of GDP in 2023-24. The government aims to steadily reduce fiscal deficit to 4.5% of GDP by 2025-26. The chances of fiscal deficit below 5.7% in FY 2023-34 is very bright.

Likely Growth Revival : Nominal GDP is expected to grow at 11.8% (i.e. real growth plus inflation) in 2023-24 as per CNI Research

Budgetary Expansion : Robust tax revenues have changed the financial position of India. The government on record said that it has a cash surplus of Rs. 3.4 lakh Crores. CNI Research expects expansion of the budget by 10% to 50 lakh crores.

Efforts are being made to bring tourism in the GDP, which may help government to raise GDP to 8% in the coming years, feels CNI Research

Economy- Continuing positives on multiple fronts

There is possible full convertibility as per CNI Research. If this happens, Road to $1 trillion foreign exchange reserves will be clear as per them.

Gradual Tax Slab Increase is expected. To make life easy, tax slabs will be raised considering that individuals are taxed higher than Corporate India. Secondly, there is realization that lower the rate of taxes, higher will be the revenue.

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Widening Tax Net:  Though the tax base is 8.7 crores, the Demat account holders are above 13.5 crores and no. of investors (as per BSE Website) is 16 crores. This will rise to 25 crores soon that is 18% of the population which will become market balancers.

Continued Digitisation Focus- Rapid digitization has brought the parallel economy to a standstill. With increase in % of online transactions, GST cannot be evaded.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions