We had been receiving numerous enquiries in the past few weeks about the best stocks to invest in 2024 to reap multibagger Returns. The year 2024 is a major year as far as the Indian Equity market is considered as Parliamentary elections are due during the year. The main contest in the parliamentary elections is between the Ruling BJP headed by Prime Minsiter Mr. Narendra Modi and the Opposition Congress Party. The markets will keenly watch the outcome of the electoral results in 2024. However a Majority for BJP or Congress will not have any major impact on the Indian Stock markets. However if no party gets a clear majority and stability of the government is questionable then there is likely to be some weakness in the markets.
The other important aspect to watch out for is the Geopolitical risk emerging out of the Middle East due to Israel Hamas war. The decision of Israel to launch a major attack on Hamas is unlikely to derail the markets in a big way. However, if the war escalates with other Middle East Countries then there is likely to be disruptions in the supply of Oil from the Middle East. Any steep increase of the prices of Crude Oil is bad for India as the country imports about 80% of its oil requirements. Further any steep increase in global crude oil prices is likely to stoke Inflation which will result in Higher interest rates which will slow down the economy in sectors like Real Estate, Housing Finance etc. But these are issues that may or may not happen and let us not jump to any hasty conclusions.
Coming back to the Indian Economy we see Indian GDP to grow at least 6% per annum in the medium term which is likely to take the Indian markets higher. No where in the world any country’s GDP is growing at 6% per annum and India is going to be the only country to provide growth opportunities. This lack of growth in other markets is likely to result in more FII flows into India which will keep the markets going northwards.
Further the Government initiatives like Atma Nirbhar and PLI schemes have resulted in Indigenous production of many defense and other components in the country which has reduced imports which saves crucial foreign currency. Further the China + 1 strategy where MNC companies are migrating to other countries especially India due to the unfriendly business environment will increase FDI Inflows into the country.
The Country’s Banking sector is also in pink of health as NPA write off’s are done and this is likely to result in higher credit offtake for the sector. However, Monsoons this year has been erratic and this is likely to impact Agricultural sector. However it is not a cause for alarm as sufficient food supplies are available. The Inflation is also at comfortable levels of the RBI though it is unlikely to cut interest at least till the 2nd quarter of next year.
Coming back to the question of best stocks for long term investment we would suggest a stock specific approach. There has been some correction in the Indian markets in the previous week due to Middle East tensions which has resulted in fall in some of the stocks. However we suggest investors to invest gradually and keep a close watch on the geopolitical problems in the Middle East. However any correction in the markets must be used as an opportunity to earn multibagger returns in the medium term and investors must take advantage of the same. We believe that Large Cap stocks offer better risk reward ratio though one may adopt a stock specific approach in the Mid & Small cap space. We believe that Agri related themes, Financials, Packaging , Chemicals and IT are worth a look albeit gradually.
Conclusion:
Though Indian markets are still slightly expensive we believe that the growth opportunities in the Indian economy will generate significant investment opportunities. We urge investors to look for stocks which are trading a reasonable levels and avoid stocks which are fundamentally weak. We at Wealth Step Research is coming out with a list of 10 stocks soon which will be good investment in the year 2024.
Happy Investing!!!
Team Wealthstep Research