visimoney
TLDR:
– Jefferies predicts that foreign portfolio investor (FPI) inflows into the Indian stock market will improve in 2024, benefiting banking stocks.
– FPIs have been net sellers in January, but domestic institutional flows have supported the market.
– Jefferies identifies key triggers for FPI flows including the peaking of the US dollar, the 2024 general elections in India, and the rising significance of India in global markets.
– The firm recommends Axis Bank, ICICI Bank, IndusInd Bank, HDFC Bank, and State Bank of India as favorable stocks in the banking sector.
In its India strategy 2024 report, Jefferies expects foreign portfolio investor (FPI) inflows into the Indian stock market to improve in the coming year, particularly benefiting banking stocks. The report notes that FPIs have been net sellers in January, but the market has been supported by domestic institutional flows, including a rise in systematic investment plans (SIPs) that create a consistent liquidity pool. Jefferies predicts that domestic flows will not be disrupted, as fixed income has become less attractive due to tax changes.
Jefferies identifies three key triggers that could boost FPI flows in 2024: the peaking of the US dollar, the 2024 general elections in India, and the rising significance of India in global markets. The firm also highlights the example of Chinese equities, which saw foreign inflows of over $50 billion per year from 2017 to 2021.
In terms of stock recommendations, Jefferies favors domestic cyclicals, including banks, power companies, telecom firms, and industrial and property companies. It is underweight on IT, consumer, and energy stocks. Jefferies believes that banks can navigate slower growth in personal loans by capitalizing on broad-based growth in small and medium-sized enterprises (SMEs) and housing, as well as an uptick in capital expenditure. The report suggests that banks will need to manage slower deposit growth, potential rate cuts, and disruptions caused by elections. Jefferies recommends stocks such as Axis Bank, ICICI Bank, IndusInd Bank, HDFC Bank, and State Bank of India in the banking sector. The report also highlights other favorable stocks, including ICICI Lombard, BSE, HDFC Life, Max Life, KFIN Technologies, ICICI Prudential, Shriram Housing Finance, SBI Cards, Cholamandalam Investment and Finance Company, and Can Fin.
Overall, Jefferies expects FPI inflows to strengthen in 2024, bolstering the Indian stock market and benefiting banking stocks in particular.
