Client Associates (CA), the country’s leading multi-family office, has projected that the Sensex is likely to hit 77,400 by December 2024.

In a report titled "CA Annual Equity Assessment 2024," CA has a neutral stance on Indian equities, suggesting investors trim their equity exposure to align with individual policy allocations. Despite acknowledging a major rise in equity indices over the past year, CA recommends caution, citing expensive valuations in mid and small-cap stocks.

The forecast for Sensex's intrinsic value by December 2024 stands at 77,400, with Indian corporates expected to deliver a robust 15 per cent earnings per share (EPS) growth in FY2025, driven by strong domestic consumption, policy initiatives and healthy corporate balance sheets.

Investors are urged to moderate return expectations due to expensive valuations and potential market volatility, primarily attributed to an expected slowdown in global activities driven by high interest rates and tight credit conditions.

The Indian economy is projected to grow at around 6.5 per cent in FY25, fuelled by strong domestic demand, calibrated policies and government focus on capital expenditure. Meanwhile, India remains the only large economy expecting GDP growth higher than its long-term averages, coupled with an inflation rate lower than its historical averages in CY2024 and FY2025.

Globally CA expects subdued economic activities due to high interest rates and tight credit conditions. However, emerging economies are expected to outperform advanced economies, with global central banks likely to adopt a dovish stance as inflationary pressures ease.

In terms of sectoral recommendations, large-cap private banks, NBFCs, and IT sectors are deemed relatively attractive in terms of valuations. Conversely, industrial, PSU, consumer, and capital goods sectors are considered expensive compared to their medium-term averages.

Auto sector is expected to witness upbeat earnings growth driven by strong auto sales amid higher discretionary spending. Similarly, infrastructure companies, boasting an all-time high order book and stable volumes, are anticipated to deliver better-than-average earnings growth.

As inflation and interest rates are anticipated to moderate, CA expects RBI to cut rates in the second half of 2024, further influencing investment strategies in the Indian market.