Indian equity markets will rise by up to 10 per cent in 2024, a domestic brokerage said on Tuesday.

About Nifty target for end-2024, HDFC Securities' head of retail research Deepak Jasani said he expects a rise of 8-10 per cent from the current levels.

The 50-share benchmark closed at 21,453 points, which is over 17 per cent higher than the close in the year-ago period.

To a question about the elections, the company's managing director and chief executive Dhiraj Relli said the outcome of the general election will have a "limited impact" on the market as investors have already started pricing in the incumbent BJP retaining power after the impressive win in the state polls, and political stability because of that.

He said the months leading up to the election results will see some changes in the months leading up to the polls.

Relli urged everybody to look at the market story beyond the election results as well and pointed to the softening of inflation and rate cuts by RBI in the second half of the year.

Inflation will cool down to as low as 2.5 per cent in the second half of the new year which will lead to a shift of stance by the central bank and also cuts of 0.50 per cent in rates, the brokerage said.

It feels the small and mid-caps have seen huge appreciation in the recent past and will offer limited upside, and made its preference clear for the large caps, Relli said.

He said some of the portfolio management services (PMS) have stopped taking fresh flows into their small-cap schemes and many more will follow suit in the next year, it said.

Its head of institutional research Varun Lohchab said it has become very difficult to pick up broader sectoral stories to bet on because of the high valuations and advised investors to be more choosy about select stocks in each of the sectors.

The brokerage has positive outlooks on industrials, infrastructure, realty, cement, auto, oil and gas, and pharma sectors, he said, adding that it is negative on consumer staples and consumer discretionary sectors and chemicals.

Relli said the lacklustre rural demand is a worry due to which the consumption-focused companies are not doing well and specifically pointed to unemployment as a challenge.