Company growth to drive 20% stock rally: Strategist

Industrial production could see 5% pick-up in US and euro zone: Pro

Global equities could rally 20 percent in the first half of 2014, driven by rapid expansion on the part of companies this year as the economy improves, according to one strategist.

Companies will undergo an "aggressive" capital expenditure cycle, in response to "unanticipated demand", Ian Harnett, European strategist at Absolute Strategy Research said. That in turn will boost industrial production across the globe, he argued.

"So we're talking about capex picking up in double digits in a number of regions and industrial production growing at perhaps 5 percent in the euro zone, 5 percent in the U.S., and something like 8 percent in Japan," Harnett told CNBC.

"So we're actually talking about very strong growth that you're going to see in the first half of this year that's going to drive equities potentially up another 20 percent."

(Read more: US stocks: So last year? 2014 is all about Europe)

Euro area industrial production rose 3 percent in November 2013 compared with the same time in the previous year, the most recent data shows. In the U.S. industrial output was up 3.7 percent for 2013.

Harnett's confidence in the improving global economy has been echoed by financial officers at major companies, albeit not quite as strongly. In CNBC's CFO Council survey, 60 percent of respondents said there would be a "modest increase" in their firm's spending in 2014.

Increasing expenditure will also provide a big boost for emerging market equities as companies will begin to look at sourcing products and services from abroad.

Wenjie Li | Flickr | Getty Images

"We are already starting to see some of the industries move…but so far EM (emerging market) equities haven't responded to that. We think that's the big trade that is still out there, the undervalued part of global equities."

(Read more: UK CFOs feeling upbeat and ready to take risks)

Others caution against such a bullish view.

"Our overview is that there will be a pick-up in U.S. and U.K. which will help the earnings story but there is quite a long chain between economic growth and corporate earnings," Max King investment strategist at Investec Asset Management, said in a phone interview.

"I would caution against premature optimism."

—By CNBC's Arjun Kharpal: Follow him on Twitter @ArjunKharpal