Mumbai: The year 2024 will be eventful for the stock market with several big dates already lined up like the Lok Sabha election in the first half, the Union Budget, and RBI's rate cuts in the second half of the year. After a gap of four years since 2020, India has a strong start for the new year with fundamentals looking very strong.
As the market has a high base with Sensex closing at 72,240 and Nifty-50 at 21,731, expectations are mixed with double-digit returns expected this year too but volatility may provide the smart investors with even higher return if one preserves cash and waits for the right opportunity. In 2024 debt investment returns could match or even go higher compared to equity with rate cuts and Indian bonds inclusion in global bond indices.
However, January has seen the market correcting significantly several times since 2008 after a bullish build-up in the previous year. Analysts are more confident of large-cap stocks than the broader market going into 2024.
"One needs to be cautious as the valuation is ahead of fundamentals. However, large caps could offer better risk-reward over the next few months. As anticipated, they've outperformed mid-caps in the past month. We recommend reducing allocation to mid and small caps," said Jitendra Gohil, CIO, Kotak Alternate Asset Managers.
"2023 was intriguing for both the Indian and global equity markets. While the year commenced with restrained expectations and notable volatility in the initial months, the Indian market witnessed a remarkable recovery in the second half, from its March 2023 bottom. In 2024, the Indian economy will continue to stand out, especially against the challenging backdrop of other emerging economies.
We firmly believe that India will continue its growth momentum in the year ahead and remain the land of stability against the backdrop of a volatile global economy.
The bolstered balance sheet strength of corporate India and the significantly enhanced health of the Indian banking system are positive factors.
These elements are poised to facilitate Indian equities in achieving double-digit returns over the next two to three years, supported by robust double-digit earnings growth," said Pranav Haridasan, MD & CEO, of Axis Securities.
RBI has also strengthened its forex reserves at USD 620.44 billion adding USD 58 billion in 2023.
"As we set our sights on 2024, a year that promises to be eventful, we anticipate it unfolding in two distinct halves. The first half will be dominated by-elections, while the second half will be shaped by monetary policy decisions, including expected rate cuts. The current market rally has already factored in potential outcomes and the possibility of up to three rate cuts by the US Fed.
Heading into 2024, many positives are expected to be priced in, laying the groundwork for a potentially volatile market closer to these key events," said Rishabh Goel, MD, Tailwind Financial Services.
"In anticipation of 2024 being a year of normalization in the performance gap between large caps and broader markets, we recommend skewing portfolios towards large caps. Additionally, we advocate for considering balanced advantage and other hybrid funds, offering a reasonable balance between equity and debt.
These funds are well-positioned to ride the waves of volatility while being strategically skewed towards large caps in the equity allocation. Furthermore, they stand to benefit from potential rate cuts on the debt allocation, translating into mark-to-market gains," said Goel.
