As we enter 2024, Indian stock markets stand at record highs after ranking among the top-performing stock indices globally in 2023. The bull run is expected to continue, with some positive triggers for the year.
The stock market indices went up because of several important factors, including good economic signs, increased auto sales, updates on the October-December quarter of the fiscal year, foreign capital inflow, and positive signals from around the world.
In 2023, the Nifty 50 and BSE Sensex, key domestic stock market indicators, experienced a surge of approximately 20%, marking their second-best performance since 2017. Investors on D-Street witnessed a remarkable rally in stocks, contributing to an addition of ₹81.90 lakh crore to their wealth during the year.
Here’s a closer look at the key factors that will drive the markets further:
- Strong Economic Growth: India’s GDP is projected to grow at an impressive 7-8% over the next decade, placing it among the world’s fastest-growing economies. This strong economic foundation serves as a bedrock for market confidence.
- Stable Commodity Prices: The recent easing of commodity prices provides relief to Indian companies struggling with inflationary pressures, potentially leading to improved margins and profitability.
- Healthy Corporate Earnings: Market experts forecast a 15% earnings growth for the markets in 2024. This sustained earnings momentum fuels investor optimism.
- Auto Sales Roar: December auto sales figures will roar in, offering a glimpse into consumer demand and the health of this crucial sector. A strong showing will work well for market sentiment.
Global Catalysts
- Resumption of Foreign Portfolio Investment (FPI) Flows: The return of foreign investors after a brief period of outflow is an important sign of confidence in the Indian market. Their increased participation is expected to contribute to fresh inflows and raise stock prices.
- JP Morgan Bond Index Inclusion: India’s inclusion in the JP Morgan Government Bond Index could attract inflows of up to $25 billion into the debt market, potentially easing borrowing costs for Indian corporates and further improving the investment climate.
- US stock markets Soared to new highs: After the Federal Reserve’s final policy decision of the year, US markets saw new highs. The bank revealed its decision to maintain steady interest rates after nearly two years of significant rate hikes. Also, the bank predicts three rate cuts in 2024, which will further build positive market sentiments around the global financial markets.
Q3 Updates
It’s time for the third-quarter business updates and investors are waiting eagerly for the results. Some companies that released their quarter results so a rise in their stock prices, like Adani Ports & SEZ, Dmart, and others.
- Adani Ports & Special Economic Zone Ltd saw a hike after the Gautam Adani-led company came out with its December quarter volume data.
- DMart saw a double-digit increase. In the third quarter of this financial year, Avenue Supermarts Ltd, popularly known as Dmart, experienced a double-digit increase in revenue, with a 17.2% year-on-year growth. The company made Rs 13,247.33 crore in sales for the last three months, up from Rs 11,304.6 crore during the same time last year.
Challenges and Potential Roadblocks
- Geopolitical Uncertainty: Global conflicts and political tensions can lead to market volatility and pose temporary setbacks.
- Rising Interest Rates: While a global rate-cut cycle is anticipated, any deviation from this could dampen market sentiment.
- Inflationary Pressures: Any unpredicted situation in inflation could impact corporate earnings and investor confidence.
Overall Outlook
Many analysts and industry observers predict the bullish trend in Indian financial markets will persist in 2024. They anticipate continued strong foreign interest, expecting significant purchases in both equity and debt markets.
Despite potential challenges, the overall outlook for Indian markets 2024 remains positive. Strong economic fundamentals, beneficial domestic events, and supportive global factors will likely propel the markets toward further highs. With targets set at 25,000 for Nifty 50 and 83,250 for Sensex by the end of the year, 2024 could become an exciting year for Indian investors.
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I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.