Stock Market outlook for 2024

Indian markets witnessed one of the strongest rally in equities post March 2023, with Indices posting a hefty-gains in past one year. There are many reasons for this buoyant performance.

India’s economy has shown a strong GDP growth last year and is expected to continue the same in forthcoming years. Between fiscal 2025 and 2031, Indian economy will inch towards $7 trillion mark (expected to become third largest economy in the world). After a sluggish decade, manufacturing will take center stage, on increasing investments, global opportunities from supply chain diversification, the green transition imperative and domestic policy push. While the government has supported the initial revival in investment cycle, the private sector seems poised to take the lead forward.

As per CRISIL, the manufacturing share in GDP is expected to increase to 20% by 2031 from 17.2% this fiscal. The services share is expected to see moderate growth to 55% from current 54.7%. In contrast, agriculture share is expected to fall to 12% from 14.5%.

Enhanced profitability and strategic deleveraging have led to healthier balance sheets. Continued momentum in revenue growth coupled with benign commodity prices will boost bottom-line going forward.

The challenges ahead could stem from global geopolitics, uneven global economic growth and technological disruptions. Also, recent announcement from Bank of Japan, reversing its 17-year rate trajectory has given shock to the world economy and has put the Fed’s chance to cut rates in coming year in question.

Both inflation and policy rates seem to have peaked and rate cuts could begin by later part of current fiscal.

The year 2024 would witness heightened volatility, with sector and stock rotation at the center stage. Adopting patience and grab the opportunity at the right time would be a key focus area from Libord. Cherry picking the attractive businesses at reasonable valuation will be a focus area for the current year.

The following was the performance of various sectors for past few years.

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