India’s stock market set for record highs in 2024

Amidst a somewhat overcast global outlook marked by modest growth prospects for 2024, India provides reasons for optimism. The nation’s booming financial sector, particularly its stock market, is set to rise dramatically, projecting a 10% increase by the end of 2024, according to a Reuters poll of equity strategists. 

Bullish Momentum 

Brushing off a recent minor setback of a 3% decrease, the BSE Sensex index, India’s benchmark, maintains its impressive display. Impressively, the index has grown almost 8% this year, a clear sign of its strength despite the prevailing sense of uncertainty. 

The BSE Sensex is expected to gain over 6% from its current position, reaching a new high of 70,000 by mid-2024. Following this, we expect an additional 3.6% growth, pushing the index to 72,500 by the end of 2024,” most analysts suggest, presenting a striking consensus among 90% of them about their confidence in India’s stock market to reach record heights in the coming six months.

Driving Forces Behind Growth 

India’s impressive economic growth, touted as the fastest among all major economies, serves as the primary catalyst behind its surging domestic equities. With forecasts of over 6% growth in the upcoming years, the nation’s economic momentum fuels its stock market’s success. One critical contributing factor is the influx of young, savvy Indian investors. Together with improved financial literacy and greater access to financial services, this has caused a massive increase in mutual fund accounts – rising from under 60 million in 2016 to over 150 million today. 

Market Insights and Trends 

In the upcoming months, value stocks are set to outdo growth stocks, marking a shifting trend. Much of this is attributed to the prediction of persistently high or even increasing interest rates. As Nishit Master, portfolio manager at Axis Securities into Reuters, explains, “In an environment where interest rates are expected to remain high, value stocks typically fare better.” 

Bearing in mind the BSE’s present price-to-earnings ratio of 21.45, which comes second only to the U.S. S&P 500 ratio of 23.11, the impressive surge in domestic equity prices denotes India as one of the top-performing markets. Despite the market’s high valuation relative to its regional peers and other major indices, analysts stand united in their optimism. Around 90% predict record-breaking highs in the coming six months. 

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