Analysts surveyed by Reuters foresee a robust rally in the Indian stock market by the end of June, projecting a remarkable 9 percent growth for 2024 despite already elevated valuations. The surge in the BSE Sensex index, which closely mirrors movements in the US S&P 500 index, reached nearly 19 percent in the past year. This surge was largely driven by expectations of global central banks cutting interest rates in 2024 and India’s economic expansion outpacing its counterparts.
In January, the Sensex breached the historic 73,000 mark for the first time, showcasing a year-to-date increase of over 1 percent. This climb comes amidst waning speculations of premature rate cuts by the US Federal Reserve, prompting the withdrawal of foreign investments from several emerging markets. However, Indian market optimism remains high, fueled by expectations of the Bharatiya Janata Party (BJP) led by Prime Minister Narendra Modi securing victory in the upcoming national elections.
According to a recent Reuters survey conducted between February 12 and 21, involving 28 equity analysts, projections for the Sensex indicate a further 4 percent growth, aiming to peak at 76,000 by June’s end. This forecast significantly surpasses the 70,000 level predicted in a November survey. The index, closing recently at 73,057, is anticipated to climb by 7.5 percent to reach 78,550 by the close of 2024, resulting in an overall approximate 9 percent increase for the year.
Neeraj Chadawar, head of quantitative equity research at Axis Securities, emphasized India’s resilience as a standout performer among emerging markets, expecting it to maintain its growth momentum in 2024 amidst global economic volatility.
India, currently the world’s fastest-growing major economy, is projected to grow nearly 7 percent this fiscal year, with growth rates expected to remain above 6 percent in the subsequent years. In response to inquiries regarding corporate earnings, almost all respondents anticipate a rise over the next six months.
Regarding the likelihood of a market correction in the next quarter, the majority of respondents expressed skepticism, with 16 out of 27 considering it unlikely, and two deeming it highly unlikely. Nine respondents anticipate a correction, while two view it as highly likely.
Despite the optimistic outlook, concerns linger over the BSE index’s price-to-earnings ratio, currently standing at 24, which exceeds its historical average of 20. Further increases in this ratio could exacerbate valuation concerns.
The Nifty 50 index, according to the survey, is expected to experience a more than 2 percent increase from its recent closing to 22,750 by June’s end, with a projected close of 23,925 by the end of 2024.
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