New Year Cheer: India's Stock Market Poised for Strong 2024 Performance, Reuters Poll Indicates

India's stock market is poised for a robust performance in the coming months, with analysts predicting new highs and a notable uptick by the end of 2024, according to a recent Reuters poll of equity strategists.

Despite a modest decline of around 3 per cent following its all-time high in September, the BSE Sensex index remains nearly 8 per cent higher for the year.

This positive momentum positions India among the best-performing markets globally, although it has also led to relatively higher valuations compared to regional peers.

The current price-to-earnings ratio of the BSE, standing at 21.45, is second only to the US S&P 500 ratio of 23.11.

Despite this, nearly 90 per cent of analysts surveyed in the poll expect Indian stocks to reach record highs within the next six months.

The Sensex is anticipated to experience a gain of over 6 per cent from its present level to reach 70,000 by mid-2024, with a subsequent increase to 72,500 by the year's end.

India's status as the fastest-growing major economy plays a pivotal role in bolstering investor confidence.

Analysts underscore India's resilience in economic growth and robust macro momentum, emphasising its attractiveness as an investment destination.

One noteworthy factor contributing to the strong performance of India's equity market is the surge in young investors.

As financial literacy improves and access to financial services increases, the number of mutual fund accounts has surged from under 60 million in 2016 to over 150 million presently. This influx of retail investors has played a significant role in propelling the market.

While acknowledging the positive trajectory, experts anticipate a moderation in growth next year.

However, they emphasise that India remains a favored market due to its resilient growth dynamics. The ongoing surge in corporate earnings, with all 27 respondents in the survey expecting an increase, adds further buoyancy to the market outlook.

Moreover, the poll suggests a shift in preference towards value stocks over growth stocks in the next six months.

Analysts point to the impact of higher interest rates, indicating that in such an environment, value stocks tend to outperform. As global interest rates are expected to remain above the historic lows of recent years, the appeal of value stocks is likely to persist.