Indian stock market outlook for 2024: Big correction is expected

Many experts are expecting that Indian stock market will perform well in 2024, with several forecasts indicating a positive outlook.

According to our website view (PS Group), Indian stock market is projected to hit new highs in the next six months and rise over 8% by the end of 2024, driven by the sustained expansion of the economy. But one important point to be noted that Indian stock market making new life time highs almost every week & Indian stock market is trading above FY25-26 valuations, So, We may see profit booking anytime in Indian stock market.

Investors & traders should also prepare for 5% to 10% downside in the short term coming weeks or months. Nobody can predict that when this profit will start in stock market.

But Many Indian stock market experts are forecasting strong earnings growth for India in 2024, among the fastest rates in Asia.

However, there are contrasting views in the market too, As per our website research (Ps group) on current situation of Indian stock market , In the medium term, We are (PS Group) expecting  Nifty and Sensex to decline by nearly 25% to 30% in 2024, citing overvaluation and the possibility of entering a global recession in the end of second half of the year 2024. it is important to consider the potential risks and varying perspectives on the market's performance in 2024.

According to Our website research ( PS group), Investors should stay alert & keep in mind all these factos before making new investment in Indian stock market in 2024.

factors that could lead to a correction in the Indian stock market in 2024?

Premium valuations:

The Indian market is trading at a one-year forward P/E of 20x, which could pose a risk.

Overheated market and potential food inflation:

The pre-election rally might be impacted by an overheated market and potential food inflation due to El Nino's effects.

Bond yields:

 Yields have contracted drastically, which may have a negative effect on the market in 2024.

Earnings growth and domestic participation:

 While India's robust earnings growth and domestic participation are favorable, extreme valuations or domestic and global shocks have historically led to significant market corrections.

Global and socio-political factors:

Global economic conditions, US bond yields, and the upcoming Lok Sabha elections in India are also cited as potential influencers of the Indian stock market in 2024.

Let us understand the main factors which can drag down the Indian stock market in 2024:

Q. what factors could cause the Indian stock market to go down in 2024?

Answer. Several factors could potentially cause the Indian stock market to go down in 2024. These include

1.  Global economic slowdown
2. Escalated geopolitical tensions
3. Negative surprises Russia war
4.  Possibility of entering a global recession in the second half of the year.
5. Overvaluation of the market
6. Unmet high earnings expectations could trigger substantial sell-offs.
7. Factors such as the actions of the US Federal Reserve,
8. Inflation
9. Interest rates could also impact the market's performance

 It's important to consider these potential risks alongside the positive outlook for the Indian stock market in 2024.

Q. how can investors prepare for potential downsides in the Indian stock market in 2024?

Answer. To prepare for potential downsides in the Indian stock market in 2024, investors may consider the following strategies based on the provided search results:

Diversification:

Investors can adjust their asset allocation by considering a mix of stocks, bonds, and other investment options to mitigate risks associated with a potential market downturn.

Hedging Against Inflation:

Given the expectation of settling but relatively higher inflation, investors should consider hedging against inflation by including assets that tend to perform well during inflationary periods.

Undervalued Sectors:

 Identifying undervalued sectors, such as the oil marketing companies, and investing in them based on their growth potential can be a part of the preparation for potential market downsides.

Global Economic Outlook:

Considering the global economic outlook and the potential for a global recession is crucial, as it can significantly impact the Indian stock market. Investors should stay informed about the global economic conditions and their potential impact on Indian equities.

Foreign Inflows and Government Policies:

 Monitoring foreign inflows, government policies, and their impact on the Indian stock market is essential. Continued foreign interest and government measures can influence market performance.

These considerations can help investors prepare for potential downsides in the Indian stock market in 2024 by adopting a diversified and informed investment approach.

  Q. what are the major drivers of the Indian stock market?

Answer.  The major drivers of the Indian stock market include:

Macroeconomic Factors:

A stable political environment, government policies, and robust earnings are significant drivers of the stock market

Mid-cap and Small-cap Stocks:

The performance of mid-cap and small-cap stocks can significantly impact the overall Indian stock market.

Domestic Participation:

 Increased domestic participation in high-growth areas has been noted as a driver of the Indian stock market

Earnings Growth:

 Forecasts of strong earnings growth, such as the 17.8% forecast by HSBC for India in 2024, are also a major driver.

Global Economic Factors:

Global economic slowdown, geopolitical tensions, and the potential for a global recession are external factors that can influence the Indian stock market

Monetary Policy:

The Reserve Bank of India's monetary policy, including rate cuts and measures to add money to the financial system, can impact the stock market.

These factors collectively contribute to the movement and performance of the Indian stock market.

As per Our Research (PS group), Some sectors can perform well in Indian stock market after Profit booking in the stock market.

Q. what are the most popular sectors in the Indian stock market?

Answer. The most popular sectors in the Indian stock market include:

Healthcare and Insurance Sector:

This sector is expected to perform well due to an aging population, increase in chronic illnesses, and growth in disposable income.

 Renewable Energy Sector:

With a focus on sustainability, the renewable energy sector is gaining prominence in the Indian stock market

Information Technology (IT) Sector:

 India is considered a global IT hub, and the IT sector is a significant driver of the Indian stock market.

FMCG (Fast Moving Consumer Goods) Sector:

The FMCG sector, known for its diverse range of products, is a top choice for stock market investment.

Infrastructure Sector:

This sector offers promising investment opportunities and plays a pivotal role in the nation's progress

These sectors are likely to provide excellent returns and are popular choices for investment in the Indian stock market.