“Knowing when to stay
out of the markets is as important as knowing when to be in them.” – Mark Weinstein (US Financial Expert)
As we embark on the new
year, we extend our warm wishes for a
very Happy and Prosperous 2024!
2023 has been a year
etched in gold for our nation, a
vibrant tapestry woven with countless threads of progress. The Indian economy
has remained resilient in the face of global uncertainties on the back of
strong structural drivers, macro stability, strong domestic demand, and
responsible fiscal governance. This has been reflected in the robust growth of
sectors like automobiles, engineering, and infrastructure. The ‘Make in
India’ initiative has gained impressive momentum, propelling us closer
to our vision of Atmanirbhar Bharat. These cumulative advancements
directly contribute to the booming stock market, attracting increasing
participation from investors. We are optimistic that this trend will continue
in 2024, fuelled by India’s projected trajectory towards becoming a $5
trillion economy.
Over the last three
years, we have seen an inflation-led
interest rate hike globally. It appears though that interest rates have peaked
and there is a possibility of rate cuts in the second half of the year. As
global growth remains muted, with commodity prices stabilising and the
demand-supply dynamics normalising, it further supports the rate view. This in
turn can lead to the flow of funds into emerging markets and India could be a
likely beneficiary given its positive growth forecast.
As we enter 2024, the market has seen an 8% gain in December, an 18%
return in the last two months, a 20% return in 2023, and a 57% gain in nine
months from the low of March.
On the domestic front, the incumbent BJP’s sweeping victory in state
elections has improved prospects of political continuity in 2024 general
elections. This augurs well for macro and policy momentum in India, which at
the moment is seeing the highest growth among major economies (in terms of GDP
and corporate earnings). All these factors have led to an upgrade in India’s
rating and GDP growth forecast by various global firms. As a result, the market
cap of BSE-listed companies has crossed the USD4t mark, and NSE has overtaken
the Hong Kong Stock Exchange to become the world’s 7th largest exchange by
market cap.
What to look forward in
January
- Q3 results
will set the tone for further rally.
We expect it to be neutral calming down markets. - Expect Crude
Oil to rebound. Tensions in Red Sea
wherein terrorists attacking merchant ships will create roadblocks for smooth
movement hampering supply, thus spike in oil prices. - Inflation nos.
expected to remain constant at same
levels that means no immediate rate cuts by central banks in India as well as
in US. - Overall, post
BJP Victory markets have discounted a
BJP win with December rally. Valuations are now touching over-valued zone. Q3
results will rebalance the Price vs Earnings difference and consolidate.
We expect markets to
correct in January. Hence, we recommend
new funds purchase towards 100% Debt allocation at present. We also recommend
booking 20% profit, booking on the overall portfolio, and shifting same to Debt
funds.Happy
Investing!
