Here are the six key events that the market will be watching out for in 2024: Find out how they can make or break your stock market investment
2024 is an event-heavy year big on elections and policy decisions. Analysts predict a roller-coaster ride for both bulls and bears, acknowledging the tendency of equity markets to spring surprises during times of perceived perfection or gloom.
While the anticipation for a Nifty repeat of 2023’s impressive 20% annual return remains low, the consensus target centers around the 23,000-mark. Analysts suggest that most positive factors expected in the new year are already factored into current market prices.
Here are the top 6 events to watch out for in 2024
Interim Budget
Finance Minister Nirmala Sitharaman is set to present the Interim Budget, with potential minor incentives for the salaried class through likely adjustments to tax slabs.
“We believe that this upcoming budget could see the continuity of growth and infrastructure focus. There could also be some populist announcements considering the upcoming general elections. Continuity of growth focus could cheer the markets,” said Divam Sharma, Founder and Fund Manager at Green Portfolio.
Lok Sabha Election
Dalal Street has factored in the victory of the Modi government in the upcoming Lok Sabha election. However, any unexpected negative developments could lead to market shocks, while positives are already incorporated. Historical analysis reveals a 13% average rise in Nifty during the six months preceding the last five Lok Sabha polls.
Explaining the pre-election scenario, Sonam Srivastava said there might be uncertainty due to concerns about policy continuity and potential disruptions. On the other hand, post-election, a stable majority government would likely be viewed positively, while a hung parliament or unexpected outcome could trigger volatility.
Fed Meetings
Investors are eyeing potential interest rate reductions by the US Federal Reserve, expecting a start as early as March following indications from Jerome Powell about three rate cuts in 2024. Delays in the initiation of the rate cut cycle could stress capital inflows.
Divam Sharma, Founder and Fund Manager at Green Portfolio says that Rate cuts in March or May could again trigger the notion of “buy the rumour and sell the news” as we have seen in historical instances.
Full-Year Budget Post Lok Sabha Election
Post the formation of the new government following the Lok Sabha elections, a comprehensive full-year Budget is anticipated. While the Interim Budget may not see bold decisions, the full-year Budget could unveil a different fiscal strategy.
Sonam Srivastava, Founder and Fund Manager at Wright Research, emphasized the potential market reactions based on the budget’s focus. Srivastava suggested that a positive market response is likely if the budget prioritizes key areas such as infrastructure spending, tax reforms, and comprehensive economic plans. Conversely, Srivastava cautioned that disappointment or a lack of clarity in these crucial areas could dampen market sentiment.
RBI MPC and Rate Cuts
Investors are anticipating interest rate cuts by the Reserve Bank of India (RBI) in 2024 to align with global trends. Sonam Srivastava, Founder and Fund Manager at Wright Research, highlighted the potential impact of interest rate adjustments on borrowing costs and liquidity. Srivastava also noted that a dovish stance, characterized by a more accommodative monetary policy, has the potential to stimulate economic growth. Conversely, Srivastava mentioned that adopting hawkish measures, indicative of a tighter monetary policy, may lead to a constriction in financial conditions.
Global Elections, including US Elections (November 2024)
The year 2024 marks election years in multiple countries, including the USA, UK, Russia, EU, and South Korea. With at least 64 countries going to the polls, the geopolitical impact will be felt in the coming years. Ahead of the US election in November 2024, subdued oil prices are anticipated.
“These elections would come in the later part of the year and could trigger volatility across global markets. We believe the 2nd half of the calendar year could be volatile for markets,” said Divam Sharma, Founder and Fund Manager at Green Portfolio.
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