Despite an optimistic outlook for various global indices this year, JP Morgan’s equity strategists are issuing a cautious warning, predicting a potential 20-30% drop in the stock market after reaching a significant peak in 2024. In a recently published note, the analysts highlighted the likelihood of increased volatility and substantial risks throughout the year.
“We maintain our perspective that there is limited upside potential from the current point, anticipating a 20-30% decline in equities from the peak in 2024,” stated the JP Morgan strategists in the note, as reported by Investing.com. While the overall outlook for the 2024 stock market appears gloomy, the note suggests that investing in small caps could present favorable opportunities this year.
JP Morgan’s strategists outlined various reasons for potential market volatility in 2024, including the prospect of an economic recession and an inverted yield curve. The note also raised concerns about large caps reaching inflated values and highlighted the risk of historically low yield spreads despite central banks increasing interest rates.
The analysts drew attention to corporate balance sheets, currently weaker than pre-2008 recession levels, and expressed caution based on their 25-year career observation that equity markets can behave irrationally.
JP Morgan’s prudent advice serves as a forecast for a potential global stock market decline in the coming months, encouraging investors to make thoughtful and measured decisions when navigating the stock market.
Indian Stock Market Outlook Amid Elections
In a separate prediction, ICICI Direct suggested a substantial surge in the Indian stock market in 2024, being an election year. The NSE Nifty index, according to their forecast, could reach 23,400 points by June 2024. Citing historical data, ICICI Direct noted that the median market returns in election years over the past three decades have been 17 percent. Investors are encouraged to capitalize on market dips during February-March, with expectations that the 2024 Lok Sabha elections will lead to a significant upturn.
Additionally, ICICI Direct emphasized the potential outperformance of PSU Bank stocks in the coming months and advised investors to keep an eye on IT stocks, despite the current market dip.
