While most of the world’s major indices are expected to hit new highs this year, equity strategists at JP Morgan have warned that the stock market’s rise could be short-lived and that markets may see a significant decline. this year.
According to a note published by JP Morgan analysts, the stock market could see a drop of around 20 to 30 percent after reaching a significant peak in 2024. Strategists also warned of significant volatility and high risks this year.
“We maintain our view that gains from here appear limited and that shares will fall 20-30% from a 2024 high,” JP Morgan strategists wrote in a note, Investing.com reported. While the overall stock market outlook for 2024 appears bleak, investing in small caps may be favorable this year, according to the note.
JP Morgan strategists in your note highlighted several reasons why markets may remain volatile in 2024, including the economic downturn and an inverted yield curve. Another risk is that large caps reach new heights, touching inflated values.
Another major risk flagged by analysts was historically low yield spreads despite significant interest rate increases by central banks this year. Currently, corporate balance sheets are weaker than before the 2008 recession, according to the note.
“In our 25-year career, we have seen stock markets behave irrationally before and it was always a time to act cautiously, since 2 + 2 ALWAYS ends up being 4,” JP Morgan strategists concluded in their note.
The caution expressed by JP Morgan strategists offers a forecast of how global stocks could fall in the coming months, urging investors to make smarter and more measured decisions when buying stocks.
Indian Stock Market Predictions
ICICI Direct predicted earlier this month that the Indian stock market may see a significant rise in the coming months as 2024 will be an election year. He predicted that the NSE Nifty index could rise to 23,400 points by June 2024.
Over the past three decades, the average market return in election years has been 17 percent. ICICI Direct further urged investors to take advantage of the decline in the markets during February-March, and the 2024 Lok Sabha elections will lead the markets to a significant rise.
Additionally, ICICI Direct also said that the outperformance of PSU Bank stock is expected to amplify in the coming months, and investors should also keep an eye on the IT stock despite the current market decline.