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Business News/ Markets / Stock Markets/  2024 Market Strategy: What investors should stay away from next year? Experts answer
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2024 Market Strategy: What investors should stay away from next year? Experts answer

With budget and general elections most likely leading the trend in 2024, here's what you should avoid and must be watchful of in the next year.

Contrary to the initial expectations, the market surpassed projections, experiencing significant rallies and reaching multiple record highs throughout the year. (Pixabay)Premium
Contrary to the initial expectations, the market surpassed projections, experiencing significant rallies and reaching multiple record highs throughout the year. (Pixabay)

The Nifty 50 is set to conclude 2023 with an impressive double-digit gain, marking the eighth consecutive year of positive returns. Contrary to the initial expectations, the market surpassed projections, experiencing significant rallies and reaching multiple record highs throughout the year.

With a notable 18 percent gain so far, the Nifty 50 achieved a historic peak at 21,593 points. Despite challenges such as the Russia-Ukraine war, the Israel-Hamas war, peak global inflation, rising crude prices, peak US 10-year yield, and a consumption slowdown, the Indian market reached historic milestones. This exceptional performance reflects resilience in the face of various global economic uncertainties.

Read here: Market Outlook: 6 key sectors investors should watch out for in 2024

In the latter half of the year, strong foreign investor inflows, a fall in inflation, improving macros, hopes of a rate cut as well as a strong probability of the incumbent government returning next year have kept the sentiment positive.

With budget and general elections most likely leading the trend in 2024, here's what you should avoid and must be watchful of in the next year.

Trivesh D, COO, Tradejini

It's tempting to say "stay away" from specific sectors; the market is always changing, and what's hot today might cool down tomorrow. Instead of thinking in terms of avoidance, focus on where to find good opportunities. So instead of looking sector-specific, consider stock market cap investments. One must shift towards largecaps for the short term, as they seem safer based on current valuations. Meanwhile, investors should be extremely cautious with smallcaps and midcaps before investing, as they have surged lately, reducing the safety margin for current prices compared to larger companies.

Read here: Outlook 2024: How equities, gold and crude oil will perform next year

But like I said, as we get closer to the general elections next year, we cannot predict the market completely. Also, during the budget, any sector can see negative or positive effects. So, its better during that time to avoid the most volatile sectors. Once the budget is out and you have done your analysis, invest accordingly.

Anshul Arzare, MD and CEO, Yes Securities India

One should stay away from names that don’t have a consistent history of execution and where there is a question mark on corporate governance. Evaluating valuations and the potential risk-reward ratio is essential before venturing into capital markets. As markets make highs, revisiting asset allocation and rebalancing as per risk appetite and cash flow requirements need to be addressed. Also, exercising caution in stock selection and focusing solely on high-quality companies with a proven track record of market outperformance is always a prudent methodology.

Parul Sharma, Research Analyst, SAMCO Securities

Investors should tread with extreme caution in smallcaps which have run way above their valuations. They should also avoid investing in SME stocks since most of them are loftily priced during IPOs and generally slip below their listing levels in a few months of trading. There are bright chances of correction in both these groups once volatility starts picking up as we get closer to General Elections next year.

Read here: Overvaluation a key risk in market, says Kenneth Andrade of Old Bridge Capital; lists 6 key trends of 2023

 

Mohit Ralhan, CEO, TIW Capital

One should maintain caution while getting into stocks that are more exposed to global demand. IT stocks, for instance, can remain under pressure. Global macro uncertainty could weigh on discretionary IT spending in 2024. Valuations of companies especially in the mid-cap IT space have already baked in a recovery in subsequent years. So, unless order book growth surprises on the upside next year, the chances of outperformance are low.

Similarly, one can avoid commodity stocks. There could be considerable uncertainty given that China is slowing down. Meanwhile, supply chain disruptions arising from geopolitical conflicts could also impact business performance

Harsh Goela and CFA Aditya Goela, Co-founders, Goela School of Finance

In the upcoming year, exercise caution with loss-making new-age stocks, the oil and gas sector due to the strong focus on renewable energy, and companies heavily reliant on exports due to the global slowdown. Explore more resilient and sustainable investment options for a balanced portfolio.

Vinit Bolinjkar, Head of Research, Ventura Securities

One should avoid commodity stocks as the volatility of commodity prices is anticipated to persist, driven by geopolitical tensions and disruptions in the supply chain.

Rupak De from LKP Securities

While most sectors are expected to remain positive during the next year, one might consider avoiding the metal space as the stocks in this sector are likely to consolidate in the coming months. A Hanging Man pattern is forming on the yearly chart, indicating a potential correction in the metal space in 2024.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.

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Published: 25 Dec 2023, 09:06 AM IST
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