With investors taking a break from purchasing the currency after a nearly two-month rise fueled by predictions the Federal Reserve would start reducing rates later than initially anticipated, the U.S. dollar index was headed for its first weekly decline in 2024 on Friday.
After a solid AI-led rise, U.S. markets begin the day higher.
Wall Street's major indexes began higher on Friday following a remarkable gain in the previous session, sparked by positive results from A.I. poster child Nvidia and rekindled excitement about artificial intelligence.
At the opening bell, the Nasdaq Composite gained 53.18 points, or 0.33%, to 16,094.80, while the S&P 500 began up by 13.89 points, or 0.27%, at 5,100.92.
Close of the Market in 2023
Everyone is aware of the significant gains made by the benchmark indexes, the Sensex and the Nifty 50.
Even though this year has been turbulent, the market has experienced a substantial rebound at the year's conclusion.
The dollar index, crude oil prices, U.S. bond rates, and the U.S. market—, which is among the largest in the world—are some of the critical variables that influence the Indian stock market, however.
We see an inverse association between DXY and the Indian stock market, starting with the dollar index, which is one of the main drivers of our Indian stock market.
The rationale is that foreign institutional investors, or FIIs, invest more in Indian equities when the dollar index declines because they can earn more significant returns than they can with U.S. dollars.
The Dollar Index has been quite volatile throughout the last year. Still, in conclusion, it ended flat at around the same level of 102–103 as the previous year, which is encouraging for the Indian equities markets.
U.S. Exchanges
Being one of the biggest, the U.S. market is subject to general instability brought on by unfavourable outlooks, particularly about the Indian stock market. Now, look at the Dow Jones, the U.S. market benchmark index.
The absence of new catalysts keeps India's bond yields stable. Without any new catalysts, Indian government bond yields remained stable on Friday.
Meanwhile, market players were analysing the minutes from the central bank's February meeting, which revealed that most participants thought the existing interest rates were adequate.
The benchmark yield on India's 10-year bond closed at 7.0764%, up from its previous finish of 7.0682%. This week, the yield finished two basis points lower.
Outlook for the Indian Stock Market in 2024
Most data-driven reasons for the market's strong momentum have been discussed.
Let's discuss a few likely events that may serve as the Indian stock market's following significant drivers in 2024.
Different activities are seen in the stock market throughout time, most of which are influenced by market conditions at a particular moment. Which are those elements, then? Three main factors are essential in understanding how the stock market behaves. They are as follows:
- Availability of liquid assets
- Social and Political Shifts
- Business Profits
To conclude our discussion of the Indian stock market projections for 2024, we will go over each of the points above.
Availability Of Liquid Assets
Indian Stock Market Analysis 2024 determines liquidity in the stock market.
Lower interest rates in the economy indicate increased money flow and, therefore, more liquidity. On the other hand, an increase in interest rates restricts money flow and results in a liquidity shortage.
As you can see, economic inflation increased the U.S. Federal Reserve to raise interest rates in 2023 from 4.5% to 5.5%. The Federal Reserve has constrained the U.S. economy's money supply, yet the stock market has continued to rise.
Furthermore, the U.S. 10-year yield, which began at 3.8% in January 2023 and returned to its starting point by year's end after rising to 5% in the middle of the year, suggests that the Federal Reserve may lower interest rates starting in the following year, which would increase market liquidity.
Compared to the Indian 10-year yield, which was 7.3% at the start of 2023, it is now just 7.1%. This suggests that the Indian stock market will do well in 2024.
Social and Political Shifts
The social and political climate of a country has a significant impact on its economic development.
The stock market is also a good indicator of a nation's financial health.
Therefore, a strong and stable economy is a good indicator of the stock market's potential for success.
The U.S. presidential election and the Indian Lok Sabha election are scheduled for 2024.
These two are the stock market's primary motivators. Undoubtedly, the nation and the stock market will benefit from a stable political climate and evidence that the next administration can further boost the economy.
The recent state elections in India have already caused the market to feel optimistic.
The Lok Sabha Election will undoubtedly shape the stock market direction for 2024.
The only unfavourable aspects of the socioeconomic landscape will continue to be international conflict and a high inflation rate.
But as the year draws to a close, the likelihood of conflict steadily decreases, and inflation is beginning to stabilise.
Thus, from a socio-political perspective, India is growing, and the country's next five years of progress will be built around the results of the 2024 Lok Sabha elections.
Business Profits
Earning surprises by corporations is the third and last component, which may be the most significant motivator for the Indian Stock Market in 2024.
An earnings surprise occurs when a corporation declares an exponential increase in its net profit or sales for a given quarter or year.
Market Assessment
Finally, it's critical to examine the market's present value. The long-term median of the Nifty P/E ratio is about 20; therefore, let's use the P/E Ratio of Nifty 50, now at about 22. Markets are pricey about their long-term normal.
Conclusion
In the past, the market saw a sell-off when the Nifty 50 P/E ratio hit levels of 25 to 29. As a result, the market still has an opportunity to reach further highs in 2024.
Read more: https://www.starsuntold.com/how-to-invest-in-stock-market-stock-market-guide-with-example
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