Stocks weren’t the only asset class that performed well last year, with gold, real estate, and Bitcoin also delivering double-digit returns.
After a tough 2022, Bitcoin rose 156% last year, topping all major asset classes. However, the largest cryptocurrency coin by market capitalization is at $42,556, which is still far from its 2021 high of $68,789 and $65,000.
While Nifty returned 20% last year, the broader market as measured by Nifty Midcap 100 and Nifty Smallcap 100 ended with gains of 47% and 56%, respectively.
glittering gold
Gold based on MCX spot price rose 15%. The central bank bought 800 tonnes of gold in his first three quarters of 2023, gently supporting prices. While global gold ETFs saw outflows, domestic gold ETFs saw net inflows of Rs 2,831 crore in the year to November.
The yellow metal rose sharply early last year amid stress in the U.S. banking system. Prices subsequently fell, but geopolitical tensions in West Asia and concerns about an economic slowdown in the United States caused prices to rise toward the end of the year.
House prices in the top seven cities rose 10-24% last year, mainly due to higher input costs and strong demand. Average house prices in the top seven cities have increased by 15% in the past year, rising from £6,150 per square foot in 2022 to nearly £7,080 per square foot in 2023, according to data from Anarock Property Consultants.
Term deposits have a yield of 6.8% to 7.25% for one to three years, while most bond funds have a return of 6.5% to 7.8%. After taxes, returns are even lower when accounting for inflation.
Commodities had a tough year, with Brent crude oil down 10% and base metals as measured by the LME index down 5%. However, the majority of investors do not invest in this area, which is reserved for professional traders and institutional investors.
Stock outlook
Market experts remain bullish on Indian stocks despite rich valuations, but are advocating a pivot to large-cap stocks.
Small and mid-cap stocks are trading at a historical premium of two standard deviations above large-cap indexes, a warning for caution.
“Valuations appear to be stretched in certain quarters, as reflected in the micro-cap rally and the euphoria of first issuances, including in the small and medium-sized enterprise sector. “We prefer to move away from growth stocks that trade at steep valuations and increase exposure to reasonably priced large-cap and value stocks.”
Indian stocks are currently 77% more expensive than the emerging market (EM) average, according to Citi’s Wealth Outlook 2024 report. However, the bank remains overweight in Indian stocks, with a focus on materials, industrial products and consumer staples.
India remains well-positioned given macroeconomic stability, favorable commodity price outlook and corporate earnings momentum.
BofA Global Research believes that interest rate cuts and the US dollar’s plateau are positive for emerging markets, and that emerging market returns tend to be very positive in the 12 months following the Fed’s last rate hike in the cycle. .
ICICI Direct has set a December 2024 target of 25,000 for Nifty and Sensex and 83,250 for Nifty and Sensex, which could be about 15% higher from current levels.
“The recent recovery in corporate earnings is on track, with Nifty’s earnings growing at a CAGR of 22% from FY20-23.Going forward, we expect Nifty’s earnings to grow at a CAGR of 16.3% from FY23-26. “There is,” he said.
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