Outlook 2024: Charting the Investment Insights for 2024 is multi-asset

livemint.com:

global market performance has got highly buoyant in anticipation of deep reduction in interest rate. Concern is that the rally is stretching ahead, caution is warranted as inflation is forecast to stay above average in 2024. Fed is indicating 3 cuts in 2024 while market is hoping on 4 to 5.

The actual number of cuts will depend on the degree of economy and inflation slowdown. Domestically, the effect of El-Nino is a pressing challenge for India. Food prices are already elevating, impacting CPI and rural demand, which is negative for agriculture and the FMCG sector.

RBI will be able to cut only post June 2024. However, inherent is that India's economic growth is dynamic, with a long-term base GDP growth forecast of 6 to 7%. And as the global economy stabilizes, India will boost towards 10%, as highly achievable.

We expect India’s FY25 real GDP growth to moderate marginally from 7% in FY24 to 6.5% due to slowdown in world GDP growth and El-Nino effect. US GDP is forecast to down to 1.4% in CY24 from 2.6% CY23 but will avoid a recession while Euro region is forecast to stay subdued with 0.8% GDP growth in CY24, as per their respective central banks. Positive factors include favourable domestic politics, a contrasting global geopolitical risk, ease in bond yields, and moderated crude prices.

Conversely, the El-Nino effect, global economic slowdown, continuation of quantitative tightening and high valuation pose as challenges limiting upsides. RBI has noted that the level of unsecured loans in the domestic financial system is a potential risk. Given the intricate economic & valuation landscape with a decoupling growth in India, a balanced approach to investments is recommended.