Stock market will fall 20-30% from 2024 peak, predicts JP Morgan report

While majority of the top indices of the world are expected to hit a new high this year, JP Morgan’s equity strategists have cautioned that the stock market’s rise could be short-lived, and the markets can see a significant dip this year.

According to a note published by JP Morgan analysts, the stock market could see a dip of around 20 to 30 percent after hitting a significant peak in 2024. Strategists also warned of significant volitility and high risks this year.

“We stick to our view that upside from here appears limited and that equities will fall 20-30% from a 2024 peak,” JP Morgan strategists wrote in a note, reported Investing.com. While the overall 2024 outlook for stock market seems bleak, investing in small caps can be favourable this year, said the note.

JP Morgan strategists in their note highlighted several reasons why markets can remain volatile in 2024, including economic recession and an invested yield curve. Another risk is large caps reaching new heights, touching bloated values.

Another major risk flagged off by the analysts was historically low yield spreads despite the significant hike in interest rates by central banks this year. Currently, the corporate balance sheets are weaker than they were ahead of the 2008 recession, the note said.

“In our 25-year career, we have seen equity markets behave irrationally before and these were always times to act with caution as 2 + 2 ALWAYS ends up being 4,” JP Morgan strategists concluded in their note.

The caution sounded by JP Morgan strategists gives a forecast of how global stocks could decline over the coming months, urging investors to make smarter and measured choices while buying stock.

Indian stock market predictions

ICICI Direct predicted earlier this month that the Indian stock market can see a significant spike in the coming months with 2024 being an election year. It predicted that the NSE Nifty index could rise to 23,400 points by June 2024.

In the past three decades, the median market returns in election years have been 17 percent. ICICI Direct further urged the investors to embrace the dip in the markets during February-March, and the 2024 Lok Sabha elections will lead the markets to a significant spike.

Further, ICICI Direct also said that the outperformance of PSU Bank stocks is expected to amplify over the next couple of months, and investors should also keep an eye out for IT stocks despite the current dip in the market.