Stocks, Gold, Bitcoin: Where should you invest for the rest of 2024?

Stock market strategy: Equities, analysts said, have priced-in most positives and are likely to adjust to the fundamentals now with growth in earnings needed to justify high valuations

Stock market strategy investment ideas: While investors have been adding to their equity holdings in the past few months, that took the S&P BSE Sensex and the Nifty 50 to all-time highs, it is silver that has given the best return in the first half of calendar year 2024 (H1-CY24) and gained over 30 per cent during the period.

The rally in prices of silver, said Navneet Damani, head research for Commodities and FX at Motilal Oswal Securities, has been on account of geopolitical tensions and the economic recovery in China, which is one of the largest consumers and producers of metals.

 

“Positive signals from China on economic growth or industrial demand could further support prices. Given the 30 per cent rise in silver prices, there can be some profit booking in the short-term. That said, any dip can be a buying opportunity. Important support is near Rs 86,000-86,500; while the 12-15 month target has been revised higher from Rs 100,000 to Rs 125,000,” Damani said.

As regards gold, analysts expect real interest rates to weigh on the yellow metal towards the end of 2024 and 2025. Those at HSBC have raised their average price forecasts for gold for now, but anticipate a move lower in Q4 this year or 2025.

“We look for a wide 2024 trading range of $2,200/ounce - $2,600/ounce,” said James Steel, chief precious metals analyst, HSBC Securities.

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While commodity plays are likely to hold the momentum in the remaining part of 2024, large-cap stocks, analysts believe, may offer better returns than mid, and small-cap stocks within the equity segment.

“Amongst all asset classes, investors could first park their money in gold and then equities. Central banks may look to buy gold, which can keep prices buoyant going ahead. Rate cut by central banks may also aid gold prices,” said G Chokkalingam, founder and head of research at Equinomics Research.

Within the broad commodity plays, geopolitical tensions, according to analysts at Rabobank International, are likely to keep oil prices firm for most part of CY24. They expect Brent crude oil prices to average $91 for Q2-Q3 (up around 7 per cent from the current levels of $85 a barrel), and $90 for Q4-CY24, with a full year average of $89.5.

“We have raised our 2025 yearly average to $93.5 and 2026 to $98.75. We forecast WTI prices to average $87.25 for Q2-Q3 and $85.60 for Q4 2024, with a full year average of $85.5. We have raised our 2025 yearly average to $88.9 and 2026 to $93.75,” they wrote in a recent note.

Stock market outlook

Equities, analysts said, have priced-in most positives and are likely to adjust to the fundamentals now with growth in earnings needed to justify high valuations.

Global geopolitical situation, they added, remains a concern for equities as election outcomes in major economies like France, UK, etc. may add to uncertainty ahead of the US elections in November 2024.

They prefer large-caps on the basis of relative attractive valuation (24.5x trailing price-to-earnings) as compared to the small-caps that are trading around 38x trailing P/E.

"We raise our base case Nifty50 target to 26,398 (25,816 earlier), which is 7.7 per cent higher from current levels. We expect market consolidation and recommend buying during market dips," said Amnish Agarwal, head of research, Prabhudas Lilladher.

The brokerage believes capital goods, infrastructure, logistics/ ports, hospitals, tourism, auto, new energy, e-commerce and telecom are potent themes to play, though investors need to be cognizant of valuations.

“Normal monsoons and some concessions for rural and middle class will revive demand in sectors like FMCG, Durables, and Auto, retail, and building materials,” Agarwal added.

That said, analysts are cautious on Bitcoin as the asset remains speculative due to the lack of transparency in their underlying portfolios.