The markets ended with gains for the eighth straight year. The 18-20 per cent gains by the benchmark indices have been among the strongest in the last six years — barring 2021, when indices saw extraordinary gains after the easing of Covid restrictions.

Despite a slight-profit booking on the last trading day of the year, the domestic market experienced a gradual rally, riding on the positive global market trend. The optimism was fuelled by expectations of rate cuts by the US Fed and a cooling global inflation scenario. “Further, an ease in Red sea disruption and a reversal of FII inflows supported the market to touch new highs,” said an analyst.

The anticipation of political stability in the upcoming national poll in 2024 and a positive market outlook are supportive factors. Sector-wise, auto and FMCG outperformed in expectation of a revival in demand, while the IT sector underperformed due to profit booking.

According to Vinod Nair, Head of Research at Geojit Financial Services, the euphoria is expected to continue during the start of the next year on account of the exuberance of rate cuts and the drop in bond yields. “We expect a modest return of 10 to 12 per cent on the main market in CY24. It is advised to diversify the investment pattern to multi-assets,” Nair said.

“It is suitable to be diverse when equities are trading above the long-term average for a prolonged period. We presume CY24 to be a year of reversal in sector and category wise,” he said.