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India's stock market will surge to new highs by the end of June and gain nearly 9% in 2024, despite already lofty valuations, according to analysts polled by Reuters, who said a correction in the next three months was unlikely.

The BSE Sensex index, closely tracking the U.S. S&P 500 index, climbed nearly 19% last year on expectations global central banks will cut interest rates in 2024 and India's economic growth will outpace its peers.

Breaching the 73,000 mark for the first time in January, the benchmark index is up over 1% this year.

That is despite fading speculation about early rate cuts from the U.S. Federal Reserve triggering foreign portfolio outflows from many emerging markets.

Optimism in the stock market has also been driven by expectations the ruling Bharatiya Janata Party, led by Prime Minister Narendra Modi, will retain power in the upcoming national election.

The Feb. 12-21 Reuters poll of 28 equity analysts forecast the Sensex index would add another 4% to reach a high of 76,000 at the end of June, far above the 70,000 level expected in a November poll.

From Tuesday's close of 73,057, the BSE index is forecast to rise 7.5% to 78,550 at the end of 2024. That would be around a 9% gain for the entire year.

"The Indian economy remains a 'star performing' economy against other emerging markets. Moreover, we firmly believe it will likely continue its growth momentum in 2024 and remain the land of stability against the backdrop of a volatile global economy," said Neeraj Chadawar, head of quantitative equity research at Axis Securities.

"The entire setup for the market is very constructive at this level because the market is looking at the policy continuity in the upcoming national level election."

India, the fastest-growing major economy, is expected to expand nearly 7% this fiscal year and grow over 6% in the next couple of years.

All but one of the 26 respondents to an additional question said corporate earnings would increase over the coming six months.

When asked about the probability of a market correction over the coming three months, a near 60% majority of respondents, 16 of 27 said it was unlikely, including two who said highly unlikely. Nine said likely and two said highly likely.

"It is very difficult to call whether there is a major correction. But right now I think India is in a good macro situation and the concerns are more around a little bit of high valuations than anything else," said Rajat Agarwal, Asia equity strategist at Societe Generale.

At a price-to-earnings ratio of 24, the BSE index is trading above its long-term average of 20, suggesting any further rise will only add to concerns around valuations.

The Nifty 50 index is forecast in the poll to gain over 2% from Tuesday's close to 22,750 at the end of June and 23,925 at the end of 2024.