The Investment Analysts Association (IAA) cut its 2014 SET index target to 1,534 points amid concerns over local politics and economic slowdown, as well as the US Federal Reserve's stimulus rollback.
The downward revision indicates the local stock market's upside is limited, while the SET index is heading for the first annual loss since 2009.
Poranee Thongyen, IAA's director, said the latest target of the main gauge has been slashed from 1,700 points surveyed in July.
In a consensus, securities analysts forecast that the SET index will peak at 1,623 and bottom out at 1,271.
IAA has also trimmed the country's economic growth projection to 2.9% from 4.6% for 2013 and 4% from 4.8% for 2014.
While earnings per share (EPS) for 2013 have been cut to 11.2% from 20% projected in July, the figure for 2014 has been revised up to 13.1% from 11.6% in the earlier forecast.
Local gold price forecast has been increased to 18,362 baht per baht-weight (15.16 grammes) from 17,658 baht predicted previously due largely to the baht's weakness.
The IAA also expected the baht's retreat to continue into 2014 to 32.5 baht per dollar, compared with 30.6 baht to the dollar in the earlier forecast.
The association estimated the Bank of Thailand will maintain the policy rate at 2.25% throughout 2014.
Mrs Poranee said investors need to closely watch whether February's election will take place as scheduled.
Analysts surveyed also agreed that the US will end its quantitative easing in 2015.
The US central bank recently announced its plan to begin scaling back its US$85 billion monthly asset purchase programme by $10 billion in January.
Foreign investors are expected to turn back to the Thai stock market next year with net buying of around 17 billion baht, the association's survey said.
The IAA also suggested investors diversify assets, with 36% in stocks, 23% in debt instruments and fixed-income funds, 20% in foreign funds, 15% in cash and deposits, 5% in gold and futures and the remaining 1% in other instruments.
The survey said Charoen Pokphand Foods Plc (CPF), PTT Global Chemical Plc (PTTGC), and Thai Union Frozen Products Plc (TUF) are among stocks recommended by analysts in the survey.