Any serious investor worth his salt would admit that 2018 was oneof the most challenging years in last decade for equities and securities.Investors entered 2018 on an extremely positive note, riding on the positivewaves of late 2017 push. The market bloomed to new heights before crashing hardin February. A fall that shivered everyone, as NIFTY 50 market flirted with the9,900 mark. Since then it kept a harmonic movement between 10,300-10,800 marktill September and then riding on news of recovering the economy and better Q2numbers, market touched the historic mark of 11,700. Since then indices slidcoming scaringly close to 10200, only to recover to 10,700 by the end of 2018.
So what does 2019 hold in place for an investor? Will the equitiesbleed or the market will make merry. Shyam Advisory brings to you an in-depthanalysis of the road ahead. The three governing factors for 2019 are:
General Election: Let’s face it. 2019 is not going to be as easy as 2014 for the present government. History is a witness that election years have rocked the stock market always. But if the ruling BJP government is able to make a decisive comeback, the market will welcome their victory with open hearts. The phenomenal bull run of 2014-2018 may be on cards again. Whoever wins, a muted opposition is ruled out. A stronger opposition may be a good thing for the Indian market right now.
Trade War: No country is isolated from the global recession and the emerging trend of protectionism. The increasing tension between the two economic giants, namely U.S. and China has caused some heavy jitters in the market. Although China’s response is somewhat balanced, President Trump of the U.S is known to be unpredictable. The latest event of arresting the CFO of Chinese tech giant Huawei has escalated the issue. The upcoming months will decide how the issue pans out. If the economies continue their protective stand, this will have an impact on global demand, which brings to our next area of concern.
Worries of Recession: Recently there has been diverse opinions on this. Although it is sure that economies have not been able to pick pre-2008 growth, the general view is that it is not a recession. China’s PMI showed a but of contraction, but this alone can not be taken as an indicator of recession. General view still remains that economies are taking their natural course and the driving hand of the market will make things eventually right.
Oil Prices: Oil has been India’s grey area. Being heavily reliant on oil import, Indians can only hope for a stable year, where sudden spikes like Q3 of 2018 are absent. Should the oil prices remain stable with natural fluctuations, a good 2019 for equities cannot be ruled out. With stable oil prices, the rupee will appreciate, which will be a positive sign for the economy.
For investments, 12 months time period may be counted as shortterm but it is quite a healthy time period for the market to take shape.Present equity valuations are cheap by many yardsticks. Value investors areadvised to remain cautious and be sector specific, rather than choosingad-hocism.
Once the clouds of uncertainty about general elections and tradewars settle,Nifty may see an upward journey towards 12,750. This will beboosted by healthy Q1 FY19-20 numbers and a populist budget.