The year 2018 has already been remarkable for the Indian Equity market because the moves seen in this year are unlike any in the past. This year has also been much more volatile than the past year. Market volatility has spiked this year as investors grapple with a number of different factors combining to make this year quite unique.
Heading into 2019, Equity market will continue to be volatile as political uncertainty is expected to hit a feverish pitch as we move closer to general elections. Given the concerns around election cycle in India and global risk-off, here are ten anticipated developments that will have a bearing on the equity market in the year 2019:
- Much awaited earnings-growth recovery, as per Bloomberg estimates Indian corporate earnings to grow at 15-20%.
- The upcoming general elections in India will decide which party and ideology gets a mandate to lead India for the next five years.
- The currency movement which is expected to remain volatile because of political uncertainty around the election.
- Crude prices: With OPEC’s production cut and slower demand growth globally, we might find some stable levels for crude which could help market participants and businesses to make smarter decisions.
- Inflation, growth rate, interest rate and trade deficit will be the key economical parameters to watch out for. Inflation has stayed under 4%, RBI may consider rate cuts.
- Consumption growth is expected to remain the main driver for the Indian market in 2019, Auto industry has slowed down in recent times but FMCGs are coming out with reasonably good numbers.
- Infrastructure, unlike the last few years, may see some traction and thus should provide select opportunities for stock picking.
- Liquidity conditions have eased considerably but with lower cost of funds and higher retail deposits, private banks have an enduring advantage over the NBFCs.
- China’s relation with the US, deal on trade and intellectual property theft, will be closely watched in 2019.
- Britain will officially leave EU on March-2019, if everything goes according to the plan, transition period will end in 2020, Indian currency and exports of India to the European Union will be impacted.