INSUBCONTINENT EXCLUSIVE:
By DK Aggarwal Calendar 2018 was an eventful year and numerous moving variables led to heightened volatility in the stock market
Markets across the globe came under pressure as growth worries intensified following trade war tensions and now a US government
shutdown.
Concerns over the same have been voiced by the many central bankers across the globe and we hope these may lead to lower pace of
tightening or a pause by the central banks to support growth in their respective economies
This, in turn, will support stock markets
On the flipside, the Fed has already planned two more rate hikes instead of three, and those would dry up some liquidity in the emerging
markets like India.
Back home, the silver lining is that the macro parameters such as oil prices, bond yields and liquidity, which ruined
market sentiments in the 2018, now appear to have turned favourable
From the peak of $80 a barrel hit in early October, oil prices are now hovering at around $50
may restrict supplies and push up crude oil prices.
The Indian stock market saw a net outflow of $4.58 billion in 2018, the steepest selloff
Yet, India did well compared with other emerging markets, and the reason behind it was the large flows coming through domestic institutions
As India grows, we will continue to see the clout of domestic investors grow, as that of foreign players.
Strong consumer loan growth and
rising real income will boost consumer discretionary spends, whereas a likely turn in private capex (capital expenditure) cycle and strong
public capex should will continue to boost the overall economy and corporate earnings.
Undoubtedly, investors would be looking forward to a
US-China trade deal in 2019, but the real effect of withdrawal of quantitative easing programmes by major central banks and slowing global
and the revival of corporate earnings would be key monitorables
Meanwhile, fundamentals of the economy, such as increasing tax compliance and collection and infrastructure building, seem to have firmed
up, giving momentum to the broader economy
It means Calendar 2019 might as well turn out to be a year full of ups and downs depending on how these variables pan out!
(DK Aggarwal is
Chairman Managing Director of SMC Investments Advisors)
