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By DK Aggarwal

Calendar 2018 can be marked as a very tough year for investors, as markets witnessed volatility of diverse magnitude due to global and domestic factors. At home, volatile crude oil prices, depreciating rupee, rising interest rates across the globe and liquidity concerns in the NBFC space roiled sentiments of market participants.

However, situation is quite different now; crude oil prices which had touched a high of $76.89 have cooled off now by 40 per cent and the rupee has paused its downside slide. Going forward, crude prices are expected to stabilise in the $55 -60 a barrel range. With the fall in crude prices, India’s macroeconomic mathematics will not go into the risky territory as the market had earlier feared.

Meanwhile, the domestic currency has appreciated by a good margin to below 71 from 74.40 level. Earnings growth outlook for Indian companies are looking better as margins are likely to improve from low crude oil prices as well as softer commodity prices due to subdued global growth outlook.

After the recent market correction, stocks valuation have come down to somewhat comfortable levels, i.e. valuations are now slightly better than when we started in 2018.

Along with foreign investors, we may see huge participation from the mutual fund segment. Several measures taken by market regulator Sebi will help increase penetration of mutual funds.

On the IPO front, calendar 2019 looks promising, with some Rs 60,000 crore worth of issues – including Renew Power, Rail Vikas Nigam, PNB Metlife India Insurance – lined up with Sebi’s clearance and those of many companies such as Aakash Education, AGS Transact Technologies, Devi Sea Foods, Anmol Industries and Barbeque-Nation Hospitality, to name a few, are in the pipeline.

During 2018, Main-board IPOs garnered Rs 30,959 crore and SME IPOs brought in Rs 2,254 crore.

On the debt market front, as oil prices continue to slip and RBI is likely to continue Open Market Operations (OMO), which should support the bond market. The Indian bond market, especially the G-sec segment, will become more widespread and it would draw more investments from retail investment.

Going forward, the domestic market will continue to track global factors.

Brexit negotiations will remain hard, trade war remains an overhang and other external factors – be it politics in Italy, among others – would continue to weigh on the market. At home, as we head into the election season, political uncertainties may rule the market, but in the long term, the market will continue to grow along with the economy.

All in all, the market will move higher amid volatility. India is poised to grow further coupled with earnings recovery, and this will further boost sentiment of investors, both domestic and global. Among all the sectors, fintech would be market’s favourite. Those companies, which are using artificial intelligence, digital transformation will emerge new leaders of the market going forward.





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