It is always risky to make financial or commodity market predictions. The only thing more dangerous than predicting the path of any equity index 12 months from now is to try and estimate the price of oil in the same period. Still, there are enough indications that 2020 will be a better one for equity markets in India if credit conditions ease off and the sudden drop in consumption reverses.

Nifty and Sensex have been heading north despite broader market weakness and drop-off in growth mainly on hopes of revival in 2020. An ET poll of top 25 fund managers and heads of research at brokerages conducted earlier this month showed 48 per cent of respondents expect a 15 per cent gain for Sensex.

More foreign money has poured into stocks this year than in any year since 2014. For hopes of a recovery to continue, some crucial reform decisions need to be taken. The non-bank lender crisis needs to be resolved for money to start flowing to SMEs. A personal income-tax cut, if it happens, more interest rate cuts, and easy liquidity should considerably lift consumer sentiment and spending. That should boost bank and NBFC stocks and also help the spluttering auto sector.

It is difficult to see fixed investment recovering in a major way. Some sectors like power, coal and capital goods are likely to be under pressure or underperform.

A lot of positive developments have taken place in key areas of the economy, with companies either adjusting to the new reality (auto) or taking steps to improve financial health (telecom). 2020 may, indeed, be quite exciting.

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(This story is part of the ’20 Questions for 2020′ package)





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