Since the start of the last quarter, global markets have been experiencing a high pressure to sell. Geopolitical issues between global giants has been a major contributor to this behaviour. Global selloffs have melted 10% - 25% off the global indices and China seems to be most impacted. It has been experiencing a consistent fall since the start of 2018, witnessing a slow and steady fall that continues to date. US and the other stock market biggies, on the other hand, were among the top gainers till start of the last quarter when the market was still bearish. India felt the hit at the start of fall but withstood its ground… thus avoiding a major meltdown. But the concern remains: should the Indian Market continue to remain invested in its own markets, riding on the optimism that the growth story will continue? How will India survive the 2019 market?
Continuation of global factors like China’s slowdown, monetary tightening and growth/trade concerns may restrict global growth in 2019. But hopefully not India’s, which is likely to remain one of the fastest growing economy. How much will this sentiment remain unaffected though is yet to be seen, especially with the general election coming up in May 2019. A major domestic event and game changer, the sword on uncertainty hangs on its fate as we speak. But somehow, the market always seems to buffer itself through the medium of news and speculations.
In spite of Foreign Institutional Investors (FII) being net sellers in majority of the months since the start of the financial year 2018-19, Indian Markets have succeeded in reporting growth in the earlier months while shielding itself from a fall in tandem with the global fall. As far as finances are concerned, the current government is taking adequate measure to maintain a balanced fiscal policy and forex reserves. If we look back, the Indian Market tends to have a pre-election upswing. But as of now, with the ruling party losing out its hold in important states, things may even change to the worst.
For the smooth implementation of reforms in the stock market, a stable government is always desirable. But if we get a coalition government in 2019, we can expect some correction in the second half of 2019.
Stock prices are driven by earnings and crowd sentiments. And for now, since the air is filled with optimism, a stable growth in GDP is likely to continue in 2019. Ideally, the domestic Indian market should succeed in upholding the economy and that would work in favour of the market. NIFTY seems to be going strong on the 10K and plus mark. Only a strong and sustainable move can push it below it, which would result in the Indian Markets shifting to an intermediate neutral zone. This dive may take months to cover up. On the other side, if NIFTY sustainably crosses the hurdle area of 11K, then it has high chances of reaching, and further, scaling the 12K and above mark, this year. But the likeliness of that happening is something that only time can tell. Until then, its only wait and watch.
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