Investments Economic Scenario @ January 2019

Season Greetings!

Globally the markets were stable with an outlook of increase in interest rate scenario in USA and slowing down of European economy including England. Chinese were also seen mending their business model suiting to new developments. Statement in the last week of the last year by President Trump Vis Vis US & Chinese trade relationship has thrown some amount of optimism in the global Market.

Back home in India when we look at the opening and closing numbers of the calendar year Nifty ended with 5.9% and Sensex 3.1 gains. The sharp movement in crude oil price marked the year 2018. From close to 70 US$ at the start of the year it rose to over 80 US$ before falling to 50 US$ levels near year-end. Consequently, we saw some widening in current account deficit. Movement in oil prices also influenced Rupee (currently at 69.80 which was at 63.80 on the first day of 2018) and interest rates.

Global trade war also kept market volatile in early half of 2018. Positive derived out of same was that our dependency of foreign inflows got reduced.

Corrections, in Midcap & Small Cap stocks were imminent, with the kind of rally they had in preceding year. Overall, technology funds, which benefited from the sharp depreciation in Rupee and robust corporate earnings, were the star performers in the equity space. Meanwhile, PSU funds delivered the lowest returns. On market capitalization basis, large cap funds outperformed the mid and small cap schemes.

What to expect from 2019.

Interest rate hike will be order of the year in US. European markets will still take time to settle down. With decline in crude demand globally (as the prices are also coming down) there is all possibility of the cutting down production of crude resulting in hike in Crude prices in first half of the new year. This aspect needs to be watched very carefully going forward in 2019.

Elections and stance of RBI in the upcoming monetary policy meeting will be events to watch out for in the coming months. Inflation expectation will also affect market sentiments in the near term as RBI closely tracks inflation trajectory while determining interest rates. However, on a long-term basis corporate earnings and the valuation at which a security was purchased are the two key drivers of equity market returns.

Goal oriented SIP’s (equity/balanced/debt) would be order of the year. Debt fund in Short term space would be an ideal call for three year time horizon. Well traders can set an eye for NIFTY 10000 mark to speculate which looks possible. We can summaries safely by expecting 2019 to do better than 2018.

Happy Investing