Market experts believe that coming 12 months will remain challenging owing to political heavy calendar, including General Elections, which are scheduled in 2019. Besides, global uncertainties to add up to volatility to India’s stock market movement.
While recent sharp fall in the markets invite investors to buy as selected stocks, which have turned attractive in this scenario, experts recommend to stay cautious during Samvat 2075.
Here’s a list of factors responsible for the market to stay volatile:
Rupee fall: Anything that dents India’s economic picture will have a role to play in bringing down markets. You must be aware that Rupee has been one of the worst performers among other currencies in Asia lately. Indian currency is likely to remain under pressure if the pace of foreign outflows rise amid waning Indian economy. The currency will take a further hit if global crude oil prices surge.
Elections: Political scenario will have major impact on market movements in the coming months. Upcoming assembly elections in five states (Chhattisgarh, Madhya Pradesh (MP), Mizoram, Rajasthan and Telangana) will augur the future for stock markets in India. Any disappointment in elections results will push market sentiments to drastically low levels.
Later in 2019, Lok Sabha elections are likely to influence market sentiments. Should it results in defeat of the BJP-led alliance and advent of an unstable coalition in power, it will smash the stocks market hard.
Crude oil hike and Trade war: US sanctions on Iran will have major impact on global scenario. Global markets including India’s will have its impact. However, US has allowed temporarily exemptions but there is no certainties on its future action.
In addition, Global trade war and risk of further rate hikes by the US Federal Reserve (Fed) also pose headwinds for the global markets.
India to miss fiscal deficit target: Despite government’s effort, India is on its wat to miss its fiscal deficit target. Government of India had high hopes from Goods and Services Tax collections but things did not go as expected. This will definitely affect Indian economy and add up to deteriorating macros.
The bigger worry is that the government could dole out populist measures ahead of the general elections, which in turn, could put further pressure on the fiscal and current account.