A look at 2018 – The year that was
A year of reversals. Macro concerns, volatile crude oil prices, strong USD and rising yields drove most asset classes in the red. Geopolitical events tightened liquidity, state elections kept investors on the edge. Also, secular growth in the equity markets seen in 2017 gave way to volatility in 2018 globally, India was no exception.
Indian Equities markets witnessed high volatility in 2018. The markets hit a peak in January then fell to a bottom in March only to rise to record levels by August and fall back by 12 – 14% to January levels in the months of October to December. Volatility is expected to continue in 2019 primarily due to upcoming General Elections in May 2019. Impact of election results tends to be more short term in nature and gets overshadowed eventually by the state of the economy and earnings growth. Also, crude oil price swings were a major driver of volatility in 2018. Crude is expected to be rather stable in 2019 near the current $55-$60 levels. Upwardly recommends investors to continue their SIPs or start new SIPs in equity funds to benefit from the volatility in markets.
India was an exception
Although 2018 was a low year for the global equities market, India was an exception to the trend with the NIFTY 50 index posting marginal gains of 3% and SENSEX rising by 6%. However, the broader indices in India did not replicate the same trend. Also, the NSE Midcap 150 and Small cap 250 indices cracked by 13% and 26% respectively.
2018 was an eventful year for the mutual fund’s industry with the introduction of reclassification of mutual fund categories and new regulations which further brought down expense ratios and distributor commissions. Above all, this is good news for investors. Therefore, Mutual Funds are indeed the best investment product.
A striking feature of 2018 was the resilience shown by Indian retail investors in investing through SIP into the equity market. Even while the foreign institutional investors (FII) were net sellers of Indian equities, domestic inflows led by mutual funds balanced them. Most noteworthy is that the monthly SIP book now stands at ₹8,000 crores or USD 1.1 billion! This means that, at the very least, more than a billion dollars is getting invested into the Indian markets every month. Therefore, this brings maturity to Indian equity markets and reduces the impact of FII actions.
2019 – Looking forward
- Global growth has peaked and will see a slight slowdown in 2019
- Emerging Market growth will sustain as the global macro backdrop becomes supportive
- Brent crude prices mostly will be range-bound which will be positive for oil importing Emerging Market, including India.
- The worst in the banking sector is behind us and the rupee is also expected to be mostly stable during 2019.
- External stability will return as the macro backdrop has improved
- Tax Reforms and Market-linked reforms should help to manage fiscal deficit in the future
- With inflation in the RBI’s comfort zone, interest rates are likely to be supportive
- Themes of Interest are Financials (Private banks, Corporate banks, and select NBFCs) and Consumption (Consumer and Consumer Discretionary).
What should you be doing
- Plan your Investments with a Goal in Mind
- Avoid Timing the Market. Always Think Long Term
- Start Investing. Start Small if Required
Where can you Invest
- Lumpsum investment in Small and Mid-cap funds with a long term view (5 years +)
- Lumpsum investment in Balanced Funds with a medium-term view (3 years +)
- Start SIP in Midcap/Small-cap/Value funds for long term wealth creation
We understand your goals. and we recommend investments based on your risk appetite.
Our recommendations are handcrafted to prepare you for your aspirations and any uncertainties. Talk to us @ +91 7337740002 or write to us @ email@example.com