2018 marked a year of volatility for the stock markets. It has been a roller-coaster ride for retail investors in India. The equity markets have been in grip of volatility for last couple of months of 2018 and we expect the volatility to continue till the domestic general elections of 2019. All apart, it was indeed a great year of learning as we have seen in the past that every correction in the markets provides us ample opportunities to invest. We at AxisDirect hope that in this New Year, you make the maximum by investing right. For the Year 2019, we hereby present few investment ideas which have the potential to create wealth in the long run.
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2019 would be an interesting year to watch on. US Fed has raised the Fed Funds rates by 25 bps and guided for 2 hikes in 2019 which is taken negatively by the markets. ECB has already ended the QE in Dec.’18 and could take a re-look at policy rates somewhere in second half of 2019. Currently, the Eurozone refinance rate is at a record low zero% and the deposit rate at - 0.40% and the marginal lending facility rate for Eurozone is at 0.25%. If ECB raises interest rates and/ or embarks on quantitative tightening, it will have adverse impact on global liquidity. Then we have Brexit vote in UK Parliament probably in Jan 2019; UK walking out from EU without a deal is likely to cause temporary uncertainty for the equity markets.
The developments on US China trade war would also dictate the course for the markets. Slowdown in Chinese economy would cause a knee jerk reaction in equity markets but would lead to fund flows towards India.
Domestic general elections would be scheduled for May-June 2019; as we approach the day, we expect the markets to go through bouts of volatility.
Crude oil prices to play a crucial role; low crude oil prices would help it bridge the deficit giving the helping hand to the Govt. to invest in the economy. Low crude oil prices would push the inflation low and lead the central bank to policy rate cuts thereby helping investments and consumption.
The quarterly earnings have been positive for last 3 quarters. As we approach Q4, the base effect will play on. If the robust demand continues supported mainly by the rural growth, the earnings growth trajectory would lead the markets northwards. Being an election year, higher spends in terms of infrastructure built up, or populous schemes like NREGA, farm loan waivers etc. by government would enable the consumption led demand from both rural and urban segments.
India
NRI
