What to expect from Equity Market in 2019?

Sathish Kumar - Wealth Consultant, Investment Consultant, Equity Fund Manager, Mentor, Coach, Manager.
Sathish Kumar – Wealth Consultant

The year 2018 is about to end in 3 days, and this also calls for an end to the year full of volatility. Since the start of 2018, a lot of macro and microeconomic factors led the equity market through a series of ups and downs. Due to this continuous volatility, a large number of equity mutual funds showed negative returns throughout the year. A little sign of recovery can be observed from the past 2 months performance of the equity schemes.

Now, one common question among all investors is, what 2019 be like? Will it be the same? Well, a lot of factors are there that can impact the equity market performance in 2019. While a number of experts are bullish on the performance of the indices, others are predicting an economic slowdown. So, today, we will discuss the factors that can affect the Indian equity market performance in 2019.

General Elections 2019

One of the major factors that will have a prominent impact on the market performance is the upcoming General Elections 2019. A lot of market experts are saying that if the ruling party secures a win again, then NIFTY is all set to breach the 13000 levels, which surely will be great for the equity mutual fund schemes and will help greatly in the recovery. On the other hand, if the opposition comes into power, experts are expecting NIFTY to go even below the 10000 levels, thus bringing a slowdown in the equity market as new government means changes in policies, which has affected the performance of equity market in the past too. But, as the market paid no heed to the recent assembly elections, nobody can be certain on how the investors will take the results.

Crude Oil Prices

A major reason for the 2018 volatility was the regular fluctuations and rise in the price of oil. A significant cause of this increase was the increasing global demand and low supplies. But, from the past 1-2 months, a bit of stability can be observed in the price of crude oil, and if the situation remains intact, then it will play a great role in improving the equity market conditions, and if the price shows further surge, then a similar volatility can be faced in the first half of 2019.

US-China Trade War

Another reason that from time to time has spooked the market this year and to a great extent was responsible for the volatility in 2018 was the US-China Trade War. Now, the end to this war cannot be seen in a nearby vicinity and a lot of experts are predicting that if this goes on with the same pace, this can be the biggest trade war witnessed till now. Now, the Indian market can benefit from this because of the increase in demand of various goods that China was importing to the US and vice versa. So, this can also play a great role in the market movement in 2019.

Rupee-Dollar Valuations

The rupee to dollar value went as high as Rs. 75 in 2018 and the effect of that on the market was seen by all. The technology sector companies were some among the few that showed positive growth and a major part of the market was in red. This was one of the major reasons for the market fall in October. Now, the rates have again touched the 70 levels, which has added some ease to the market. Henceforth, if the valuations remain at this or go to lower levels, then a great recovery will be seen in the indices.

What Kind of Behaviour Can Be Expected?

One common thing that most of the equity market experts have a common view on is that 2019 will bring growth with it. Now, all we have to do is wait to see what will be the intensity of that growth. In the year 2018 itself, even during the downfall phase, Indian indices have outperformed almost all of its global peers and looking at the growth rate, an even better performance can be expected in the coming year as well.

What Can be Expected from Equity Markets in 2019?

Now, in the first half of 2019, a recovery phase can be seen, with a bit of fluctuation here and there. During the general election results, some sudden movement can be seen in the performance of the market, which may affect your mutual fund schemes for a short term, but except that no major factor is there to cause a downfall. In the second half, a lot of experts are expecting high growth in NAVs of the equity schemes, and if the market sentiments stay intact, you can observe some good growth on your investments.

What Should Investors Do?

If you are an existing investor, keep doing your investments as this is the right time to invest at lower NAV. If you have some idle money, then an additional purchase can be made, because if the market shows a rally, it will be really hard to get these prices back. As for new investors, it is the right time to invest as you can enter these schemes at lower levels, and can enjoy a much better growth in 2019.

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Sathish Kumar

Equity Fund Manager | Wealth Consultant | Speaker.

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