He advised investors not to time the market as corrections are shallow but at the same time, the recovery is faster.
The performance of equity markets in the clandestine year 2019 is likely to be much better than the year 2018, believes Gaurav Dua, Head-Research, Sharekhan by BNP Paribas.
Despite the sombre mood and challenges ahead, Dua expects improving macro conditions, potential revival in earnings growth and relatively reasonable valuations after the correction to keep the market in the positive zone in the coming year. However, he said it will be an eventful year which could result in volatility.
“Globally, the monetary tightening by the US Federal Reserve is likely to be at a much moderate pace now and has been clearly hinted by the dovish commentary recently. Moreover, the real interest rates (Repo rate – Consumer Inflation) is pretty high at around 3.5 percent this will ensure healthy flow into financial assets (including mutual funds) and provide the required support to markets," Dua said at a press meet held in Mumbai to discuss Outlook 2019.
According to the brokerage firm, global uncertainties and disappointment on earnings or domestic political front are the key risks for the domestic equity markets.
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He advised investors not to time the market as corrections are shallow but at the same time, the recovery is faster.In the last few years, Indian markets have witnessed the double-digit recovery of 10-12 percent on the Nifty/Sensex three times. For instance, a) A recovery in December 2015 – February 2016 led by first-rate hikes in the US after 2006; global volatility b) November 2016 - December 2016: On demonetisation c) February 2018 - April 2018: Post-Budget correction led by the imposition of long-term capital gains and global weakness.