If 2018 was to be summarised in just one word, it would be termed ‘eventful’. Even though bears tried to bring down the market, benchmark indices are expected to close the year in positive with single-digit returns.
The momentum is likely to continue in 2019, despite the overhang of general elections, a poll showed.
The S&P BSE Sensex, which has risen 7 percent so far in 2018, is on track to hit Mount 40K in the year 2019 and may even touch levels closer to 45,000, according to a poll conducted by Moneycontrol.
We spoke to 15 analysts, fund managers and money managers to assess the investor sentiment on the Street and get some idea of what to expect in 2019.
Almost 50 percent of the poll respondents feel that the S&P BSE Sensex is likely to hover in the range of 40,000-45,000, while 43 percent feel it could move in the 35,000-40,000 range, and the rest 7 percent are of the view that the index will hover around 35,000 and may even dip below the same.
Similarly, for Nifty, 47 percent of the poll respondents feel the index is likely to break the 12K barrier and surge to new high above 12,500 in 2019, 33 percent are of the view that the range will be around 11,000-12,000, and the rest 20 percent feel that Nifty is likely to hover in 10,500-11,000 range.
One big headwind for Indian market in 2019 will be the upcoming Lok Sabha elections which will push investors on the sidelines as volatility will rise. However, investors should use the dips to buy quality stocks.
Almost 47 percent of the poll respondents feel that Modi will return as the Prime Minister in 2019 but it will be as a coalition, while 33 percent feel that BJP will come back to power with full majority, and the rest 20 percent preferred not to comment.
“Markets will remain extremely volatile due to the election outcome. It is hard to predict which party will win or lose, but in any case, market will make extreme moves in the short term which will be irrational and therefore, a contra position, if any, could be taken,” Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote told Moneycontrol.
“Volatility in an election year is an investors’ best friend for someone willing to take a 5-year view from one election to the next,” he said.
Results in the assembly elections of three key states i.e. Rajasthan, Madhya Pradesh, Chhattisgarh put Congress in a leading position. BJP was the ruling party in all three states.
The next big question is – should investors look to buy the dips?
Well, investors can use the dips to buy quality stocks but in a staggered manner, suggest experts. As many as 64 percent of the poll respondents feel that investors should look at buying into market but in a staggered way while the rest feel that they can go all-in on the first big dip.
One space that remained under pressure throughout 2018 was smallcaps. The S&P BSE Smallcap index has plunged 24 percent so far in 2018 to record its worst fall since 2013 when it saw a decline of 12 percent. It plunged over 40 percent in 2011 and more than doubled in 2009.
But, analysts feel that as we step into 2019, returns from the broader market will be dependent on earnings growth, and investors should use rallies to exit small & midcaps and just retain quality names for wealth creation.
“Small and midcaps is certainly the right theme to be invested in for a longer period of time. The recent correction has just made it attractive at lower levels and one should utilise it by adding in the space some good value buys,” Mustafa Nadeem, CEO, Epic Research told Moneycontrol.
“The year may be full of volatility and the correction may be seen but any correction in Nifty towards 10K levels is ripe for long-term investors. This doesn't imply to be aggressive but maintain staggered approach in investments since the purpose is to lower the risk and improve risk-adjusted returns,” he said.
As much as 67 percent of the respondents feel that investors should retain only quality names after the recent rout seen in the broader market in 2017, 20 percent feel that the broader market as a theme has become attractive, 7 percent suggest investors to stay away, and the rest 7 percent preferred not to comment.
List of analysts who contributed to the poll:Naveen Kulkarni, Head of Research, Reliance Securities Ajay Bodke, CEO - PMS, Prabhudas Lilladher Vijay Singhania, founder-director, Trade Smart Online Vipin Khare, Director-Research, William O'Neil India Nikhil Kamath, Co-Founder, Zerodha. Rahul Jain, Head, Personal Wealth Advisory, Edelweiss. Mustafa Nadeem, CEO, Epic Research. Jyoti Roy, Deputy Vice President, Angel Broking Ltd Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in Gautam Duggad, Head of Research, Motilal Oswal Institutional Equities Jimeet Modi, Founder & CEO, SAMCO Securities & StockNote Sanjeev Jain, AVP, Ashika Stock Broking Vineeta Sharma, HOR at Narnolia. Mohit Ralhan, managing partner and CIO at TIW Private Equity.Rajesh Cheruvu, CIO(Chief Investment Officer) of WGC Wealth.