The stock market is expecting a volatile year ahead with a host of domestic and international factors expected to drive its movement and these include national elections, a pre-poll union budget, trade war issues and crude oil prices.
Experts believe the overall movement for the benchmark Sensex may also end up in 2019 at around 5 per cent, the same as 2018.
"The first few months of 2019 are likely to be volatile as it will be very event-heavy. Markets like certainty and continuity and post the events, markets should stabilise," Essel Mutual Fund CEO Viral Berawala said.
Anand Shah, Deputy CEO and Head of Investment at BNP Paribas Asset Management India, said, "While the first half of 2019 will have multiple events which will keep markets more focused on macro variables, we believe the second half will see micros take centre stage."
According to Vinod Nair, Head of Research, Geojit Financial Services, this ongoing volatility may continue in the near-term, impacting the performance during the initial part of 2019.
The reasons why this muted performance can continue are the premium valuation of the main market, the slowdown in the domestic economy, a muted earnings growth for next two quarters, while liquidity crunch can have a cascading effect on the urban and rural market, Nair said.
Effect of elections in the short-term with the risk of populist measures and uncertainties in the global market may also weigh on the market performance, he added.
Nair further said some stability may come in as the new year progresses and create a better investment period with positive returns in the broad market.
"We have a target of 11,500 for Nifty 50 by December 2019," Nair said.
As per Manav Chopra, CMT, Head Research Equity, Indiabulls Ventures, markets are likely to witness increased volatility in 2019 due to Budget and upcoming general elections.
"We expect markets to consolidate and form a higher base around the 10,400 levels for Nifty. The index is likely to witness some consolidation before any range breakouts on the upside. The overall structure for the Indian markets remain bullish and likely to see levels of 11,600-11,850 by year-end and Sensex around 39,300-39,650 levels," he said.
"The road ahead for Nifty and Sensex in 2019 seems to be accommodating volatility which has been cyclically down for the last couple of years. With events, ahead of us such as the 2019 Lok Sabha elections and global markets continue to break important supports we expect headwinds will be there, " Epic Research CEO Mustafa Nadeem said.
"Though on the other hand, we have crude which is around USD 42, below the USD 50 mark, which is a boon for Indian economy hence we will see bulls try to make their way out of it. For Nifty the range seems to be 12,100 on the upside to 9,400 on the downside. Sensex may oscillate between 39,800 and 32,300," Nadeem added.
On the driving factors, Nadeem said, "The most important factor that was hurting the overall market sentiment was depreciation in rupee and appreciation in crude oil prices which were up to USD 75.
"Crude is now below USD 45, while rupee is showing some strength as it is now back to USD 70 mark. The most important factor on the domestic front would be then a mandate that is seen with the party that is winning."
On whether 2019 is going to be different from 2018 for the stock market, Berawala said, "In terms of volatility 2019 will likely be similar to 2018. There are a number of events which will impact the markets Brexit, the direction of trade war post the 90-day dialogue period, the 6-month window for oil exports by Iran ends in May and general elections in India."
On sectors that are likely to outperform in 2019, Nair said, "We feel that after the initial hiccup, liquidity and rate-sensitive sectors like finance, auto, infra and industrial will do better.
At the same time improvement in external factors will provide supportive vibes to IT, pharma and chemicals. During this volatile period, defensive and stable sectors like FMCG, consumer and IT will continue its modest and positive trend."
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