Last calendar year, NSDL data showed that FPIs sold Rs 33,014 crore worth of equities in 2018.Mumbai:The coming general elections, along with ongoing US-China trade war and crude oil prices will determine trajectory of equities in 2019.Additionally, Reserve Bank of India's (RBI) rate stance, direction of foreign fund flows, rupee's strength against US dollar, quarterly earning results as well as premium valuations are expected to impact investors' sentiments in current year."The ongoing volatility may continue in near-term due to premium valuation, slowdown in domestic economy, muted earnings growth in next two quarters, cascading effect of liquidity crunch in urban and rural market," Geojit Financial Services Head of Research Vinod Nair told IANS."Short-term effect of national electionsand global effect of current uncertainties, will impact performance during initial part of 2019," he said.HDFC Securities' Retail Research Head Deepak Jasani told IANS: "The Nifty has potential to touch 12,400 points during CY2019.
This is based on various factors, namely expectations of an earnings pick-up in corporates post Q4FY19, and resumption of FII (foreign institutional investor) inflows to domestic markets around and post general elections.""Till February, corporate earnings trends, US Fed outlook on interest rates and trade war issue developments need to be closely watched."In 2018, despite heavy volatility, foreign fund outflows and a weak rupee, equity market emerged as one of best performers globally, mainly on account of a rise in pace of economic expansion, lower inflation and a normal monsoon.The two key indices -- SP Bombay Stock Exchange (BSE) Sensex and National Stock Exchange's (NSE) Nifty50 -- closed higher by just six per cent and three per cent respectively, placing theindices among best-performing benchmark indices among BRICS (Brazil, Russia, India, China, South Africa) group of countries.However, gains were capped as crude oil prices rose and fears over a tariff war-induced global slowdown grew."Markets appear to be much better in year 2019 compared to behaviour we saw in 2018.
Two important variables among others that went negative for markets were rise in crude prices and consistent selling by FIIs," SMC Investments Advisors CMD D.K.
Aggarwal told IANS."As of now, undoubtedly, surging crude oil prices have reversed, rupee is now stable, but political risk and trade war concerns and other global risk factors remains as a key headwind for markets."On currency front, therupee's strength against US dollar will play a decisive role in charting course of key indices.Therupee was heavily dented in 2018.
The currency fell by 9.23 per cent against US dollar at 69.77 from its previous close of 63.87 at end of 2017, making it worst-performing Asian currency of year.Another important factor for 2019, will be direction of foreign fund flows.
Last calendar year, NSDL data showed that foreign portfolio investors (FPIs) sold Rs 33,014 crore worth of equities in 2018.Similarly, provisional data from stock exchanges showed that FIIs sold over Rs 73,000 crore worth of equities."For short term, FIIs may come in a big way around general election time, if markets are at an attractive entry level.
Their subsequent behaviour will depend on political situation in India and interest rate trends abroad," Jasani added.