Equity Strategy 2018 Snapshot
- Indian markets continue to witness volatility especially in the midcap and smallcap space despite companies posting results in-line with or better than the market expectations.
- The S&P BSE midcap index has underperformed the Sensex by 7% in the last 12 months due to heavy selling by FIIs despite companies reporting better than expected Q4Fy18 results.
- At current levels of 35000 we believe that Sensex could touch levels of 40k in the remaining year 2018 as the economy continues to show a positive trend.
- Expectations of a normal monsoon and steady global economic growth should augur well for the corporate performance in FY 2018-19.
Fixed Income Strategy 2018 Snapshot
- In June policy meeting RBI raised the repo rate by 25 bps to 6.25%.
- RBI may raise the Repo Rate from 6.25% levels, the number of hikes will depend on core inflation expectations.
- RBI will keep liquidity easy and comfortable
- Government will spends to push up economic growth even as it tries to keeps down fiscal deficit.
- India inflation is unlikely to go down to 4% levels but will stay within the RBI 4% +/- 2% target range.
- RBI has changed its policy stance from accommodative to neutral and will most probably signal the end of low interest rates in the economy.
Commodity Strategy 2018 Snapshot
- Gold will under perform while industrial metals out perform
- Crude Oil will stabilize
- Commodity prices continue to rise on a broad-based global recovery
- Outlook for commodities is better than what it was in the past few years.
Currency Strategy 2018 Snapshot
- The global currency market is likely to witness high volatility in the remaining part of 2018
- Emerging market currencies have been collapsing over the last few months.
- The MSCI Emerging Markets Currency Index is down 3.5% since its peak in April
- The INR fell below Rs 68 levels against the USD in May 2018 and is currently trading at levels of Rs 67.15, down by around 7% so far in 2018.