Equity Markets Outlook
- Surge in the world economies. Growth is picking up. Strong US economy, China picking up. Though commodities are best, equities are more favoured asset class among global investors.
- Only US continues to increase rates. Japanese equities likely to do well when there is strong US dollar. Money printing continues in Europe and Japan. US is lone hiker on the rates.
- Political risks continue in Europe. Unpredictable Trump administration in US.
- The global cyclical upswing continues to extend with Emerging market doing much better. It should continue to sustain for some more time. In the US, investment is picking up and it will become a more important driver for growth story for US for next few months.
- This cyclical upswing may continue for longer. How much further? The markets are going to face more challenging times and expect volatility to pick up from recent times. Global investors continue to buy dips.
- With BJP winning in UP elections, investors will interpret the win as an indication that economic policy reforms will get an impetus.
- Investors prefer continuation and stability in policy making. Most feel BJP will be a strong contender in the 2019 elections and may get a second term.
- Reforms gradually coming in, we expect better things to the economy.
- Equity markets have been enthused by macro data and company earnings in recent months that showed that demonetisation had a negligible impact on the formal sector.
- We believe the earnings will be much better going forward especially in the midcap companies over the next 3-4 years.