Equity Market Outlook by Sumit Bhatnagar, Head – Equity, Indiabulls AMC
- India’s high frequency data continues to indicate that economic activity is picking pace. Improving GST collection numbers and a forecast for normal monsoon augurs well for Indian economy and markets.
- We would keenly focus on Q1FY19 result season.While large cap space is likely to do well,we would be keenly observing mid & small cap universe for signs growth and margin pressure.
- We maintain our positive view on Indian equities over medium to long term and believe any small correction is a buying opportunity. STPs and SIPs should be preferred route in near term. We continue to prefer large caps over mid & small caps.
- Political uncertainty around 2019 general elections is likely to keep markets volatile. Also geo-politics, fears of trade war, emerging market currency depreciation,crude oil prices etc are key risks to our outlook.
Debt Market Outlook by Malay Shah, Head – Fixed Income, Indiabulls AMC
- Debt markets closed lower for the 3rd consecutive month,as the MPC hiked its policy rate for the first time in over four years,while quicker inflation and higher crude oil prices led to fears of further policy tightening. Lack of appetite from state-run banks and consistent selling from foreign investors also weighed on sentiment.The benchmark yield rose 7 bps inJune,its 3rd consecutive monthly rise.
- The markets will continue to trade on incremental macro data-tracking crude oil prices,core inflation dynamics and the monsoon.Foreign outflows could moderate further as FPI’s look to consolidate their positions. India’s strong macro fundamentals make it likely that it will be able to weather any major global sell-off relatively well.Yields have priced in a fair bit of macro uncertainty and any positive surprises from hereon will likely aid the markets.
- The front end of the yield curve remains attractive,providing a substantial carry at current yield levels.Duration funds could see higher volatility though current yields provide an attractive opportunity for long-term deployment of funds with a 1-3 year time horizon. Investors with a longer investment horizon can consider medium term funds at this point. A low duration accrual strategy continues to remain our preferred strategy. We recommend the lower maturity ultra-short-term and short term funds for investors seeking attractive returns with low volatility,while the liquid scheme remains a smart option for deployment of overnight funds.