While the equity markets signed-off 2015 on a disappointing note, the year 2016 is expected to be slightly better but equally challenging as experts believe that some of the issues that triggered a se
While the equity markets signed-off 2015 on a disappointing note, the year 2016 is expected to be slightly better but equally challenging as experts believe that some of the issues that triggered a serious risk aversion among global investors in 2015 would continue to have a major influence on the markets going ahead.
After delivering impressive returns in 2014, the Sensex slumped 1,381.88 points or 5.02 per cent to end the year at 26,177.54 and the Nifty dropped 4.06 per cent or 336.35 points to close at 7,946.35.
Experts believe that a recovery in domestic economic growth, revival in corporate earnings and the passage of some of the long pending reform bills like the GST would lend a helping hand to ‘bulls’ in pushing the markets higher in 2016.
In the backdrop of global uncertainty, they feel investors should take stock specific investment decisions rather than sector-specific ones.
One of the advantages that the domestic equity markets enjoy over the rest of emerging market universe is India’s strong macroeconomic fundamentals. “Going into 2016, India is one of the bright spot in the entire emerging market universe because of which global portfolio managers are likely to allocate higher amount of funds to Indian equity markets this year,” said Ambareesh Baliga, a senior research analyst, adding that the markets are likely to register a 18 per cent gain in 2016.
Sounding out caution, Daljeet S. Kohli, head of research at India Nivesh Securities, said that the impact of interest rate hike by the US Federal Reserve on Indian markets had remained benign till now. “However, that should not lead us to complacency. By the middle of January 2016 when allocations to various regions start, we may witness more pronounced effect of Fed lift-off,” he said. He believes that FY17 earnings revival is predicated on boost from government on both capex expenditure as well increase in salaries of its employees.
Some visibility on earnings will emerge from March 16 or June 16 quarter results. “Untill then we cannot say with confidence that 17 per cent growth can be expected in FY17. As of today, we think there is scope of downward revision in co-rporate earnings expectations for FY17,” he added.
