2019 may be year of bulls, but D-Street frets about unclear signs

Stock investors could rack gains in 2019 but they may have to brace for sharp swings amid uncertainties over the general election and the US economy. A majority of 26 top money managers and research heads of brokerages polled by ET, however, said the Nifty will be up 6-17 per cent by December, eclipsing previous records. Axis Bank, HDFC Bank, ICICI Bank and Infosys are among top stock picks for 2019.

Restrained inflation, soft crude oil prices, and the likelihood of slowing global growth should lower the bond yields in India, where uncertainties about the outcome of this summer’s general elections could make the rupee a bit more volatile, another ET survey of market experts showed.

The majority of the 25 participants polled in this survey said the benchmark bond yield could fall 25-45 basis points from the current level of 7.45 per cent. The more optimistic participants believe the gauge could drop below 7 per cent. The rupee, meanwhile, could trade in the 69-73 range against the dollar, with political uncertainty having an exaggerated impact on the local currency in the runup to the national poll, which is likely to be held in April-May.

The market is expected to be wobbly before the general election as the performance of the Bharatiya Janata Party (BJP) in recent state polls has led to uncertainty about its prospects on the national stage, said most participants in the first poll cited.

“The market will take into account political risk in the run-up to elections, so there will be higher uncertainty,” said Nilesh Shah, MD, Kotak Mahindra AMC. “The biggest concern for markets is the formation of the government after the elections and the economic agenda.”

A good number of those polled in the first survey forecast the Nifty to be between 11,500 and 12,700 points by the end of 2019. The Nifty closed at 10,727 on Friday. A fourth see the Nifty at 11,500, 17 per cent at 12,000, 25 per cent at 12,500 and 17 per cent at 12,700.

The Nifty hit a lifetime high of 11,760 on August 28 last year. The Sensex rose to a record of 38,989.65 on August 29.

The most optimistic Nifty projection is 14,000, the most pessimistic is 11,000. Nobody expects the market indices to end lower. The three big concerns for 2019 are local political uncertainty, concerns about a US slowdown and a further delay in corporate earnings growth, according to those polled. “We may enter a soft interest-rate regime this year,” said Soumya Kanti Ghosh, the group chief economic adviser, SBI. “Yields will remain largely range-bound, with a downward bias. Domestic inflation continues to surprise on the downside.”

Yields may fall below the psychological mark of 7 per cent, said five respondents in the second poll — Bank of Baroda, Bank of America, Lakshmi Vilas Bank, Mirae Asset and Trust Capital.

Retail consumer prices plunged to a 17-month low in November to 2.33 per cent, undershooting the central bank’s projections. In its August monetary policy last year, the central bank had set its task as achieving the mediumterm target for consumer price index (CPI) inflation of 4 per cent, within a band of +/- 2 per cent, while supporting growth.