The pain may not be over for Indian market even after a near 10 percent correction from the all-time high recorded earlier in January, feels Raamdeo Agrawal, Joint MD at Motilal Oswal Financial Services. There could be another 10 percent slide in Nifty in 2018, Agrawal told CNBC-TV18.
Volatility hit Indian markets after a largely calm calendar year 2017 due to a rise in bond yields (both in India and globally), tightening liquidity conditions, fears of inflation, and adverse market reaction to domestic policy events, especially the Union Budget.
The fall in the index was largely weighed down by both domestic as well as global factors starting February. Foreign institutional investors (FIIs) dumped Indian equities after the proposed imposition of long-term capital gains tax (LTCG), and the PNB banking fraud which caught many off-guard.
The good news is that the bull market is still intact, but after a 3-year rally it is time to give back some gains, said Agrawal. He said slow catch-up in earnings, and the massive banking fraud were keeping sentiment low.
A lot of stocks are doing well and so is the macro situation, Agrawal pointed out. Credit offtake has picked up, automotive segment is booming, so economy is firing up.
Definitely, there is some good news on the macro front but remember there are political headwinds which could well weigh on Indian markets going forward. Almost 4-5 major states will be going to poll and every poll is now considered as a mini general election. Finally, we have the big one in 2019.
So, on a year-on-year (YoY) basis it will be a nice year of correction and once the new government comes in the market should pick up.
Commenting on the markets, Agrawal said individual stocks will do well and on the index front, Agrawal said the downside on the index is about 10 percent from current levels and that too with a good probability. Investors should be prepared for that kind of fall in the markets.
Commenting on the portfolio investing, Agrawal said we will keep buying stocks which are displaying growth. For example, if we commercial vehicles are picking up then we will try and include some stocks which can give us that exposure in the portfolio.moneycontrol