What a year 2017 has been. The Sensex has risen from 26595 to 34057 in one year. That’s 21.91% in a year, meanwhile the BSE Midcap delivered 47% while the BSE Small Cap Index took away the winners prize with a whopping 58%
This is an eye opener for those who stay away from Equities thinking that they are risky. They are risky only if you invest with expectations of high returns in short term, if people treat Equities like Long Term Fixed Deposits then they become more and more safer with the passing time. This does not mean you go and do the act of investing yourself. The line ‘they become more and more safer with the passing time’ holds good only when you are seeking the advice from an experienced advisor. Keep in mind there are many examples where people have lost even in 2017, though 2017 can be termed as best of the years.
So how does 2018 hold for investors? We at VRIDHI believe 2018 is going to be a challenging, volatile and a year with full of surprises, and yet there would be ample number of opportunities which would frequently be thrown up, will the investors grab them at the right point is a big question. Hence again you may need help of an experienced advisor. In 2017 the percentage of regrets may have been very less but 2018 would clearly differentiate between the Men and the Boys. Only seasoned people will be able to grab most of the opportunities.
We may end Sensex in 2018 at around 38750 – 40000. We may see great amount of support at 29450 on the lower side and immediate support at 32550. When we say target of around 38750 – 40000 for the year, in percentage terms it is just around 12% to 17% meaning we need to be really opportunistic in the ensuing year. Those not feeling happy with these returns kindly keep in mind Equities will still be the best performing asset class in this year and hence stay invested in a tactical manner!
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So what can drive the market up or down in the next year? Some of the factors are mentioned below:
* Earnings pickup: Since many quarters, we all are expecting that the corporate earnings would pick up soon. After the implementation of GST and the systems having almost settled fully, we expect that the earnings can pick up from March quarter onwards. If the earnings pick up happens in a secular manner we may cross even the 40k mark which we have mentioned above.
* Budget and Govt Spending: Feb.1 would be the last full budget of this government and hence expect many favourable announcements for the people and the economy. Only thing which we should be alert of is that the govt should not go overboard and create fiscal deficit. But knowing the politics of Mr. Modi, the freebie politics is not present in the blood of Modi like others. Widening of Fiscal Deficit can create problems like those we saw during 2013 under MMS. This govt has been under control till now.
* State Elections and General Elections: People in general don’t think with mind open. They would see a great defeat in Modi if the ruling party does not fare well in a state like TN where they actually have no presence! They conveniently forget the 19 state governments and central govt is ruled by same people. Mentioning all these since every state election is crucial in 2018. There are 8 state elections and we expect even the general elections to be advanced to Dec’18. We saw 800 points intraday dip when at a point of time Congress went ahead in Gujarat! Hence market is not going to like any bad surprises and market expects that the same PM be re-elected. Any change would be a temporary but sharp setback to our money!
* Global Markets and Geo-Political Tensions: Globally markets are flushed with liquidity. As long as this liquidity is not squeezed out, we would continue doing well. The risk of North Korea, Pakistan and the likes going out of senses is a huge problem. India is also seeing huge money flowing into markets from the traditional FD investors.
* Inflation and Interest Rates: There are fears that RBI may hike Interest Rates in case Inflation spikes up. We are totally control over inflation till now and are around the RBI expectations. Inflation spikes can bring in selling pressure in the markets and a rate hike can make the situation worse.
We don’t think Interest Rates can move up from here, on the contrarian we feel they are still headed only downwards. Those meeting their ends meet with the interest amounts are finding it quite difficult. Senior Citizens in particular are feeling the pinch. Sadly this is a global phenomenon and we got to deal with it.
With 2017 getting over, let’s change our thinking. Let 2018 begin looking for new opportunities. At VRIDHI we can help you get better than Fixed Deposits with minimum risks. We take Extra Care of Retired and Seniors Citizens. VRIDHI has representations in Delhi, Chennai, Goa and Nagercoil.
Many of you would be looking for some safe bets in 2018, have tried to mention few of them on this show at Moneycontrol. You can view the show by Clicking Here.
So plan your money well in 2018 and tag your investments with your goals in life. Don’t blindly invest in anything, including Bitcoins! Seek help of your Investment Adviser.