Monthly Review (As on 31st March 2018)
The Nifty-50 closed up 10.3% for the financial year ending March 2018, after a fall of 3.6% in the month of March. The last month’s movement was negative due to adverse news-flow on a potential global trade-war as well as an increase in political uncertainty as regards the 2019 national elections, after a major ally of the ruling Government quit the alliance.
The CRISIL Bond Index closed up 5.1% for the financial year, thanks to a rally of 2.1% in the month of March. The last month saw a rally in bond prices due to a fall in consumer inflation from 5.1% in January to 4.4% in February, and the announcement of a lower figure for Government borrowing for the first half of Fy18-19, which surprised the market participants, and the 10-year Government Security fell by 33 bps to 7.40% post these developments.
Economy
Retail Consumer Price Inflation fell from a high of 5.1% in January to 4.4% in February due to a decline in inflation in food and fuel.
The GDP growth is projected to strengthen from 6.6% in Fy17-18 to 7.4% in Fy18-19.
Outlook for Markets
Equity Market
Near term volatility is expected to persist due to political events in an election year, a potential slowdown in domestic retail equity inflows along with FIIs staying on the sidelines, and global uncertainties related to trade actions by various countries. However, the long-term attractiveness of the Indian equity market remains intact, and could be aided by the strong earnings growth over the next two years. Several individual stocks have corrected significantly more than the Nifty-50, and selective stock-picking could yield good long-term returns from current levels. The near-term trend in the equity market therefore, is a good opportunity for longer-term investors.
Monthly Review (As on 31st March 2018)
The Nifty-50 closed up 10.3% for the financial year ending March 2018, after a fall of 3.6% in the month of March. The last month’s movement was negative due to adverse news-flow on a potential global trade-war as well as an increase in political uncertainty as regards the 2019 national elections, after a major ally of the ruling Government quit the alliance.
The CRISIL Bond Index closed up 5.1% for the financial year, thanks to a rally of 2.1% in the month of March. The last month saw a rally in bond prices due to a fall in consumer inflation from 5.1% in January to 4.4% in February, and the announcement of a lower figure for Government borrowing for the first half of Fy18-19, which surprised the market participants, and the 10-year Government Security fell by 33 bps to 7.40% post these developments.
Economy
Retail Consumer Price Inflation fell from a high of 5.1% in January to 4.4% in February due to a decline in inflation in food and fuel.
The GDP growth is projected to strengthen from 6.6% in Fy17-18 to 7.4% in Fy18-19.
Market Outlook
Fixed Income Market
RBI has revised its CPI projections downward to 4.7-5.1% for the first half of Fy18-19, and to 4.4% for the second half of Fy18-19, though with a risk of being higher than these figures depending upon crude oil prices, higher Minimum Support Prices for agricultural commodities and the monsoon. G-Sec yields have now cooled off, and bond prices have rallied; we expect the 10-year G-Sec yield to now be in the range of 7.10-7.30% in the near-term.
