Election Outcome, Quarterly Results And FIIs Will Determine Market Direction In 2019!

While the Sensex struggles to cross 39,000 decisively and the broader markets continue to show some strength, I think it is only a matter of time before the markets will touch all-time highs. The sideways movement will continue till the election results are out. The markets will take direction – mostly upwards post-election results, as I expect NDA to form the next government. Election outcome and quarterly results will decide the market trend for the coming year. The quarterly results should mostly be positive, in my view. The benign interest rate environment should propel some growth in profits for Corporate India. A decent growth in profits in the coming quarter should make the valuations look better, as currently, the Sensex is one of the most expensive markets in the world. The earnings will have to grow for the markets to look attractive. Liquidity alone may not help push the stock prices higher from the current levels. Talking about liquidity, I am happy to see the way FIIs have pumped cash into the Indian markets lately. Expect this trend of FII investment into Indian markets to continue.

As mentioned, in my earlier communique, investors so far have ignored crude oil price rise, which may be a concern, along with the slowing world economy predicted by several economists. Barring slowing macros for most of the economies, things look bright for equities to deliver double digit returns in 2019 for a majority of the world indices.

In case you have not noticed so far, the options markets and the volumes in F&O segment have increased, so much so that these are now 26 times that of cash market volumes. Without debating whether or not this is good for the markets, we have in our cover story explained how best a trader can participate in the most promising options market and take advantage of the increased volatility in the security/index prices. I am glad to mention that the cover story is actually a step-by-step guide for investors who intend to participate in the options market. I urge the traders to look at the cover story carefully and follow the steps recommended to consistently book profits in the options market. 



Our special story on the tyre stocks finds that these stocks have underperformed in the last one year and have not participated in the current market rally. It looks like the tyre stocks will grab some headlines sooner or later, just as auto stocks have done recently. Have a closer look at some of the quality tyre stocks to include in your diversified portfolio.

ROCE is one of the most looked at efficiency ratios while studying a company’s performance. In our other special story, we have explained in detail how best to analyse this ratio and build an estimate on future wealth creators. Of course, ROCE as a metric has to be combined with other metrics to identify hidden gems. Do share your feedback with us on the special story that can really help you identify quality stocks for your portfolio.

The global markets are on a song, in spite of the growth concerns. Markets are in good shape and I see some good opportunities among small-caps and mid-caps as the sentiment improves for the broader markets. As always, focus on quality stocks and stick with your proven stock-picking strategy.

Accumulate high conviction stocks at the current levels and follow a disciplined portfolio management strategy. Remember, the most important edge one has in the markets is to have a disciplined approach towards portfolio management.

Happy investing!

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