K Sandeep Nayak
Executive Director and Chief Executive Officer, Centrum BrokingHe has more than 20 years of experience in capital markets including retail broking, private client services and portfolio management, retail distribution and franchisee development.
Volatility could rise in D-St, Use it to realign portfolio
Belying skeptics who had painted a gloomy scenario for the Indian economy, data from the Central Statistics Office (CSO) stated that there was an uptick in private final consumption to 10.1 per cent in the third quarter from 5.1 per cent in the preceding quarter.
While the manufacturing sector was expected to bear the brunt of a negative consumer sentiment in the aftermath of demonetisation, it bounced back to record a growth rate of 8.3 per cent in Q3 as compared to 6.9 per cent in Q2.
Key economic sectors, with the exception of construction, financials and real estate, clocked a faster-paced growth in Q3 as compared to Q2.
Indian macroeconomic fundamentals continue to be strong and a balanced Union Budget with a commitment to rural sector improvement and infrastructure spending has kept investment interest intact in the India growth story.
Better-than-expected corporate earnings for Q3FY17 are proof of the fact that the effects of demonetisation have been not as bad as one had initially expected and this has had a spillover effect in the equity market, which is witnessing a robust uptrend.
The probability of a US Fed rate hike as implied by Fed fund futures, which was pegged at less than 30 per cent about three weeks back, rose to 90 per cent last week after the Fed talked up the probability of a rate hike.
After a long time, the US Federal Reserve has assumed a lead role in guiding financial markets rather than toeing the line the market had expected.
The possibility of a 25 bps hike in Fed rate is now almost certain, assuming that no negative data on jobs shows up before the March 14-15 Fed meet. A hike in US interest rates will impact emerging market economies through increased capital outflows on account of the need for carry trade unwind and course corrections may be in the offing for developing markets which are at an elevated state of complacency just now.
Closer home the market remains fixated on the results of the UP assembly elections. The polls in India’s most populous state is being seen as an acid test for the Narendra Modi government and a win for the ruling party would smoothen the path for the pursuance of its reform agenda.
If Modi does not find favour with voters in these elections, he would be forced to pursue a path of populist rhetoric with economic reforms relegated to the backdrop.
The election has huge significance for the economy and its outcome would determine the trajectory of the markets in the days to come.
The nature of the stock market is such that political events, both local and international, along with monetary and economic policies would continue to steer the behavioural aspects of markets resulting in volatility.
Investors should use these opportunities to realign their asset allocation in consonance with their investment strategy and allocate adequate monies to equities through exposure to good quality companies with the help of a qualified portfolio manager.
While the manufacturing sector was expected to bear the brunt of a negative consumer sentiment in the aftermath of demonetisation, it bounced back to record a growth rate of 8.3 per cent in Q3 as compared to 6.9 per cent in Q2.
Key economic sectors, with the exception of construction, financials and real estate, clocked a faster-paced growth in Q3 as compared to Q2.
Indian macroeconomic fundamentals continue to be strong and a balanced Union Budget with a commitment to rural sector improvement and infrastructure spending has kept investment interest intact in the India growth story.
Better-than-expected corporate earnings for Q3FY17 are proof of the fact that the effects of demonetisation have been not as bad as one had initially expected and this has had a spillover effect in the equity market, which is witnessing a robust uptrend.
The probability of a US Fed rate hike as implied by Fed fund futures, which was pegged at less than 30 per cent about three weeks back, rose to 90 per cent last week after the Fed talked up the probability of a rate hike.
After a long time, the US Federal Reserve has assumed a lead role in guiding financial markets rather than toeing the line the market had expected.
The possibility of a 25 bps hike in Fed rate is now almost certain, assuming that no negative data on jobs shows up before the March 14-15 Fed meet. A hike in US interest rates will impact emerging market economies through increased capital outflows on account of the need for carry trade unwind and course corrections may be in the offing for developing markets which are at an elevated state of complacency just now.
Closer home the market remains fixated on the results of the UP assembly elections. The polls in India’s most populous state is being seen as an acid test for the Narendra Modi government and a win for the ruling party would smoothen the path for the pursuance of its reform agenda.
If Modi does not find favour with voters in these elections, he would be forced to pursue a path of populist rhetoric with economic reforms relegated to the backdrop.
The election has huge significance for the economy and its outcome would determine the trajectory of the markets in the days to come.
The nature of the stock market is such that political events, both local and international, along with monetary and economic policies would continue to steer the behavioural aspects of markets resulting in volatility.
Investors should use these opportunities to realign their asset allocation in consonance with their investment strategy and allocate adequate monies to equities through exposure to good quality companies with the help of a qualified portfolio manager.
