Markets To Be In Bloom

The stock markets are set to chart new peaks in 2018. If the surge in liquidity and the massive domestic capital flows are any indication, Indian stock markets should have another great run this year. In 2017, the bellwether indices scaled new peaks as the Nifty surged 31 per cent and the S&P BSE Sensex  jumped by 27 per cent. The Mid-cap indices beat the frontline indices for the fourth straight year in outperformance even as the BSE Mid-cap index zoomed 45 per cent. Indian markets have rarely had five good investment years in a row. But chances are that the outperformance could continue given the massive domestic fund inflows. In fact, this is the third consecutive year that domestic mutual funds have been stronger at $18 billion compared to $7.5 billion of foreign portfolio flows. In fact, equity mutual fund assets rose 5.3 per cent to $125 billion the last year. India’s market cap to GDP rose by 97 per cent in 2017. However, it is still lower than the 2007 peak levels of 149 per cent, according to research by Morgan Stanley.

Experts are bullish of the prospects of the markets over the next two years. Kotak Securities reckons that the markets could touch 11,600 by December 2018 riding on the back of  the strong inflows. The sectors that have the wind on their side for 2018 are banking, infrastructure, housing finance, insurance auto and auto ancillaries. Pharmaceuticals could be a contra-bet during the year because of their beaten down valuations.

Says Kamlesh Rao, Managing Director, Kotak Securities, “We think that in the BFSI there will be reasonable excitement in insurance, banking and housing companies. If you look at the top 100 stocks abroad, you will find four, five insurance companies. In India, there is no single insurance company at the top. Housing finance companies, both NBFCs and pure home finance companies, have a good potential. There is a general focus of companies in that area. The only contra is pharmaceutical. We feel that the level of underperformance has reached its reasonable base.”

The caveat for the markets to sustain, of course, is the outlook on oil and interest rates. Says Rao,  “Oil price rise can have an implication on interest rates and 10-year yield, which can shrink the delta in equities.  We still have to watch out for the GST income. Chances of a corporate earnings disappointment is low. By and large, if this does not happen, capital markets are in for a good ride in the next one to two years.”
—  Clifford Alvares 



Happy Days Ahead For The Farmer?
A draft of the model Contract Farming Act – that could change the lives and lifestyles of India’s farming community – is now in public domain. When passed into law, the Agricultural Produce and Livestock Contract Farming (Promotion & Facilitation) Act, 2018, could be the answer to many of the Indian farmers’ travails, like decreasing landholdings, decrease in yields and rising input costs.

Championed by the Union Ministry of Agriculture and Farmers’ Welfare,  the proposed law strives to set up an appropriate and unbiased state- level agency called the Contract Farming (Development and Promotion) Authority, to  create the provisions for contract farming and popularise it among stakeholders. When passed into law, the Act will also promote Farmer Producer Organisations (FPOs) / Farmer Producer Companies (FPCs) to mobilise small and marginal farmers, so they may benefit from economies of scale in production and post-production activities.  So, 2018 may just bring good tidings for the Indian farmer.                                
— Prabodh Krishna 

Steps To Stub Out Smog
The haze of gloom over the national capital every winter could lift up just a wee bit in the years ahead, now that the Union Environment Ministry is determined to woo farmers of surrounding states away from burning the stubble of the winter crop.

The smoke from stuble burning in the farm fields of Haryana and Uttar Pradesh adds to the smog from vehicular and industrial pollution in Delhi and the National Capital Region (NCR) and created unbearable environmental conditions towards the end of 2017.

The Union Environment  Ministry has now approved a project worth Rs 100 crore ($15.6 million) to tackle crop and stubble burning to clear cropland in the surrounding states. The project was ratified at a meeting of the National Steering Committee on Climate Change held in New Delhi recently.

“The first phase of the project has been approved at a cost of around Rs 100 crore ($15.6 million) for the states of Punjab, Haryana, Uttar Pradesh and Rajasthan,” said a ministry official. The project aims to mitigate not just the climate change impacts of crop burning, but also its environmental impacts, in a scientific manner.  
—  Anurit Kanti

Machine To Mind Man
Technology, artificial intelligence, robotics and big data is going to rule the human resource industry in 2018. Tech disruption is going to define the future of employer- employee relationship. Richard Rekhy, former CEO, KPMG India says, “Technological tools like AI, robotics will enhance the quality of work the HR managers are going to do. Owing to these disruptions, job requirements are becoming specific but, as good talent is always scarce, in the coming year, HR managers need to become more agile and relevant to the organisation and be able to understand the use of technology.”

Technology is undoubtedly, transforming the workplace. “Data is fundamental to any change in the way companies function but managers also need to get to know how to understand and use the data, which exists in both structured and unstructured forms, a lot more,” says Alok Tripathi, Consulting Leader, TMS, India and South Asia, IBM.                                                            
— Himani Chandna