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NEW DELHI: With the markets remaining highly volatile, retail investors are in a wait-n-watch mode. While there’s lingering fear over whether panicked investors will desert the market, experts say the upcoming monetary policy could offer some cues on which way retail investors will turn.
“The unprecedented downfall in Dow and a combination of other negative factors like the high fiscal deficit projected and proposal on LTCG (long-term capital gains) and fear of the stand that RBI will take during Wednesday’s review have led to this meltdown or selling panic,” said Deepak Jasani, head of retail research at HDFC Securities.
Ritesh Jain, chief investment officer, BNP Paribas Mutual Fund hopes the fear would settle down without any systemic damage. “It’s a wait-and-watch situation until then.” Most experts say it’s too early to take a view on the direction of the markets. However, there is consensus that a rally similar to the one in 2017 is unlikely in the short term.
“We see the equity markets hinged to global outcomes in the near term while earnings growth will likely accelerate through 2018 and demand supply for shares gets tighter,” said Ridham Desai, economist with Morgan Stanley Research.
According to Angel Brokings, the market will always find its own reason to correct and this time it was LTCG followed by global turmoil. “Considering the quantum of profit booking, we would advise traders to lighten up their long as we may see further pain going ahead,” said Sneha Seth, derivatives analyst at Angel Broking.
RBI’s monetary policy review, too, could influence investor behaviour. Jagdeep Kannarath, research analyst with Edelweiss Securities, said that a hawkish tone by the Monetary Policy Committee may unnerve the markets further.
Vinod Nair, head of research at Geojit Financial Services, expects RBI to maintain status quo but feels any commentary over the government’s fiscal policy could add to volatility. Experts in general say there is no reason for retail investors to worry as it is a good time to buy as the markets have corrected.
“The fact that we did not have any significant drawdown in CY17 is making the current correction look more ominous than it is. We believe the correction is offering a good opportunity to buy from a 2-3-year perspective,” said Gautam Duggad, head of research at Motilal Oswal Institutional Equities.
He ruled out any major shift of retail investors from equity and mutual fund to safer assets like gold.
