How markets fared in 2017 and outlook for 2018
We have to see 2018 in the backdrop of market performance in 2017. Last year has been phenomenal in terms of returns and all the three indices – large caps, mid caps and small caps have reported excellent performance. The YTD performance for these 3 indices has been- 28% for BSE index stocks, 48% for BSE midcaps and 60% for BSE small caps.
We have seen the corporate earnings reverse its trend from Q2FY18 onwards and the second half of the year is expected to continue the direction amidst improving consumption led demand on the back of good monsoon in 2017. Though 2018 is being ushered-in amidst few macro concerns like rising crude oil prices, inching inflation along with an increase in the government borrowing programme leading to some slippages on fiscal consolidation path; we feel that these developments would be short-lived.
Moreover, the real fruits of the reform of the decade- GST would be seen in next 12-18 months as things get sorted out, tax revenues improve and consumption rises following a drop in prices for the end users. We expect markets to do well as the corporate earnings improve going forward as we move ahead in the year but given the spectacular returns in 2017, we should temper our expectations for 2018. Anyhow, we would advise our clients to keep invested and use any meaningful correction to add good quality stocks with proven credentials to their portfolio.
The author, Arun Thukral is MD & CEO, Axis Securities
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Via:: Stock – India Infoline