Indian Market Outlook for 2017 Post Brexit, US Presidential Election & Demonetisation

“The New Year might see a negative start, and it might last for a few months. Political uncertainty following Brexit and post- US Presidential election and the demonetisation, we’re cautiously optimistic about the year ahead. We suggest that investors should expect lower-than-average returns in the equity markets going into 2017. Key indices could correct by 10-15 percent in 3-6 months if domestic institutional investors (DIIs) sell off. December 2016 is turning out to be the worst month in terms of sell-off from global funds. But we expect things would start to improve in the second half of this year (2HCY-17) fundamentally.

Post demonetisation, a new fear-factor has emerged in the market amongst the investors. Earnings growth for the next one-two quarters should be little tough from an economy perspective. We expect a fall in cement off take, in automobile, in textiles, in gems and jewellery, retail footfalls. The big liquidity crunch in the economy, that’s having an impact. Earnings growth in 2016-17 (FY17) will only be around 2-3% because of the very low earnings growth in the third and fourth quarters.

Above all, there is the movement of money from emerging markets to developed markets. The situation has become tricky for global fund managers, after the election of Donald Trump as US president.

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About Manohar Sharma 152 Articles
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