India is a micro story; best ‘Bull Market’ has come when macros are bad :-

The year 2017 gave handsome returns to investors, but things seem to have changed in 2018 as far as the bulls are concerned. However, experts suggest that there is no need to fear as this correction was well anticipated and we are still in the bull market.

“We are in a bull market correction as we didn’t saw any correction in the year 2017. It is a healthy correction which was broadly required. We are back to 10,000 which we hit back in July while in the interim we had patchy earnings,” said Sridhar Sivaram, Investment Director, Enam Holdings in an interview with CNBC-TV18.

“It is a good consolidation which the market needed. It is a reminder to people that it is not a one-way street and many investors which joined equity markets in the last three year haven’t seen at all,” he said.

 Commenting on the macros, Sivaram said that India is moving away from the sweet spot that was enjoyed for some time in terms of macro fundamentals which have significantly deteriorated in the last three years.

Inflation is inching up, current account deficit has widened, and signals from the Reserve Bank of India suggest that interest rates could well move up, he added. Having said that, it should be noted that India’s best bull market came at a time when macros were not that great. This implies that India is more of a micro story.

If we look at some of the macros such as CV’s numbers, or even tractor sales are improving. On the other hand, best of macros are behind us and I think it has already impacted markets to a certain extent.

Commenting on the market movement, Sivaram said that it is very difficult to say what would be the downside from current levels, but in general, we could say that 2018 will be a tough year and investors should have muted return expectations.

From the current levels we could see +(-) 5% or 10% as we still have many uncertain events such e-way bill which is starting from April 1, he said. A lot of people have told me that it might be slightly disruptive and then state election results will also have some bearing on India markets.


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