5 Key Drivers for Indian Stock Market in 2018

Indian stock market reached all time high on Tuesday. In 2017 BSE Sensex rose by almost 28 percent and closed above 34,000 marks whereas NSE Nifty also rose by almost 28.7 percent higher and closed at the level of 10,530.70.

After 2009, year 2017 was the best for any Indian equity investor. India gained more than 35% in current year in dollar terms. More than one third of the NSE 500 stocks gained more than 50% during the year.

Indian Stock Market in 2018

Overall 2017 remained a profitable year for equity investors in India. Now, all the investors are looking towards another good year 2018. Market participants are taking necessary steps to get ready for the New Year.

Investors must keep in mind the domestic and global factors which may be responsible for movement direction of the Indian stock market in 2018.

RBI Monetary Policy

RBI Monetary Policy is one of the important factors for stock market. Six month bi monthly monetary policy will release in Feb. 2018. Some expect that RBI will be in pause mode for most part of the year 2018 while others expect rise in interest rates by RBI. Indian Market may react positively if the RBI cuts interest rates further.

Morgan Stanley said in a note “As the economy evolves in line with our narrative of a broadening recovery and rising headline inflation, we think that the RBI will gradually shift towards a hawkish tone, eventually paving the way for a rate hike in the second half of fiscal 2019,”

Assembly election

Assembly election of eight states is due in the year 2018 and trading sentiment of the stock market will be driven by the election results.It is very important for equity investors to keep in mind the assembly elections time and date. After looking at the market reaction on Gujarat election results day, BJP’s win in the state assembly elections may be good for the market.

Union budget 2018

Union budget plays a vital role in Indian economy.  As always seen, budget speech made by the finance minister is taken as a direction for stock market movement. A Populist budget as expected, may take the market up or down depending on the fiscal deficit. Higher fiscal deficit will mean higher cost of capital and low profit, hence a negative sign for stock market.

Finance Ministry’s decision to borrow 50,000 Crores from the market indicates that GST is a failure. If 12.92 lakh crores have been spent till October & revenue collections were only 48% of the target figures speak for themselves. Fiscal Deficit will rise that will impact ratings

— Manish Tewari (@ManishTewari) December 28, 2017

Q3, Q4 Corporate results

Corporate results of Q3 and Q4 FY201718 will release in the year 2018. Results of any company play a vital role in volatility of the stock of that particular company and industry competitors. Overall good results in the market reflect growth in the industrial economy and that may add to the market optimism. Such a scenario will give big push to the fundamentals of the market.

US FED reserve policy

US Fed rates hike will have a global impact especially on emerging markets. Stock market will have the most relevant impact. Committee expects two or three rate hikes in the year 2018. A hawkish stance by FED may result in negative or negligible impact on the market.

New Year Trading Plan

Equity investors must always consider the factors which make stock market volatile or a particular stock to loose or gain. Above factors will have major impact on Indian stock market in the year 2018.