Everyone in stock market desires to have a vision about the future movement of stock market. So, they can be benefited from it. And with the arrival of 2019, these desires have increased exponentially. The year 2018 has passed, but the volatility of the market has been continuously increasing. It is now crystal clear that 2018 was not a good one for the investors due to some reasons. So what kind of movement can be expected in 2019?
According to me the market will give good returns this year. Why I think so? Go on and read my reasons to find out.
Market loves stability and big investors respect market sentiment. Trend of market and stop loss are the only friends of an investor or trader in the market. History has it, no matter who ever wins the election, the market gives good return after the election phase.
So, the stable form of government ensures good governance at the top. The good governance helps the market in gaining some momentum.
Inflation refers to the rate of increase in the price of goods or services offered. Currently the rate of inflation in India is around 4%. There has been a significant decrease in the rate of inflation.
With decrease in inflation rate the price of raw materials will not change much, ensuring no significant increase in cost of production. The constant cost of production will help the companies in improving their results. Improvement in results will imply increase in stock price.
GDP stands for gross domestic product. It refers to the market value of set of goods and services produced in a country either quarterly or annually. The growth rate of GDP signifies the rate with which the value of GDP is increasing. And currently India is the fastest growing nation with trillion dollar economy.
Pace excites everyone. Growth at the fastest pace, excites the institutional investors too. This will bring more funds from them, which will provide additional pace to the market. It simply implies the market will get favourable support due to the growth rate.
The surge in the price of crude oil has been a major problem for the companies this year. The surge in price of crude oil plunges the profit of company. This plunge leads to decline in stock prices, pulling down the entire market.
Almost all the companies have direct relation either with crude oil or its derivatives. It is one of the most important raw materials for the factories.
But, now as the price of crude oil is getting cooled down, the stability of market will increase. Increase in stability along with other favourable factors help the market in gaining bullish momentum.
2018 has been the year of NPAs and CEO change for the banking system. As, banks constitute a major part of market capitalisation. So, instability in banking stocks pulled the market down in 2018.
Yes Bank, Axis Bank and ICICI Bank were some major banks in terms of market capitalisation who went through the process of CEO change. Currently they all have got a new CEO. This has provided stability to the stocks and therefore to the market.
Then IL & FS grabbed all the eyeballs. The sense of instability reached its peak during this time. The NBFCs suffered the most during this time, as they had exposure to this company. DHFL saw a steep downfall of 50% just in a day, only because of the panic among the investors.
Now as the IL & FS fiasco has been resolved to some extent, the market is being stabilised. But no major up move is expected till the elections.
So these are the reasons due to which I expect a bull market this year.