Where To Invest In 2019?
Businessworld|December 8, 2018
Where To Invest In 2019?

Stocks can’t fly, bonds can’t tumble, gold may not shine, and real estate might not offer returns. 2019 promises to be an action-packed year, but with a cauldron of caution

Clifford Alvares

While it began with a big bang, 2018 should be a year of dis-remembrance. Everything that was not supposed to happen, happened. And stunned the markets — followed by more, in spades. A VIX meltdown in February saw one of the worst periods in investor history, with foreign investors dumping stocks left, right and centre. The Nirav Modi scam jolted the banking system, while SEBI’s mutual fund re-classification saw domestic mutual funds dump mid-and small-caps.

Additional surveillance measures, trade wars, Fed rate hikes, IL&FS defaults followed by an NBFC ALM crisis, the shock resignation of the RBI governor and the BJP’s loss in three state assemblies kept the Indian markets on tenterhooks all through, with no shortage of negative news. Yet, despite the lack of positive surprises reported, not even an earnings uptick nor capital investments, the equity markets managed to wiggle up 3.2 per cent in 2018.

Had it not been for steady inflows in equity markets through SIPs, we would perhaps be reporting a regular rout in the stock markets. In January 2018, monthly SIPs touched Rs 6,644 crore. By December, SIP flows steadily crossed Rs 8,000 crore. The year topped, with over Rs 80,000 crore of SIP funds, or $12 billion in equivalent inflows. Who needs FIIs?

Year 2019, by contrast, has been choppy so far. The broader markets have somewhat recovered after a year-end sell-off, but equity prices are not out of the woods yet, with the markets expected to be volatile in the first half of 2019.

EQUITIES: CONSOLIDATION TIME

Equities have started on a tepid note. Given that this will be an election year, equity prices will periodically go into a tailspin. Besides, this being a national election, if a clear mandate for a government at the Centre is not forthcoming, the markets could be whacked. Although markets in the past have done well after elections, investors still have to exercise “stock-market caution”.

Don’t chase upticks

The blessed mantra this year is to invest in select (few) companies where the India demographic story is rolling out. India’s swelling population requires more goods and services such as food, consumables durables, travel, etc., the sector playground of FMCG, banking, travel, consumption stock players.

Of course, since most of these stocks are now reasonably priced, investors should hold investing when prices are running up. Instead, they should concentrate on buying when their favoured stocks have dipped 10-15 per cent. Hence, make an investible list of 10-20 good stocks and, to invest, periodically look for significant drops in their prices.

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December 8, 2018