The major event this year for Indian markets is the general elections and this may shape up to a tale of two halves, equities moving sideways ahead of the elections, according to Karvy’s Investment Strategy Report.

The equity market may also lay focus on important economic events such as bank recapitalisation, populist measures, if any, in the interim Budget, the report, which was released here on Friday, said.

Key factors such as the effects of the farm loan waiver, GST collection trends, progress under the insolvency code, and interest rate trajectory, will assume significance. Based on the outcome of the recent State elections and the general elections due in the first half of calendar 2019, the government is likely to focus more on the rural and agriculture sector. “Creation of jobs at an accelerated pace could be one more focus area,” it added.

According to the recently released RBI report, gross NPAs of banks decreased to 10.8 per cent in September from 11.5 per cent in March last and are expected to further decline to 10.3 per cent by March this year.

“Being positive for the economy and markets, it is targeted for Nifty to touch 14,000. Gains were triggered on hopes of interest rate cut by the RBI after latest data revealed that retail inflation has dropped sharply in December. Positive global stocks also boosted sentiment,” it added.

Releasing the report, Rajiv Singh, CEO, Karvy, said: “Investors would do well to moderate their expectations for index returns in calendar year 2019. We expect Nifty to face resistance around 11,750 levels followed by 12,000 levels for the year ahead.”

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