DNA Money Edit: Watch out before investing in stocks

As stock market indices – BSE Sensex and NSE Nifty 50 -- hit fresh peaks, investors may be looking to make a quick buck. Oil prices have fallen by almost 10% over the last week as crude supply constraints eased. On the flip side, the rupee has gained strength against the US dollar, of late. The better-than-expected quarterly performance of India Inc has also given the markets a significant push while the general elections of 2019 are likely to be a major trigger, going forward.

But experts warn that the next few months could be difficult for India and other emerging markets as global liquidity is expected to shrink. Some have even predicted that global markets could correct by 10-15%. Emerging market currencies are already wobbling while equities in those markets are facing headwinds. India may have outperformed over the last one week because of a sharp fall in crude oil prices. But it has seen consistent outflows from foreign investors, both from the equity and bond market. For the country that is running high current account deficit, this may create significant impact.

At 68-69 per dollar, the rupee is among the worst performing currencies in 2018. The trade war and tough liquidity conditions may stir up the dollar, and India's stock markets may face tough times.