DNA Money Edit: Hope for markets amid challenges

Samvat 2075 holds hope amid elections and macro challenges emerging from widening fiscal and current account deficits and a volatile rupee.

The rupee, which has been one of the worst-performing Asian currencies in the past year, is likely to stay under pressure if foreign outflows pick up momentum or if crude oil prices surge. For the time being, Brent crude prices have dropped far below the psychological mark of $80 per barrel and is hovering around $72, after the US waiver on Iranian oil sanctions was announced. But if global crude oil prices move up above $80/barrel, economists foresee a drop in rupee to 76-levels.

The GDP growth has picked up over the past one year to 8.2% for April-June 2018 period, highest in two years, but the road ahead is paved with bumps. The trend in fiscal deficit for the first half of 2018-19 suggests that the government may miss the annual target, though Goods and Services Tax (GST) collections have seen a steady improvement. It may be difficult for the government to resist populist measures ahead of the general elections scheduled for May 2019, which, in turn, could put pressure on the fiscal deficit and current account.

Surely, the recent market correction has made valuations attractive for some stocks, giving investors an opportunity to accumulate quality stocks. But market experts warn investors to go slow. A stock-specific approach may help them.