Here's why 2016 will be mixed bag year for your finances

The New Year brings with it renewed hopes but this optimism is guarded in 2016. The good news is 2016 is expected to be a better year than the year gone by across most sectors, according to experts.

The year may not have begun well for equity investors, but the Indian equity market is expected to perform better during the year compared with 2015, which failed to live up to its promise.

"Barring unforeseen events, the equity markets will do well this year, especially in the second half of 2016 on the back of an earnings turnaround,'' says Ravi Gopalakrishnan, head, equities, Canara Robeco Asset Management.

This view is echoed by others in the industry too. "The markets may witness a 5-10% upside during 2016,'' feels Paras Bothra, VP equity research at Ashika Stock Broking.

It is expected that the government will ensure the passage of the GST Bill this year. "This will give a push to the market. Both equity and debt funds will do well this year on the basis of good fundamentals,'' says Hemant Rustagi, CEO, Wiseinvest Advisors.

"We are also seeing a trend where increasingly people are comfortable with investing in mutual funds (MFs) and they do not wait for markets to run up before investing in MFs,'' says Rajat Jain, CIO, Principal Mutual Fund, who is cautiously optimistic.

As the market stabilises, the large caps are expected to catch up with the mid-caps during 2016. "Debt funds will do well, but the returns on equity funds will outperform debt funds,'' adds Jain.

Irrespective of how the markets fare, the equity investor should not worry about the volatility in the markets, caution financial planners. "It is better to align our investments to our long-term goals,'' advises Suresh Sadagopan, Founder, Ladder7 Financial Advisories.

The year is also likely to see more IPOs. "This will be an opportunity for investors to get exposure to newer companies,'' says Arnav Pandya, certified financial planner.

The public may be able to invest in PSU IPOs, too. "The second half of the year may see some action on the disinvestment front,'' feels Bothra.

Not much is expected from the RBI this year regarding interest rate cuts. "Depending on external factors, there could be a rate cut after the second quarter,'' says Abhishek Goenka, founder & CEO, IFA Global, a Forex and Treasury Solutions firm. Experts predict a 25-50 basis point rate cut after the second quarter, which would bring relief to borrowers.

2016 will also be the year when the popularity of digital money is expected to increase. "A lot of transactions are moving towards the mobile phone as people realise that the mobile phone is more secure than your desktop or personal computer,'' says Sony Joy, founder & CEO, Chillr, an online payment application.

Of the total financial transactions, digital transactions account for a mere 3% at present. These numbers are expected to see a significant jump in the coming year as more people join the e-commerce bandwagon and banks further digitise their operations.

The insurance industry is using the digital platform to aggressively market its products. Munish Sharda, MD & CEO, Future Generali India Life Insurance, says, "The forecast for the next year looks positive and we are confident that the multiple channels of distribution and the open architecture with banks will help increase penetration of life insurance policies in India."

"Travelling abroad and foreign education may be more expensive in 2016,'' points out Goenka. The rupee-dollar exchange rate will move in the 65.5-70 band during the year.

Gold is unlikely to attract investors during the year. "Investors are disenchanted with gold because of its poor performance over last two years and it is likely to continue in foreseeable future,'' predicts Vishwajeet Parashar, senior VP & group head, marketing, Bajaj Capital.

The Real Estate (Regulation & Development) Bill is likely to be passed this year. However, property prices are unlikely to see a major price appreciation. "There could be a 5-6% increase in prices, basically just enough to factor in inflation. While it is not a good time to sell, but it is a good time for end-users to buy property,'' says Ashutosh Limaye, national director, research, JLL India. Regarding trends in the commercial space, Limaye predicts a 5% increase in rentals of commercial space due to demand supply gap.

There are not too many expectations from the budget this year and tax rates are expected to be stable. "The finances of the government will be constrained this year due to the payments on account of one rank one pension and the Seventh Pay Commission,'' says Gopalakrishnan. Cautious optimism seems to be the watch word for 2016.