Even as stock markets remain choppy on the back of various domestic and global factors, Tata Mutual Fund says that the ongoing year can be compared to the middle overs in Cricket. “After a rousing start in 2017 and a mini-batting collapse in 2018, equity investors will have to respect risk-reward i.e. take the singles, rotate the strike and play the percentage game to be able to stay in the game,” noted the firm in a recent report.
Explaining that the earnings growth may not necessarily result in equivalent returns in the year 2019, Rahul Singh, CIO- Equities at Tata Mutual Fund said that the moderate return outlook in 2019 for equities has to be weighed against the risks. “The real story as always will be in the relative timing and spacing of the various evolving domestic and global macro risk factors during the year. In such a backdrop, priority should be to get through to the other end of the wicket safely,” he noted in the report.
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Taking stock of the looming risks, Tata Mutual Fund said that fiscal slippage is an immediate worry. “GST collections have lagged targets and there is a risk of pre-elections sops making the fiscal deficit target of 3.3% for FY19 difficult to achieve,” noted the firm. In the current scenario, banks seem to be benefiting not only from the normalisation of credit costs (in the case of corporate lenders) but pricing power and credit growth also bodes well for the core income growth. “The dislocation in the financial markets in the last quarter of 2018 has stabilised a bit but 2019 could remain a year of growth reset for the NBFCs as capita conservation remains a priority,” noted the firm in its report.