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2019 India Investment Outlook

A lotus in the mucky pond
28 December 2018
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    Alotus in the mucky pond

    Tushar Pradhan, CIO, HSBC Global Asset Management, India

    The year gone by for most investors global or local was very forgettable. While we began the year with the strong returns achieved in 2017 behind us and braced for a more sedate 2018, hardly anyone was prepared for the strong headwinds of the enveloping trade war, substantial rate hikes in the US and local turmoil in the nature of the banking crisis and the issues in the non-banking financial sector.

    While the United States remained the most robust economy with regard to strong GDP growth, corporate profits and employment figures, the EU, Japan and the rest of the DMs struggled to achieve growth. Interest rate hikes in the US ensured a strong dollar and higher oil prices also led to a significant deterioration in economies around the world that had trade deficits as well as negative current account balances.

    India too had its share of troubles in the form of the twin challenges of a rising crude price and falling Rupee. While in a way these two parameters are linked, the surprise nature of the sharp upmove in crude prices was not expected. There was pressure to rein in the oil price pressure and ease the burden on the common man, however fiscal prudence pointed in continuing the pass-through stance. Interest rates too started showing a steep rise and this was enough to cause some panic in the debt markets.