Stock Market flashback 2018: The year 2018 started with great hope, investors were confident that their investment will grow exponentially like 2017. There is no doubt that the Indian stock market has grown during the year 2018 but not as per the expectations of Investors. The yearly growth of Nifty was around 3 percent whereas Sensex and Bank Nifty gained around 6 percent during the year. The year 2018 witnessed a tough fight between bull and bear right from the beginning itself.
We have noted down top 10 events and factors which had influenced the stock market in 2018.
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| Top 10 events of stock market 2018 |
ASM started during Budget:
SEBI had launched a new measure Additional Surveillance Measures (ASM) to curb the nervous and volatile Indian stock market in2018. In addition to circuit filter, SEBI started to maintain a list of stock which is highly volatile, more than 200 percent in the last three months. The list is updated periodically by the exchanges. The ASM was also imposed in Index future of top High net worth clients in the volatile market. Investors were asked to either pay additional money as margin or reduce the position to eliminate the risk in carryforward position by the brokers.
LTCG:
The re-introduction of Long Term Capital Gain (LTCG) in the budget was negative for the Indian Stock market. It impacted negatively in the Stock market after the announcement in the budget. Investors had to pay 10% as LTCG tax on profit exceeding more than 1 lakh on selling on an asset like shares, mutual fund or any market-related instrument.
PNB Scam:
PNB scam by Nirav Modi and Mehul Choksi shocked the Indian Stock Market in February 2018. It was more than 2 Billion USD scam, one of the biggest banking scam in India. The PNB Brady House Branch had issued a Letter of Undertaking (LOUs) without any collateral at the bank. And on renewal fresh LOUs were issued to rotate the amount. Since then Nirav Modi and Mehul Choksi are absconding and recently Nirav Modi has been identified in the UK. Due to the news PNB stock fell from Rs160 to Rs 65 only. Other PSU Banking stocks also fell due to the PNB scam.
Monsoon:
India is a country still it depends on agricultural revenue. On the positive side, there was normal monsoon predicted by the MET department and market rallied on the news in the month of April 2018.
Nuclear war threat and Trade war:
The tension created by Kim Jong regarding Nuclear war and testing missiles has come to an end on 12th June 2018. An unprecedented bilateral summit held at Singapore between Kim and Trump where they both had signed the joint declaration calling for “ Full denuclearisation of the Korean Peninsula” Indian Stock Market rallied on that news along with Global market.
But as soon as the Nuclear threat ended, Trade War started between the US and China where both the countries started increasing the import duties and along with global market Indian Stock Market reacted negatively on that issue. Recently the US and China agreed to halt additional tariffs, with fresh talks aimed at reaching an agreement within 90 days.
Macro Economic data:
India's macroeconomic data released during the year 2018 was impressive almost all the times. Whenever there was an announcement of macro data like inflation, IIP, GDP etc almost all the time market reacted positively.
ILFS Issue:
The Indian Stock Market has seen a steep correction in September and October after the news of Infrastructure Leasing and Financial Services (ILFS) issue came. ILFS has piled up with a huge debt as well as defaults on its short-term commercial papers (CP). This rocked both debts as well as the equity market and the market witnessed a huge liquidity crisis. The NBFC stocks were 52 weeks down due to the news.
Crude Oil and Rupee:
Crude Oil Price is another culprit which dragged the Indian Stock Market during September and October 2018. India is one of the largest importers of crude oil due to the increase in crude price the Indian rupee also started depreciating against the dollar. The result of which the Indian rupee touched all-time high 74.48 in October 2018. The Crude Oil prices started falling after the US granted waivers to countries like India to import crude from Iran. After the news rupee started appreciating and Indian Stock Market also bounced back from the lower level.
Election result:
Karnataka state election was held in May 2018, after the nail-biting result, the Congress formed the government at Karnataka. BJP's hope of forming government at Rajasthan, Madhya Pradesh, and Chhattisgarh has also shattered in November 2018. Congress has made a good comeback in the state election in 2018. This has volatile Indian Stock Market in 2018 in the month of May and November.
RBI Governor's resignation:
We all know the friction between RBI and government regarding usage of RBI reserve for MSME and liquidity crisis. The resignation of RBI governor Mr. Urjit Patel much ahead of his terms has stocked the market. The result of three state election and RBI governor's resignation came on the same day. Indian Stock Market opened gap down and recovered from the day low on that day. Indian stock market had earlier discounted the negative result of the election outcome and taken positively the exit of Mr. Urjit Patel.
Conclusion:
The above ten factors were mainly influenced the Indian Stock Market in 2018 and made the market volatile in last twelve months in 2018. We suggest you review your stock market investment in 2018 and make proper planning keeping in mind the main events of 2019.
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Finogyan Team
