Budget, earnings, monsoon to influence market in 2018

New Delhi: Market sentiment in 2018 will be steered by Union Budget in February, corporate earnings, outcome of assembly elections in eight states, monsoon and global oil prices, say analysts.

"Global oil prices, international commodity prices, global policies and interest rates if remain stable, we are likely to see positive sentiment continue. Any erratic changes in these parameters will trigger market movements going ahead," said Anita Gandhi, Whole Time Director, Arihant Capital Markets.

The Sensex gained 7,430.37 points, or 27.91 per cent, last year. The 30-share key index touched its lifetime high of 34,137.97 on December 27.

"In 2018, we have Karnataka elections in March-April and three other northern states around the same time. The provisions of Budget 2018-19 due on February 1 will also influence the outcome of this election, though economic growth/reforms and job growth are already under scrutiny," said Deepak Jasani, Head - retail research, HDFC securities.

Timely, well spread and sufficient monsoon in India will also help rural wealth and spending, having a salutary effect on consumption and GDP growth, he added.

"We believe, the BSE Sensex can go up close to 34,500 levels and Nifty 50 can go close to 10,800. Also, the other catalyst for growth would be government's focus on sectors such as clean energy, affordable housing and allied," said Payal Pandya, Research Analyst - Wealth Research, Centrum Broking Limited.

Pandya said the factors that are likely to trigger market movements going ahead include the upcoming budget, outcome of 8 legislative assembly elections, possible policy changes which go towards reviving the investment cycle or any additional measures to support the rural economy and large infra project announcements. Sectors such as pharma and textiles are expected to perform better in 2018, she added.

"Indian economy is on the growth track. The macros so far have been good though there has been some spurt in inflation due to food price rise, especially vegetables, which is expected to be tamed as the fresh supplies resume.

Though it is too early to predict at the current juncture, monsoon is expected to be good as the La Nina conditions have developed and are strengthening over the Pacific Ocean.

"A good monsoon is likely to convert into good harvest and consumption led demand leading to improved corporate earnings. As far as markets are concerned, equity markets are expected to post good returns following corporate earnings recovery over next 18 months," said Arun Thukral, MD & CEO, Axis Securities.

On the domestic front, next triggers would be elections and corporate earnings. Post the recent state elections, all eyes are on Budget 2018-19. The next budget is expected to be focused on improving rural economy and would be an ideal opportunity for the government to set its road map for alleviating rural distress, Thukral noted. Crude price could be a trigger too, he added.

"Focus on upcoming union budget and reforms will direct investors to turn sector/stock specific. Additionally, any pick-up in capacity utilisation and recovery in capex cycle will add impetus to the market. Though the outlook on main indices is moderate in the short to medium-term, we feel that the broader market will maintain its vibrancy as businesses flourish," said Vinod Nair, Head of Research, Geojit Financial Services.