How has the Indian Stock Market fared in the first half of 2018?
If we were to compare the contrast of the returns given by the market in 2017 & first half 2018, the later seems to be gloomy. But even in times of gloom, there are some bright stocks in the Indian stock market. Let’s see how the Indian Stock market fared in the first half of 2018?
While 2017 witnessed cash inflows from both Domestic Institutional Investors(DII) such as mutual fund and Foreign Institutional Investors(FII) whereas 2018 to date has been marked with continuous FII outflows which has been cushioned by the investment by DIIs(Much higher in amount than FII). In the past, the Indian markets were at the mercy of FII but with the demonetization in 2016, there has been a shift from other avenues of investment to Indian equity markets. Indians are now investing through monthly Systematic Investment plan via mutual funds which provide these mutual funds with substantial fresh capital to invest every month.
Index return comparison for 2017 & 6M 2018
You can see the sharp contrast in the returns of this 2 period. While 2017 also witnessed some period of volatility based on North Korean nuclear threat, LTCG tax etc but 2018 has seen rather a volatile market despite not have any such threatening news equivalent of the previous year. The primary reason has been the concern of trade wars due to repeated threats created by US president shaking the very concept of globalization and to some extent strengthening of US economy creating fear of tapering of the flow of money which earlier was available at the negligible interest rate.
Now let’s shift our focus to the returns given by companies in Indian Stock market in the first half of 2018. There are 38 companies that have given returns in excess of 50%. These names are primarily again from Small & Midcap segment despite the very index being in the red.
Maximum return given by companies in the first half of 2018
Even in such as gloomy market, we have stocks that are giving good returns. I can’t vouch for all the companies but just by glancing at the names a lot of credible names seems to be present including one of my holdings HEG. A very easy way to filter out doubtful companies would be to look at the Sales figure and remove those with revenue less than 50 or 100 cr to be on safer side.
Lets look at the larger companies:
Returns given by large cap companies in the first half of 2018
Among the larger peers, baring the top 10-11 names most of the large companies have given negative returns. Even in these 10-11 names, the returns have been dominated by the top 4-5 ones only which contribute significantly in the calculation of Nifty/Sensex.
Coming to the conclusion, in any market scenario good returns can be made, but one needs to be agile and have the confidence or guts to make quick changes to the portfolio.