Is a good time over for Indian shares? BofAML expects

On Tuesday report, Sanjay Mookim, a research analyst at Bank of America Merrill Lynch said, “This year is going to be tough ahead. Lots of money has been made by the investors through expansion in multiple which are very high now. The Domestic market is over-valued and it is expected that there would be a double-digit correction in the first half of 2019. But after the meetings, a stable government can help to push the market up in the second half of 2019, a foreign broker said. Financial-system liquidity is being gradually destroyed as central banks globally trim balance sheets, encouraging agitations that investors may avoid from riskier assets such as equities.

In 2018, Overseas investors have withdrawn 4.6 billion dollars from the Indian stocks, the most in a decade, even with the economy and company profits seems to be recovering with the introduction of an undisciplined national sales tax and a currency ban. There is a little reason to be hopeful about the domestic market. It is adding the only sector banking which can work for the investors, as the lenders come out of the faulty asset problems. He also said that we have to factor in the global headwinds along with the high valuations. When asked for advice, Mookim suggested the investors stay away, as the domestic stocks are not cheap and hence they should look for the opportunities outside equities. He declared that lack of ideas to invest in the current situation is one of the factors, but maintained that commercial operations have not turned bad.

Mookim said, there are only a few large caps that are available at a reasonable price. But it was observed that while the enormous correction in the mid-caps has created some space, the dispirited sentiment in the run-up to general elections will leave with little chance for growth. The investor expectation will be hit in the run-up to the meetings in the summer as the opposition points to the present government’s faults. The hypothesize move of offering income support to farmers comes too late and it will also be difficult to find the right beneficiaries. He also said that the fall in crude prices has already been factored in by investors and the variation is unlikely to lead to a rush in stock prices.  

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