Emerging markets (EMs) have had a bad yearly performance in 2015. Most EMs, including India, have delivered negative returns this year. Most of these markets are facing turbulent times due to various global/ domestic reasons. Brazil and Russia have been adversely affected by the consistently falling commodity prices. China has been struggling with a readjustment in its consumption theme leading to a sharp dip in its GDP. India, though taking a positive from the sharp drop in commodity prices (especially crude oil), has received a setback due to domestic factors like high inflation and political logjam.
Analysts are now hoping that most emerging markets would find their bottom soon, and latter half of 2016 may see their revival. The uncertainty over hike in US Fed Rate is over and most emerging markets have responded positively to the event. The Indian Rupee has appreciated a bit and is now hovering around the Rs66/ $ mark. The stability of the Rupee is a good sign for our economy. The commodity markets are close to their bottom. Although lower commodity prices may seem positive for India, indirectly they lead to lower demand for Indian exports as the commodity exporting countries loose their competitiveness. Thus any further fall in commodity prices is not desirable for the global economy.
India is better placed than most emerging markets due to the revival of its domestic consumption story. There have been some green shoots of revival of consumer demand in urban areas, though rural demand is yet to pick-up steam. The pay hike for Govt. servants may boost the economy in the next fiscal. The passage of interest rate cuts by RBI will gain momentum in fiscal 2016-17, which will be a major force in revival of the earnings cycle. The clock seemed to have turned full circle for the markets, which are likely to stabilise in the range of 7500-8000 on the Nifty, before making the next up move. Surprisingly, the broader markets have performed much better in the recent down turn, and this augers well for a market rebound, sooner than later.
In conclusion, retail investors are advised to get ready for a revival, and continue to put money in the markets slowly, SIP would be a better choice. 2016 promises to be a better year for equity investment as compared to 2015.
