With losses of close to 5 per cent this year on the Sensex, it has not been a great year for Indian stock markets.
Just using the Sensex as a barometer, you would have earned Rs 95, if you had to invest Rs 100, at the start of the year 2015. On the other hand you would have earned Rs 109, if you had to invest in a bank deposits at the start of the year.
Clearly, a loss of Rs 14, when you compare equities to bank fixed deposits. Of course, we cannot have such a simplistic explanation, because individuals could have also made money, depending on the stocks that chose. We have just taken the Sensex, which may not be the best way to compare.
1) Chinese currency devaluation a real threat
There are worries that if China slows down, there maybe further currency devaluation. This means there could be further competitive devaluation of currencies around the globe. If growth in Asia's largest economy slows, there could be a further collapse in commodity prices, which is not good news for stock markets.
2) Rate hikes in the US
The pace of further rates hikes could also be a cause of concern. The US Fed is slated to once again meet in Feb and another 25 basis hike in interest rate would not be good for the Indian markets.
3) Inflation and RBI rate hikes
There are also worries that inflation has begun rearing its head once again. If there are no further cuts in interest rates, the markets are unlikely to take it well.
4) GST Bill
The GST Bill has been stalled in the monsoon as well as the winter session of parliament. If this trend continues, we may see some selling pressure in the Indian markets.
2016 and the Indian stock market
Indian stock markets may not give bumper returns to investors, as was seen in 2015. The year is going to be extremely volatile and one will need to time the markets well, to make money.
At best the markets may remain in a grind for most part of the year. If investors can get a 10 per cent returns from the Indian stock markets in 2016, they can consider themselves lucky.