Nifty target for March at 9,500; retail flows & 2019 election outcome big risks

In our view, the recent liquidity squeeze would not turn into a prolonged credit crunch although we believe the easy money seen over the past 3-4 years is behind us, said Gautam Chhaochharia of UBS

The second edition of the UBS Evidence Lab Market Thinking Game was sent to investors in the week of October 31, 2018. The survey, instead of asking investors their own views, asked investors to predict what other investors think.

Sentiment has turned bearish; oil, liquidity top drivers

About 61 percent of the respondents indicate a bearish sentiment for the Nifty compared to 31 percent in the previous survey. Only 7 percent of respondents remain bullish compared to 28 percent last time.

The responses indicate oil prices continue to be the most important driver– much like the first survey conducted in July 2018.

Liquidity for financials is considered to be the second most important driver, followed by politics/elections. Notably, fund flows appear to have lost their importance in investors' minds and has been assigned the least important ranking. The rupee exchange rate continues to be ranked lower.

Investor sentiment at UBS India Conference

At the 14th UBS India Conference, overseas investors indicated continued robust interest in India. However, the recent market correction and key developments (liquidity crunch, oil, and RBI-government issues) were clearly a consideration among investors.

Most global/global emerging market (GEM) investors appear to be willing to weather the above, given India’s relative growth potential. Most global investors appear to be presuming that PM Narendra Modi will come back in 2019, and the markets may not be pricing in any build-up of potentially adverse perceptions into May 2019.

GET TWO DAYS FREE TRIAL>>>>COMMODITY TIPS