Stock market may witness global headwinds this year: Study

The stock market is expected to be more volatile in 2018 compared to last year due to global headwinds like tightening of monetary stance by major central banks and increasing crude oil prices, as per industry chamber Assocham.

"Correction in the global indices due to any or all of the factors such as - the central banks tightening globally, balance-sheet reduction of the US Fed, pressure on crude oil prices and geopolitical risks, among other factors, may impact over-bought position in India, China and other emerging markets in 2018," an Assocham paper note today said.

It said the market in 2018 may be contrary to 2017 when as many as 153 initial public offers (IPOs) hit the Indian bourses and raised around USD 11.6 billion.

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"The AUM (Asset Under Management) may remain a preferred choice for investors in 2018 as well, but with the bond markets indicating inflationary pressures and their upward impact on the interest rates, the dice may favour debt market and the bank deposits again," the paper said.

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During Jan-Dec 2017, the paper said, the domestic institutional investors made the record net purchase of Rs 90,738.31 crore, whereas foreign institutional investors registered net withdrawal of Rs 44,108 crore from India during this period.

"In the backdrop of upcoming union budget in the beginning of February, followed by assembly elections in key states, the markets may witness a greater amount of volatility," Assocham Secretary General D S Rawat said.

In 2017, the stocks of certain industries such as IT and pharmaceuticals which are based on export businesses remained under pressure due to continuing disappointment by the earnings caused by a decline of US Dollar to the rupee throughout the year.

"Which sectors would outplay others is still not clear," the paper said.

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