From domestic growth to global economy: Key risks for markets in 2018

H2FY18 should see sharp earnings recovery, led by low base of demonetisation and signs of pick-up in rural consumption

Of late, the rich market valuations have been drawing a lot of attention, with the market trading 23% above the long-period average. This author discusses the key risks to markets in 2018.

Sustenance of healthy macro fundamentals and liquidity has driven valuation re-rating even without concurrent improvement in micros (earnings growth), in our view.
 
As regards the political landscape, in the first major state elections post GST implementation, the BJP, the ruling party at the center, has won Gujarat for the sixth straight term and Himachal Pradesh (HP) state elections with a comfortable majority.
 
Winning UP and