 "Market, Nifty, Sensex")
In December 2015, Ridham Desai of Morgan Stanley expected the Sensex to be 30,200 on a probability weighted outcome (whatever that meant) basis by December 2016. As this piece was being written, the Sensex was around 25,700. Not only was this below Desai’s base case of 28,000 but even the direction seemed to be wrong, as the Sensex is now into the red, having closed at 26,117 on New Year’s eve this year.
Desai is an example; most analysts did not get 2016 right. They can readily blame Prime Minister Narendra Modi’s unexpected note ban move and its hit on the domestic consumption story. Yours truly listed 16 predictions and wishes for 2016. The first one, which at that time seemed a done deal, came to a cropper. Let us see what happened to others.
1. A new chairman for Sebi: In a surprise decision, incumbent U K Sinha got a one-year extension at the last moment as head of the Securities and Exchange Board of India, though the selection process had shortlisted three candidates. Instead, we had a new Reserve Bank governor in Urjit Patel.
2. Decision on FTIL-NSEL merger: The government indeed passed the final order merging the two entities. But, the matter is still with the courts for a final decision
3. An inspiring Budget: The Budget was not great for the market, as the dividend distribution tax for high net worth investors was a dampener.
4. Stable commodity prices: Though the price of oil has gone up from last year’s close of $37, it is still around $50 a barrel, not upsetting fiscal calculations too much.
5. Rupee below 70: The rupee has tested the 2013 low once after Raghuram Rajan quit but has stayed below 70, trading now at 67.81 to a dollar.
6. Ample foreign inflows: Despite remaining net sellers in the past three months, foreign portfolio investors are net buyers in equity for Rs 25,000 crore but have sold Rs 43,700 crore in debt, making 2016 a net outflow year.
7. A bumper year for IPOs: This was an easy one. A little over Rs 26,000 crore was raised by some two dozen issuers.
8. More KYC hassles: The big hassle of note ban seems to have made all other hassles small and inconsequential
9. International financial centre (IFC): Despite the recent pre-Budget noises, the GIFT City did not become as big as it threatened to be. Nor did Mumbai make any stride to becoming am IFC. Instead, it’s building a statue.
10. Successful new products: Can’t think of any.
11. A new finance minister? No such luck.
12. Unified regulator: Remains a wish for 2017.
13. Integration of commodity & equity markets: Sebi seems to have effortlessly subsumed the commodities regulator. But, the exchanges and intermediaries are awaiting the contours of a new regime that will integrate the underlying markets effectively.
14. Honest intermediaries: Dream on.
15. Conservative fund managers: No major debacle like JP Morgan’s Amtek Auto (2015) this year. But, the Tata- Mistry fight that eroded thousands of crores of investors’ wealth caught everyone off guard.
16. Some returns to smile about at the end of the year: May the new year be one in which you smile more at the end than at the beginning, that piece titled '16 things to make 2016 sweet for market' had said. However, with only four sessions to go, the Sensex needs another 300 points to remain in the green. Even if it did, it would be more a sigh of relief than a smile of success for the investors. Let us hope your stock picks did better than the Sensex.
