MSCI India index slips into red, more volatility ahead

The MSCI India index turned negative for the year with a 2.2 per cent decline so far in 2018 in rupee terms and a 12.5 per cent fall in dollar terms. The difference in local currency and US dollar returns is the second widest after South Africa as the rupee declined more than 12 per cent in 2018. However, in terms of local currency, India’s equity performance is the second best after Russia. Indices from Germany, China, South Korea and South Africa declined between 15 per cent and 17 per cent.

The markets will remain highly volatile in 2019 according to analysts due to elections to state assemblies and Parliament. Investor interest would be firmly on assessing public opinion and any change in political formations would be keenly watched in the run-up to the general elections, said analysts. “Elections can add to volatility in the short run, but over the long term, we believe, the fundamental drivers of earnings and liquidity would determine the market returns,” said Suhas Harinarayanan, head of research, JM Financial.