2014 Market Outlook - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 4 January 2014
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2014 Market Outlook A  A  A

- By Asad Dossani, Author, The Lucrative Derivative Report

Asad Dossani
For the first time since the financial crisis began in 2008, the outlook for markets is optimistic and positive. Most analysts and commentators are predicting that economic conditions in 2014 will be better than they have been over the last year. The Indian economy has seen falling growth since 2010, though this stabilized in 2013. In the last year, annualized growth has held between 4% and 5%, indicating that the fall in growth may be over.

The stock markets agree with this, as global indices and Indian markets are both near record high levels. Though economic conditions are likely to improve, stock markets are less likely to keep rising. This is because they are already at record high levels, and so a correction in 2014 is due. The US Fed's continued taper will keep stock markets from rising too fast in 2014.

Commodities have been one of the big losers in 2013. This is especially true for precious metals like gold and silver. A combination of lower safe haven demand and tighter monetary policy by the Fed has heavily reduced the demand for gold. In India, restrictions on gold imports have increased, further denting demand. Though the fundamental factors go against gold, gold is already trading much lower than its prior highs. Thus, we do not expect significant further falls in gold in 2014.

The rupee has had a volatile year. It reached record lows in August and September, and experienced record volatility. Since then, the currency has stabilized. Due to continued inflation, we can expect that the rupee will remain weak in 2014. However, if the RBI is successful in significantly bringing down inflation through monetary policy, then this will be good for the rupee.

One of the biggest factors that will impact Indian markets in 2014 is the upcoming general election. If the result is a new government that has a stronger capacity to implement policy, then the Indian economy and markets will perform strongly. The biggest reason why Indian markets have underperformed the rest of the world is that the government is weak and unable to implement sound economic policy.

As is the case every year, 2014 is sure to bring surprises that will impact markets in ways have not yet thought of. Either way, an outlook helps us prepare for some of the issues that will impact markets. Good luck to all investors in 2014, as we continue to navigate complex and ever changing market conditions.

Do you think the stock markets are due for a correction in 2014? Share your views in the Equitymaster Club.

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is a financial analyst and columnist. He actively trades his own and others' funds, investing primarily in currency, commodity, and stock index derivative products. Prior to this, he worked at Deutsche Bank as an analyst in the FX derivatives team. He is a graduate of the London School of Economics. Asad is a keen observer of macroeconomic trends and their effects on global financial markets. He is deeply passionate about educating investors, and encouraging individuals to take part in and profit from financial markets. To put it colloquially, he wishes to take Wall Street products and turn them into Main Street profits!

Disclaimer:
The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and have not been authenticated by any statutory authority. The author and Equitymaster do not claim it to be accurate nor accept any responsibility for the same. The views constitute only the opinions and do not constitute any guidelines or recommendation on any course of action to be followed by the reader. Please read the detailed Terms of Use of the web site.

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2 Responses to "2014 Market Outlook"

Dr.Veeranna Doddipatla

Jan 5, 2014

Yes, it is due for correction. It will be highly volatile. It is more likely that investors will be taken for roller coaster rides. The reason ascribed for the sudden change of direction on 2nd day of new year is silly. This will be repeated at regular intervals to trap investors.

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santosh arora

Jan 5, 2014

INTRESTING. PURELY MY OPINION. ELECINCOMMISION MUST STIPULATE THE AGE OF THE CANDIDATE WHICH SHOULD NOT BE MORE THEN 60 YEARS.THIS IS IN LINE WITH THE RETIREMENT AGE OF AN INDIAN AS PER THE CONSTITUTION OF INDIA.
PRESENT PRIMINISTER & ITS TEAM MUST LEAVE THE STAGE OF PARLIAMENT. LET YOUNG PEOPLE MUST MAKE WAY TO STAGE & MAKE A DIFFRENCE IN THE LIFE OF ALL INDIANS AS WELL AS ALL HUMANS
COSTITUTION OF INDIA MUST PROVIDE THE BASIC NED OF ALL PEOPLE,LIKE
1 PROTECTION OF YOUN GLIFE BU HAVING A SHE ON THE HEAD OF A YOUNG ONE
2. JOB TO PARETS SO THEY CAN PROTECT & FEED THE YOUNG LIFE
3. FREE EDUCATION TO ALL TILL COLLEGE LEVEL
4. FREE EDUCATION & TRADE TRAINING TO TRADE PEOPLE
5. ALL MUST BE EDUCATED & QUALIFY HOW TO PROTECT THEIR OWN BODY FROM DRUGS, HARD DRINKS, OVER EATING , HEALTHY EATINGS ONLY.
6. GOVT MUST PROVIDE 1 BED ROOM ACCOMODATION TO ALL.
7.NO BUILDING SOULD NOT BE MADE ABOVE 5 FOORS. YOUNG LIVE UP & ELDERLY ON LOWER FLOORS.
MOTO : WE ALL R HUMANS & OUR NEEDS R SAME FO ALL OF US.
REST WILL TAKE CARE ITSELF.

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