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Will 2016 have an Impact on 2017?
Mon, 2 Jan Pre-Open

As we move ahead into 2017, let us pause for a minute to review the year gone by. 2016 was definitely a year to be remembered. It has made surprise the new routine and forecasting a mug's game.

Last year saw many major occurrences that changed the global economic scenario... for better or worse. We had the Brexit, Indo-Pak surgical strikes, US Elections, the OPEC deal, Fed rate hike... Oh, and not to forget the demonetisation saga that's still going on.

All of the above had a significant impact on the Indian financial markets. Most asset classes took a beating thanks to volatility caused by these.

With all that happened in 2016 the question arises - 'Will 2017 take it's cues from 2016'?

We believe three key events could have some impact on 2017.

  • US Elections: Donald Trump's unexpected win in the US elections has shaken the world. His stance on immigration, taxation, and free trade practices, among others has generated uncertainty. This could significantly impact the world economy, including ours.

Tanushree Banerjee, Equitymaster's co-head of research, in a recent 5 Minute wrap up asked 9 interesting questions. Here is a question she asked Donald Trump:

  • Will you change the definition of 'fair and reasonable' in US' trade deals with us like you do for your real estate deals?

    The book Trump Strategies for Real Estate suggests that you have, from time to time, changed the definition of 'fair and reasonable'. This was to make your real estate deals more profitable. Should Indian companies with US trade relations get wary of such Trump shockers during your Presidency?
  • Demonetisation: On 30th December 2016, the demonetisation saga concluded formally. But the social, political and economic effects will stick around much longer.

  • We have already seen the first round of the economic impact. Sectors across the economy are lurching. With real estate and microfinance leading the tale. It would be interesting to see how long this impact continues. We also wonder how the transition towards the cash less economy will play out.

  • Budget Reset: The Indian government has decided to prepone the budget presentation. It will present it on the first day of February instead of the customary last day of February. The move is meant to reorder the government's spending patterns.

Typically, a budget presented on the last day of February gets approved by the parliament around mid-May. This way it is only actually implemented after one quarter is past.

An early budget would mean early implementation, and hence higher efficiency.

Even though surprise has become the new routine, we believe these events will definitely continue to make waves in 2017. But only time can tell whether their impact will be positive or negative.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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