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The BOFA- ML fund manager analysis discovered that 34 percent of them expect a Recession in 12 months, the highest since 2011. This is not surprising, given that the US yield has inverted recently. The worldwide business cycle have been around for a while. The US economic data remains strong but does point to a deceleration. The inversion of the yield curve, if persists, can be regard as an indicator of a depression. The Worldwide recession arrives, the Indian economy would go through as well, both due to the direct economic effect but more so on account of the Indirect linkage via financial markets. I fright that a recession may start by the end of 2020 or early 2021, and for now investors should remain invested in equities, but at the same time remain observant.

The Fear of a worldwide recession, uncertainty on account of trade wars and predictions of week monetary policy, gold is likely to do well and we counsel investors should invest in gold. The Indian market faces its own set of challenges, primely the downturn in the economy resulting in poor corporate earnings. We consider that the economy is likely to bottom in Q2FY20 and recover from that point. The Government spur can make the recovery stronger. The Earning for the quarter that just ended drop 10.8 percent, making it the most horrible quarter in the last two years. The Weakness was well predictable, earnings were below harmony by close to 5 percent.

The Weakness was largely lead by metals and autos whereas banks and select consumer companies did fine. The earnings downgrades mean predictions will be lower, secondly  the economy is likely to alleviate in Q2FY20, and lastly, the effect of the commodity prices will be a tailwind for earnings. The Sector is likely to observe continued weakness through FY20 not only due to weak customer opinion, inventory buildup but also due to BS-VI transition. A temporary cut in GST or other measures can help offer temporary relief, but growth is likely to return on a sustainable basis from FY20-21.