The Indian stock market had a Black Swan moment in 2016 when Narendra Modi pulled out 85% of the currency in circulation. The repercussion of the move is still being felt with consumers and businesses struggling to come to terms with rationed money supply. Already grappling with the surprise win of Donald Trump, the demonetisation move saw the benchmark Sensex plummeting from 28,000 to 25,717 before recovering to close at 26,626, a little above where the index had ended in CY15.

A normal monsoon after two years of drought, major consumption boosters in the form of pay commission hike and defence pension revision and, more importantly, the passage of the GST Bill, have failed to lift investor sentiment. Emerging markets such as Brazil and Russia have all benefited from a recovery in commodity prices with their benchmark indices clocking gains of over 50%, in dollar terms. While over $60 billion flew into emerging market equities last year, India saw net FII flows of $3.9 billion. Had it not been for the over $5 billion from domestic investors, the Sensex would have ended CY16 in the red.

As we enter the New Year, uncertainty is at its peak, both on the domestic and global front. With three state elections due and the likely negative impact of demonetisation on GDP growth, the market now has also to contend with a new political regime taking over in the US along with elections in Germany and France. The macro events are expected to keep investors, around the globe, on tenterhooks for a good part of the year even as major central banks pursue divergent monetary policies.

Against such a backdrop, picking out winners is not easy. But like every year, this time around, too, Outlook Business’ special issue features 17 stock picks. Interestingly, of the 17 stocks, six are from the benchmark index. In other words, the market is now slowly seeing value in large caps, as post demonetisation several quality names have corrected and are trading at an attractive valuation. For patient investors, the macro uncertainty might throw up its own share of opportunity. Happy investing!