WITH all eyes set on the general election results slated to be announced on May 23, it has become difficult to predict which way the stock markets will sway. The current scenario of the stock market is looking bleak due to combination of domestic and global factors affecting the sentiments of investors. The failed US-China trade talks, US threatening Iran of attack coupled with rising crude prices have all weighed down heavily on sentiments of domestic as well as foreign institutional investors (FIIs). “In such situation the investors should take a very cautious stance till the general election results are declared,” said CA Kailash Jogani while talking to The Hitavada.
Investors on their part should keep cash on the side lines and enter after things settle down. For long term investors with more than two years horizon there is no need to worry as India’s long term growth story is still intact. It should be kept in mind that this is one of the longest general elections to take place. Investors should expect bouts of volatility till the election results, he said.
Anuj Badjate, Director of Badjate Stocks and Shares Pvt Ltd said that the investors should be careful till the election results. If the present Government returns to power the markets could go up like anything. In such scenario, the investors should take the opportunity to sell their holdings and book profits. This rally could be short lived because there are issues of slow down which the stock markets have not factored in at this point of time. Post elections there could be volatility during the next three months. In case a new Government comes to power, then there could be a sharp fall of 10 per cent to 20 per cent. He advises investors to wait on the side lines and enter after the markets stabilise.
CA Julfesh Shah, Member of Committee on Management Accounting of ICAI, New Delhi said that it is interesting to note that in last six elections, most of the time the market did not show any significant divergence from the trend seen during the pre-election phase despite surprises in poll outcomes. For long-term investors, it is important to evaluate returns as per investment horizon instead of staying fixed to short-term events, targets or time horizons. Moreover, possibility of US China trade war on anvil may also affect the sentiments of the investors in the Asian market. Even the biggest rating agencies like Moody’s as well as firms like Morgan Stanley are optimistic about India’s growth story which is positive in future for the stock markets. Looking at the recent zigzag up and down its a bit confusing that where would markets lead. It is strongly predicted that if the current Government comes back to power, the market will react in a strong positive manner and Sensex may touch the 40,000 mark.
In the last one week the Sensex has fallen approximately 1,500 points or 3.85 per cent to 37,462 levels. The US-China trade war jitters, possibilities of US-Iran war showdown and Korea firing missiles are some of the geo-political reasons behind the same. While the fate of BJP on May 23, is on the domestic investors minds according to Nirav Panchmatia, Founder CEO AUM Financial Advisors who is just back from Omaha, Nebraska, USA where Warren Buffett addressed shareholders questions is very upbeat on Indian equity. Investing in the market via the mutual funds route using systematic investment plan (SIP), systematic transfer plan (STP) is the best bet for the retail investor. Being too bold might hurt and exiting the market completely might equally hurt the investor. The prospect of the Indian economy and hence stock markets is bright looking at the next 24 to 36 months. Therefore, every dip offers an attractive buying opportunity said Bloomberg and CNBC guest expert Panchmatia.