Skip to main content

Election and Correction in Stock Markets

Image
By

"The influence on stock markets are so numerous and so complex that no person has ever been able to predict the trend of stock prices with consistent success. – Sir John Templeton"

India is all set to participate in fourth phase of parliament elections. While all political alliances are claiming success, capital markets seem to be thinking otherwise. This is the general perception now-a-days.

Elections will be over in next three weeks and in just 23 days from now on 4th of June we will have absolute clarity as to who is forming the government. Till then let’s analyse the probable scenarios that can emerge from the elctions and their likely impact on the economy and the stock markets:

A.    BJP wins with thumping majority – It will continue the ongoing economic policies with increased pace and vigour which should bode well for the economy and the markets. Additionally it can take some debatable decisions that may cause unrest in certain sections of the society, like CAA & farm bills few years back. But I don’t think it will have any disruptive impact on the economy. Continue with your investments and increase exposure to equities whenever you find opportunity.

     B.     BJP wins with just simple majority – The current pace of economic reforms and economic policies will continue. Government executives are almost ready with 100 days and five year’s action plan immediately after the formation of the new government. So continue with your investments with increased exposure to equities.

      C.     BJP do not have clear majority and forms government with the help of other parties – It will be a little tuff situation. But we strongly feel that pace of economic reforms and policies will continue and investors need not worry much. Continue your investments with caution.

      D.    Congress forms the government – The most unlikely scene. But still if it happens, it may slow the pace but will continue reforms and policies with little tweaks. So need not worry and continue your investments into stock markets.

      E.     A coalition government led by Non-BJP, Non-Congress Party – If this happens it may stall the growth or even throw back the Indian economy. And on the other hand such government will not survive for more than one and half year. So we may see a dull period in the Indian stock markets.

Present correction in stock markets is due to combination of many factors, three prominent among them are:

1.      Assumption that BJP just mange the majority and not win the way it was being projected till few days back.

      2.      Overall average results of the companies, especially in IT sector and not very encouraging guidance for future.

      3.      It is a technical correction as markets had risen very sharply over last few months amid buoyancy.

So you may take a decision for your money management based on your assumption of electoral results. Or you may discuss it further with your InvestmentMitra and take actions accordingly. Staying invested at this point of time is very important as you may miss the sudden sharp rally that can come into the markets if election sentiments improve. Further you may whatsapp your query on 9958447700 or write to contact@investmentmitra.com

Thank you.

Happy Investing!

Team InvestmentMitra

Labels:

Comments

  1. Anonymous12 May 2024 at 05:51

    Very nicely n briefly analysed and described with clarity.. keep on going..

    ReplyDelete

Post a Comment

Popular posts from this blog

This Republic Day Write Your Own Financial Constitution

By
“Constitution is not mere a lawyer’s document, it is a vehicle of life and its spirit is always the spirit of Age” – BR Ambedkar A constitution primarily is a document that details the rights, obligations, privileges, duties and responsibilities of the people living within the corridors of, and leading that country. It details the rule of governance. Without a constitution it will be difficult to live like a civilised society. We would be living like in stone-age where “Might was Right” and jungle raj prevailed all over. Like a country, each individual should also have his or his family’s own financial constitution detailing various financial objectives and the process to achieve those financial objectives, rules that will govern the way its finances will be managed etc. This applies to all individuals without exception and is more popularly known as “Financial Plan”. Like a constitution your financial plan should have a Preamble and different schedules. Preamble -...
Post a Comment
Read more

Time or Timing – What is more important with Sensex @ 64K

By
  The Stock Market is the device to transfer wealth from the IMPATIENT to the PATIENT. After swinging in a range for almost one and half years, markets breached their previous peaks and are scaling new one now. Markets have risen by almost over 14% in last three months. Major reason for this sudden rise is the return of FIIs to the Indian stock markets following the fact that India is the fastest growing economy and growing over 6% despite covid, global economic slowdown and geo-political tensions. We invest for long term and everyone knows in the long run markets will go up irrespective of intermittent shocks like scams, dot-com bubble, Lehman crisis, covid or banking troubles in USA etc. Following picture depict the journey of Sensex over 40 years since its inception.   Source; www.thenwsmen.co.in The unfortunate part is we are more concerned about the short term movements of the markets. Every time there is sudden rise or fall in them market we are gripped more by f...
Post a Comment
Read more

On Cross Roads

By
“We cannot truly plan, because we do not understand the future- but this is not necessarily a bad news. We could plan while bearing in mind such limitations. It just take guts.”- Taleb:   Propounder of The Black Swan theory. Pessimism that set in March, still persists in our minds. In fact it has deepened with growing number of Covid cases being reported. The largest question ruling our minds today is - Shall we ever be able to overcome it…………..     and if yes by when and how? Have we ever wondered how have the Indian culture survived for so many thousands of years, how come so many Indians who were transported as labourers to many African and European countries centuries ago are now ruling the roost or how come most of the top 20 firms in the world have Indian heading them and so on……….. The only reason to above and many such questions is our “ Ability to Adapt ”. We are fast learner and very quickly adapt to new situation. Indians enjoys six different we...
3 comments
Read more

Markets Tumbling, Recovering – What to do??

By
Markets Tumbling, Recovering – What to do?? "The best time to plant a tree was 20 years ago. The second best time is now." - Chinese proverb. In times like present most people flock towards safety. Most do it because they don’t know how long this doomsday atmosphere will last, some even feeling like there will be No Tomorrow. But hunger for good returns on our investment never ceases. Kin Hubbard satires, "The safest way to double your money is to fold it over and put it in your pocket." On investment and earning good money from them, Warren Buffet – the legendary investor says, "If I buy a farm, I don't know whether there's going to be drought next year, but I know that there are not going to be 20 straight years of drought, and I know there's not going to be 20 straight years of great rainfall." It is a proven fact that no matter what, in long term best returns come from stock markets only. And as Seth Klarman says, “The stock mar...
1 comment
Read more

Have You Missed Boarding the Bus

By
  "The market does not trade upon what everybody knows, but upon what those with the best information can foresee" – William Hamilton Russia-Ukraine conflict had clouded the stock markets worldwide giving speculations to the talks like possibilities of third world war, Russia heading for deep financial crisis, energy crisis looming large over Europe etc. With Russia-Ukraine conflict seems getting settled and much to the pleasure of Russia – the Super Power, this has now become a non-player for the markets until some significant deviation happens from the present stance taken by all major countries of the world. Present is the world of instant. We want everything instant and so are our reactions. In the age of internetted social life, dissemination of information is highly fluid. And over 99% of these netizens have mastered the art of forwarding such information without verifying if it’s a news, noise or manipulated agenda of some interested parties.   Most economies in...
1 comment
Read more