Indian Markets Friday rose by about 3% to close at an all time high. of 22994.for sensex and 6859 for the nifty. While markets have been inching up for the past 7/8 months on the expectation of a strong government at the centre, Fridays move indicates that its time to factor in a decisive government at the centre post announcement of election results on May 16. For the past 3 years or so markets were depressed due to a host of factors, which I had explained in my previous posts. Mainly, lingering inflation inspite of central bank's rate tightening measures, absence of growth push, a rapidly falling currency, vanishing investor confidence, government finance deficits etc. India's consumption story continues and corporate India has performed well . And so it seems we may be at the bottom of the cycle and may be on the path to recovery.
If the NDA gets clear majority and forms government at the centre India could indeed be on the highway to growth. This is what the market perceives and will find reflection in stock prices which will then rise. However the results are on May 16 and exit poll outcomes will be out immediately after the final phase of the poll concludes on May 12. The intervening period might see high volatility.
Markets have already gone up substantially. Friday's rise can be attributed to short covering as bears start to square off their positions in anticipation of a bull run, which may well happen. But it will not be wise to enter the markets now. Those who are invested are already in profit and may hold on. For others it is advisable to wait for the election results and look out for opportunities to invest. Priorities of the new government will have to be seen. What will the new budget have in store etc. As usual I'll come up with stock ideas from time to time.
But of course there is a worry on the weather front . Though the monsoon forecast at 95% should not cause panic, there is a greater concern on the "El Nino " front.. Any untoward development anywhere globally will have an impact at most places. Thing could get quite nasty in terms of losses to agriculture, disruptions etc. These are risks which come with investing for higher returns.
Until my next
Happy investing
Basudev
If the NDA gets clear majority and forms government at the centre India could indeed be on the highway to growth. This is what the market perceives and will find reflection in stock prices which will then rise. However the results are on May 16 and exit poll outcomes will be out immediately after the final phase of the poll concludes on May 12. The intervening period might see high volatility.
Markets have already gone up substantially. Friday's rise can be attributed to short covering as bears start to square off their positions in anticipation of a bull run, which may well happen. But it will not be wise to enter the markets now. Those who are invested are already in profit and may hold on. For others it is advisable to wait for the election results and look out for opportunities to invest. Priorities of the new government will have to be seen. What will the new budget have in store etc. As usual I'll come up with stock ideas from time to time.
But of course there is a worry on the weather front . Though the monsoon forecast at 95% should not cause panic, there is a greater concern on the "El Nino " front.. Any untoward development anywhere globally will have an impact at most places. Thing could get quite nasty in terms of losses to agriculture, disruptions etc. These are risks which come with investing for higher returns.
Until my next
Happy investing
Basudev
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