NEW DELHI: Domestic markets have performed well in last four years. However, with election dates already announced, experts claim that investors must remain cautious while investing in the market before March 31.
“The Indian equity market is likely to remain slightly positive on account of steady inflow by foreign investors. However, (developments in) the global front, combined with the election event, are likely to keep the index volatile,” said Debabrata Bhattacharjee, head of research, CapitalAim.
Similar views were expressed by other experts, who cautioned that markets are going to remain volatile till polls.
According to financial services firm Motilal Oswal Financial Services Ltd, “In the near term, the market direction will be a function of the general elections and the consequent political outcome.Until then, it will be an era of high volatility”.While investors can look at entering the market with an eye on the specific stock, experts, however, advise against putting bets for long term.
“Many investors are pondering if it is the right time to enter the market. While investors are bullish, it would not be wise to enter the market at this point of time, especially if you are looking for long term. The recent rally is more on sentiments than on fundamentals. It is better to remain cautious,” said Rajesh Mehrotra, market advisor.And the best approach is to invest selectively.
“The best strategy should be to invest in a phased manner, in companies that have no political connections, have a robust business model, strong earnings and transparent cash flow, low debt and good corporate governance track record,” Mehrotra opined. The best bet, he suggested, are stocks of companies trading at a discount of 50-70 per cent of their peak prices in early 2018. The consumption-based companies are also the best bet, he said.
“Despite the recent state election outcomes, the base case assumption continues to remain, with the incumbent party coming back to power for another term,” said Hitesh Agrawal, retail research head at Religare Broking.
However, several fund managers add that any deviation in the poll outcome may be dampener.“Going by the last three state elections in December, it is evident that there has been adecline in popularity of (Prime Minister) Narendra Modi. While it is difficult to make any prediction at this point of time, it would be difficult for the ruling party to get a mandate similar to what it got during the 2014 general elections,” another expert from the CITI group observed.
‘Industrial production, inflation to rule this week’
New Delhi: Stock markets this week would be guided by macro-economic data like industrial production and inflation as well as global cues, PTI quoted analysts as saying. “Fundamentals, economic data and domestic cues will play a major role since a large number of data releases are lined up. CPI inflation, industrial output and cumulative industrial output will have a major role in giving important cues,” said Mustafa Nadeem, CEO, Epic Research.