Mkt may see short-term volatility

Participants would keep watch on coalition govt’s ability to continue with various policies
Representative Image
Representative Image

NEW DELHI: Domestic equity market is likely to experience volatility in the short term following the election result which turned out to be a total dampener for Dalal Street.

With the ruling Bharatiya Janata Party (BJP) failing to reach the 272 mark and the dependence on allies for a third term, experts said the market participants would keep a close watch on the coalition government’s ability to continue with firm policies.

Rahul Singh, CIO-equities, Tata Asset Management, said the election result is likely to lead to a more balanced market; risk-reward in large caps and underperforming sectors like banking and consumer appears more favourable. On the other hand, there is likely to be greater scrutiny and valuation discipline in the performing sectors like capital goods, power, defence and manufacturing, he added.

Singh further added that the macro parameters are likely to remain largely stable and hence provide downside support to valuations. He said that the key data points to watch going forward would be the tilt of government policy and the Union Budget. “More specifically any moderation in the capital spending outlook in favour of consumption support can further drive sectoral preferences going toward.”

Local equities fell sharply on Tuesday with the frontline indices – BSE Sensex and NSE Nifty – registering their biggest single-day fall in four years. The BSE Sensex closed the Tuesday session with a massive loss of 4,390 points, or 5.74%, at 72,079.05, while the Nifty 50 ended with a cut of 1,379 points, or 5.93%, at 21,884.50. Smallcap and midcap indices fell about 8% each.

Pradeep Gupta, co-founder & vice-chairman, of Anand Rathi Group, advised investors to focus on long-term strategies, such as maintaining a diversified portfolio and avoiding panic selling. “Sectors like infrastructure, defence, and capital goods are expected to benefit from policy continuity and government focus on development projects. Large-cap stocks are preferred for their stability and resilience against economic fluctuations. In summary, while the immediate market reaction to the election results has been volatile, the overall long-term outlook remains positive, particularly if policy continuity is maintained,” added Gupta.

As per the latest date coming in, the BJP has secured about 240 seats. In the 2014 and 2019 Lok Sabha polls, the BJP crossed 272 mark.

Election results may lead to more balanced market

With the ruling Bharatiya Janata Party (BJP) failing to reach the 272 mark and the dependence on allies for a third term, experts said the market participants would keep a close watch on the coalition government’s ability to continue with pro-capitalistic policies. Rahul Singh, CIO-equities, Tata Asset Management, said the election result is likely to lead a more balanced market; risk-reward in large caps and underperforming sectors like banking and consumer appears more favourable

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