‘In­vestors Should Stay Away from Mar­kets Till Elec­tion Re­sults’

The Economic Times - - Markets + Finance -

The 1,500 points rally in BSE Sen­sex in the last three trad­ing ses­sions may tempt many re­tail in­vestors to par­tic­i­pate in the mar­kets. But the mar­kets are only spec­u­lat­ing about the elec­tion re­sults, says Raamdeo Agrawal, joint man­ag­ing di­rec­tor of Motilal Oswal. In­vestors should stay away till the re­sults as they could get hurt if a frac­tured man­date leaves the mar­kets shocked, he tells ET’s Biswa­jit Baruah in an in­ter­view. Edited ex­cerpts: What is the mar­ket ex­pect­ing from elec­tion re­sults on May 16? Should in­vestors be pre­pared for some kind of sur­prises? It seems the NDA may form the next govern­ment at the Cen­tre... The Nifty around 7100 lev­els sug­gests a lot of good news is al­ready fac­tored in. Hav­ing said that, if there is a frac­tured man­date, with the NDA bag­ging around 220 seats, then the mar­kets will be in shock. But, if the NDA man­ages to get 300-315 seats, the mar­kets will go up some more. Would it be wise for in­vestors to par­tic­i­pate in the mar­ket rally on the ba­sis of exit polls? Right now, mar­kets are only spec­u­lat­ing about the elec­tion re­sults on May 16. What is go­ing to hap­pen on May 16 or 17 is a tough call to make. I won’t ad­vise any­one to spec­u­late be­tween now and May 16, as one can get hurt also. There is the pos­si­bil­ity of people, who have made fab­u­lous money in the re­cent mar­ket rally, book­ing prof­its if the NDA bags around 280 seats. The real story of mar­kets will start only af­ter the new govern­ment is formed as good gov­er­nance will come into play, which may lead mar­kets to new highs. Where can in­vestors find op­por­tu­ni­ties in this cur­rent mar­ket sce­nario? At this point, sec­tors such as au­to­mo­tive, in­fra­struc­ture, power, tele­com are look­ing good. But it’s im­por­tant to in­vest in good com­pa­nies within this space, which is a chal­leng­ing task for in­vestors... In­vestors with short-term per­spec­tive should not get into the mar­kets; one should only buy with long-term ob­jec­tives. IT and phar­ma­ceu­ti­cal com­pa­nies have not par­tic­i­pated in the pre-elec­tions rally. Can these sec­tors be good con­trar­ian bets? Tech­nol­ogy and phar­ma­ceu­ti­cal com­pa­nies are very in­te­gral part of a port­fo­lio. It all de­pends on what kind of com­pa­nies one is buy­ing. These com­pa­nies will do even bet­ter in a well­man­aged econ­omy. And since these com­pa­nies are a proxy to the global econ­omy, they will bring some kind of bal­anc­ing to the port­fo­lio. There is a fear that the ru­pee will ap­pre­ci­ate, but it does not look like that; it will rather re­main sta­ble around 60 lev­els. Mid­caps have not par­tic­i­pated in a sig­nif­i­cant way in the rally. When do you see them com­ing into play? As the econ­omy re­cov­ers, smaller and mid­cap com­pa­nies will par­tic­i­pate in a much big­ger way. When times are tough, big com­pa­nies pros­per and small com­pa­nies suf­fer. But, with the ex­pected re­cover in the econ­omy, mid­caps will do much bet­ter.

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