‘Investors Should Stay Away from Markets Till Election Results’
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.