Today is the most awaited day for many as the election counting progresses and so far NDA leads UPA with 309 seats. And will the results, either way, i.e. if NDA led BJP comes to power again or not, will have any impact on our investments. Here is what experts had to say on the topic. Most of the experts in the investment domain and other market participants, consider the effect of election results to be only transient and investors will be better off by continuing their investments in equity via the SIP route.
This is as though because there is seen no direct link between the elections and equities. And it is the performance of the individual stock that determines returns for you as investors in them. Further, what economy at large expects is stable policy regime that promotes overall business and economic growth and in its wake, the exit polls have already predicted clear cut lead for Modi government but still, the actual results can deviate. And so, how should you plan your investments here is a brief take on it:
Do not indulge in intraday trade on election results day
First and foremost, those willing to take a dig on the election results day i.e. today through intra-day trade should stay away as it will be only trends until the final results are announced and huge volatility will not favour risk-reward for you as a retail investor.
Stay invested and do not take on to timing the market
And as per one of the experts cited in a business report, while election results will provide for the next government decision, in the long-run, the government that keeps changing every 5 years does not show much correlation with the overall economic growth. And it is, in fact, the benign demographic positioning of a country like ours that determines its long-term growth.
"Markets like the continuity of policies. One may see strength in markets in the near term, but do remember that in the long run, only corporate earnings growth matters. We have a very mature market where various participants like FPIs, mutual funds, insurance companies have been steadily investing, and such trends will continue. The government is a participant and influencer but not the only deciding factor," expert is quoted as saying.
Do not get swayed by the market’s reaction post-election results
It is the very nature of any market and so is the case with stock markets if NDA government leads as is already discounted it will show up some gains but in all possibility, the future events will then direct its trajectory. So, the impact of election-results will only be short-lived.
Equity or debt after election results
Though there can be things post elections results that a party might fall short of a simple majority or a fragmented mandate which could result in heavy volatility but nonetheless it does not lasts long. Also, whichever government comes to power, economic policies decided by them are on similar grounds. So, it is advised that you stay the course as per your agreed allocation and do not fine-tune your equity portfolio because of the election results uncertainty.
Returns from equity are in all position determined from their underlying earnings.
Also in a case if there is disappointment in the markets, you can take it as an opportunity to take more of position due to available better valuations.