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Holding Cash Ahead Of Election Results Maybe Ideal

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Markets are likely to move in a narrow range in the next three weeks, given the General Election results on May 23.

One can say with a reasonable level of certainty, that the markets are positioned to head higher, rather than lower. This is on account of the high cash levels that mutual funds are still sitting on. In fact, the month of March 2019, saw a huge inflows into equity mutual funds and probably that is barely deployed.

Holding Cash Ahead Of Election Results Maybe Ideal
 

So, every fall is likely to be bought into. In fact, even if FPIs sell a largish amount, domestic institutions would easily be able to absorb the same.

Buy into beaten down names

There are many stocks from the auto space, that have been hammered, because of poor auto numbers. Some of these shares can be good bets for the long to medium term.

In fact, even April numbers have been poor for the auto sector. It is highly likely that we might see some fresh vehicle sale numbers for the sector, following the results of the General Elections. In fact, there have been numerous steps to boost rural income, which might help 2-wheeler companies.

Select metal stocks have also seen a substantial decline and there could be some short covering bounce in these stocks as well. Ahead of the election results, one should book profits, if he or she has made reasonable amount of profits.

In any case, at 39,000 points on the Sensex, we are looking at nearly peak levels. In fact, a few stocks like Reliance Industries, TCS, HDFC Bank and Infosys have pushed the indices to higher levels. The broader markets in any case continue to languish.

With the results season too now behind us, it would be interesting to see volatility closer to the election results. Exit polls are slated for May 19, a few days ahead of the elections. Investors are certainly living in interesting times.

GoodReturns.in

Story first published: Thursday, May 2, 2019, 10:16 [IST]
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