This is what makes stock markets interesting - it goes up on expectations and as swiftly can come down. Indian investors were in for a shock on June 4 as equity markets crashed around 6% after general elections results did not give a clear majority to the ruling Bharatiya Janata Party (BJP). The earlier days' euphoria turned to trauma and wiped out Rs 30L Crores of investors money.
Lets take a look at how the Indian electorate has voted over the years.
What does it mean for the markets??
I have always maintained that there is a lot of noise around Indian elections but once a few weeks pass, markets move on. What matters are the policies and their impact on the economy. I expect the markets to remain volatile in the short to medium term till there is clarity on the government's policies.
After all the wars were over, the Butterfly still looked as beautiful!!
What does it mean for the investors?
Will there be volatility? YES
Can the markets correct further? Who knows, could be.
Has the fundamentals to the Indian growth changed? NO
Have the corporate results changed to negative? NO
Indian GDP is growing at near 8% and hence, no change in strategy is warranted.
Investors should continue to focus on their asset allocation and ensure that the assets are mapped to their goals. Long term investors can also use this volatility to add to their holdings.
Source: Moneycontrol, TOI
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