As the election fever is catching up in the States and at the Centre, the bulls and bears in stock markets too are firming up their strategies with an eye on pre- and post-poll dynamics.
This was the gist of deliberations at a session on ‘Bulls, Bears & Politics – The impact of Politics on Stock Markets’ organised by the Karvy Group here as part of Finapolis knowledge series.
For Manish Gunwani, Chief Investment Officer — Equity Investments, Reliance Mutual Fund, the shape of emerging alliances is crucial.
“The ensuing elections in three States in November-December will be watched keenly by investors and even vote-swings are to be analysed for clues to the outcome,” he pointed out.
Can the markets boast of any more insights than a common investor?
“Absolutely not and they are as lay as everybody and prefer predictability and certainty,” according to Rajat Jain, CIO, Principal Mutual Fund.
Dependency on media
When it comes to predictability on poll outcome, it is also difficult to depend on the media as its track record in predicting election outcomes has been poor, said R Srinivasan, Editor, BusinessLine.
But if it is a question of making money in stocks, it has to be remembered that people make money when they react proactively in the markets and this may not always be a post-poll phenomena.
“Everybody talks of market rally after elections, but it started one year before elections in 2013. Smart money had already made its call,” he said.
Presenting a politician’s perspective, Nadendla Manohar, former Speaker, Andhra Pradesh Legislative Assembly and a Congress leader, said markets do look at certainty of governance. Outcome of the ensuing elections in Madhya Pradesh, Rajasthan and Chhattisgarh will be vital in providing leads.
There are other issues, of course, which impact markets beyond politics. Consumer is king and rural demand is shaping aggregate demand and, hence, the health of the rural economy is key, felt Jain.
Kingshuk Nag, former Resident Editor, Times of India, moderated.