"The most obvious is not obvious"
I frequently receive calls from clients asking if they should invest a sum of money before the election results are announced. Prime Minister Modi and Amit Shah have mentioned a potential stock market rally if the BJP wins.
However, a ruling party speculating on the equity market can be irrelevant and sometimes mislead retail investors. In a situation where the number of seats for both parties is uncertain, betting on the market now is pure speculation or gambling. And the rule of gambling is that "the most obvious is not obvious."
In my opinion, the market has likely already factored in the potential BJP win. The speculation that the market will rise if the BJP wins is misleading. The BJP needs to secure a significant number of seats for the market to sustain its current levels. Additionally, market volatility could arise if they fail to do so. This result, coupled with potential interest rate news from the US, presents further risks for those speculating on the market now.
Historical context:
2004: Congress won - Nifty -10%
2009: Congress won - Nifty +40%
2014: BJP won - Nifty +20%
2019: BJP won - Nifty +8%
2024: ?
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