Hold your investments till election!
Economics Times
13 Mar 2009, 1350 hrs IST, Saikat Das,
MUMBAI: Even though markets across the globe are trying hard to bounce
back, the mix of economic slowdown, financial crisis, currency
conundrum and flight of capital has made it extremely difficult.
Despite continued efforts by various governments to prop their
respective economies, the measures have fallen short. There is
continued uncertainty over a rebound—how and when! Back home in India,
though the government has been very successful to rein in inflation
(2.43% as on Feb 28, 2009 from its peak of 12.83% on Aug 16, 2008) and
infused liquidity into the system through rate cuts and fiscal
measures, there is the uncertainty of the forthcoming general
elections. The elections will decide whether there will be a stable
government at the Centre which will take the necessary measures to
check the economy from a likely deflation or the current recessionary
trend. The Indian stock market has shown enough resilience over time,
but market men feel the time is not conducive enough for retail
investors to invest and should sit on cash until the elections are
over and the outcome clear. \"Instead of buying before elections, an
investor should keep cash ready supported by a well-calculated
strategy as to where to invest and which stocks should be looked at. A
knee-jerk reaction post election will provide an opportunity to pick
up stocks at attractive prices,\" said Daljeet Singh Kohli, head of
research (PCG) of Emkay Global Financial Services. Kohli feels
investors should stick to only those sectors which are the pillars of
growth for any developing country, that is, banking, power and oil &
gas. Among these sectors, one can track stocks like State Bank of
India, Punjab National Bank, Bank of Baroda, Tata Power, NTPC,
Reliance Industries, ONGC, and Cairn India. According to Sandip
Bandyopadhyay, director and CEO, Reliance Money, companies under ‘A’
group and large caps in nature are mostly preferred irrespective their
sector. Blue chip stocks in infrastructure and capital goods also make
investment sense. One can expect an upside in these sectors from Q2 of
FY10. Bandyopadhyay advises investors to maintain 50 per cent of their
corpus in cash before the elections and the balance funds should be
invested piece meal but not in bulk. Also Read ? Pre-poll revelry may
prop up select sectors in the short term ? M&As, PE deals dip by over
60% in two years ? Pessimism too high, time to buy: Mobius ? Experts
favour upstream oil cos; say book profits in OMCs \"There is nothing
wrong for an investor if he sits on cash for six months. Park the same
money in bank savings account to earn assured interest. There will be
fresh bottom post election and that will be the time right to enter
equity market,\" said Manish Innani, member, NSE. Said Rajesh Jain,
head of research at SMC Global, \"Fiscal responsibility should be the
top priority for a new stable government in this troubled time.
Further measures like insurance reforms, PSU stake selling will be
positive signals for the market.\"