Impact of general election on our market
We are one
of the largest democratic country in the world. The general election is the
important event of our country. The financial market is keenly waiting the
outcome of the election result. Our share market has also performed and made a
new high as per positive outcome from this election. Any unexpected or below from the expectation
would impact badly on the market in short term. The election result would be
come out on 16 May, 2014.
In my
view, the outcome of election event is only important for short term. In last
few trading days the volatility index has gone up significantly. Let see the
market’s 2 days return after the election result:
|
Election Year
|
2 days return after election result
|
|
1999
|
6.05%
|
|
2004
|
-16.56%
|
|
2009
|
17.34%
|
|
2014
|
???
|
If we
analyze the election result from 1991 to 2004, the sensex has given 20% return
after 1 year. Although it is very difficult to predict the outcome of result
but we can easily understand that business cycles will continue irrespective of
any government. The long term fundamental is intact for our economy. The last
few months has given a good hint for economy like CAD has come down, inflation
has also cooled down, the future interest rate till October look stable and
afterwards it should also soften which is good sign for our economy.
No doubt,
election play important role in driving fundamental and push to the economy. I
hope after election the elected government push the investment in system and
growth would be on track. The delayed project will get green signal and some
important decision would be take in speedy manner.
If anyone
who has not invested in the equity market still, it is the right time to reap
the benefit of the economy and start investing in the time horizon of 3-5 year.
In the next 3-5 year, I expect the good return from the equity market. For
retail investor it is the good time to enter the market for 5 year time
horizon.
If you want more information
regarding investment or you have any other query about investment feel free to
ask us.
Warm regards,
Arvind Trivedi
Certified
Financial Planner
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