Which Stocks Should You Buy Before the Results of 2019 Elections?
Video Editors: Ashutosh Bhardwaj and Abhishek Sharma
Video Producer: Anubhav Mishra
As 23 May – the date of counting approaches – the investors have just one question on their mind. What will be the impact of 2019 Lok Sabha polls on the stock market? Market expert Sharmila Joshi believes that both international factors as well the results of Indian General Elections will have a major effect on the stock markets.
Markets like stability. Irrespective of which party comes to power, as long the government is stable and the policy position is consistent, the markets will perform well. But, if a party does not enjoy a majority, it may not be able to usher in the economic reforms and enforce strong policies. This is likely to generate a negative reaction from the market. In such a scenario, the stocks can plunge and the market will see a downward trend.
Stable Government = Robust Market
Market sentiment is usually that a stable government for 5 years will push for major reforms. The results of 23 May will also bring in a sense of clarity for the investors. If the market sentiment on 23 May is that a stable government will be formed, then the shares will rise and the markets will see a boom.
Above all, what markets hate the most is a lack of clarity or instability. But apart from elections, two other factors are going to be crucial in determining the performance of the market. The investors must keep an eye on the fourth quarter earning and the global cues and trends.
Analyse These Trends Before Making Investments
Now, which company’s shares should an investor buy? Since results of fourth quarter are out, it will be imperative to keep an eye on the performance of a company based on these results.
As of now, IT sector has been performing decently. Hence, it is advisable to invest in the stocks of IT companies. As far as other sectors are concerned, current factors need to be taken into account. Consumption-based companies are experiencing a dip. This is an indicator that consumption of goods has dropped.
Fast Moving Consumer Goods (FMCG) are facing a downward trend. Similarly, automobile and related sectors are also experiencing a slump. Prices of metal and crude are also increasing. The trade war between China and USA will also have an adverse impact on the business.
These are the most important factors to keep in mind while making investments ahead of 23 May.
Policies of New Govt are Also Important
One should also keep a close eye on the policies of the new government. If you feel that the new government will focus on infrastructure projects, constructions of roads etc, then invest accordingly in relevant sectors like real estate, cements etc.
On the contrary, if you feel like the new government will focus on the existing policies then your investment decisions will change accordingly. But the safest sector to invest remains IT.
(The video was originally published on Quint Hindi)