INSUBCONTINENT EXCLUSIVE:
By DK AggarwalThe stock market fluctuates to the flow of news related to not just the economy, but also politics and other events.
In
India, the general elections decide what is in store on the political front for the next five years and foreign players generally prefer to
invest in economies that have stable governments with strong policies with long-term visibility
This optimism has kept foreign investors bullish on India and the market is benefitting from huge emerging market inflows.
To boot, India
equities have witnessed foreign inflows worth a net of $6.7 billion during January-March, which is more than the outflows of $4.4 billion in
If history is to repeat itself, India has always been a bottoms-up market, regardless of noises around elections
Moreover, volatility is a part and parcel of stock market
Investing is a process of wealth creation and should not be influenced by any events
scenarios.
Investing in companies that have robust business models and are focused on demographics, for example consumption, are expected to
There is a good number of companies from sectors like FMCG, IT, metals, refining and pharma exports, which keep on growing at higher rates
irrespective of election cycles
These sectors are hardly impacted by any change of the government at the centre and demand for consumer products like packaged foods,
electrical goods, digital services and medicines never falls.
Also, investing in companies that have high revenue growth in international
markets can also provide the much-needed immunity to the portfolio in times of volatility.
Traditional investing wisdom asks not to put all
While building a long-term portfolio, one should ensure exposure to a combination of multiple asset classes
Investing for the long term can smoothen the impact of the ebbs and flows of the market and help investors garner good profit from their
investments.
Also, past evidence suggests after reacting to election results, the market tends to move in tandem with earnings and economic
As the fundamentals of the Indian economy are solid and there are expectations of an earnings recovery, the market is expected continue its
One may look at stocks like ICICI Bank, Reliance Industries, HCL, Tech Mahindra, ITC and Indian Bank to build a long-term portfolio.
(DK
Aggarwal is Chairman Managing Director of SMC Investments Advisors)
