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State elections, alliances to determine stock trajectory this year: Experts

Author: The Finapolis News Service/Wednesday, August 1, 2018/Categories: Events

State elections, alliances to determine stock trajectory this year: Experts

Not just the general elections in 2019, but the upcoming state elections in Rajasthan, Madhya Pradesh and Chhattisgarh are going to play an important role in determining the stock market’s trajectory this year, said experts at the eighth edition of The Finapolis Knowledge Series held in Hyderabad on July 27.

The Finapolis Knowledge Series is an endeavour by the Karvy group to spread awareness on a variety of topics of interest to businesses, investors and individuals.

In the eighth edition, four panellists deliberated on the topic “Bulls, Bears and Politics: The Impact of Politics on Stock Markets”. The panel featured Manish Gunwani, chief investment officer of Reliance Mutual Fund, Rajat Jain, chief investment officer at Principal Mutual Fund India, R Srinivasan, editor of The Hindu Business Line, and Nadendla Manohar, former speaker of the Andhra Pradesh Legislative Assembly.

In the keynote address, V Ganesh, CEO of Karvy Computershare, said the government is likely to boost expenditure in infrastructure before the elections, which will impact the markets.

“The market will be looking at two factors in the run-up to the elections — how the political alliances evolve and the three state elections of Rajasthan, Madhya Pradesh and Chhattisgarh in November and December. The existing government has a lot of seats in this belt. Even the vote swings will be analysed threadbare to get a sense of how things are moving. Any news of alliance in the states will have a certain impact on the markets,” said Manish Gunwani. 

“Markets would like predictability and certainty,” said Rajat Jain.

“Domestic investors do not like to be a part of uncertainty and hence, they only participate after the elections,” said R Srinivasan. 

Agreeing with other panellists that the markets look for stability in governance, Nadendla Manohar said, “The markets doing well is a reflection of the economy. However, there are several other issues other than political ones at play in the markets. The agrarian sector is badly hit and the farmers believe that the government has not done enough. Whatever they have done in the form of the recent minimum support price programme has come too late. These factors will play an important role in the markets and in politics this year,” he said.

All panellists agreed that in the election year markets do well and eventually what happens depends on the budget.

“There a lot of participation of retail investors who comprise more than half of mutual fund assets, at present. A good chunk of this is also on equity. These make the political parties more accountable,” Rajat Jain said. 

The evening ended with the audience seeking answers from the panellists on the impact of geo-political tensions on the Indian equity markets and the overall political scenario.

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rajyashree guha

The Finapolis News Service

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The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

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