Some food for thought
"I don't set trends. I
just find out what they are and exploit them."
—Dick Clark (American
Entertainer, 1929-2012)
Word for the day
Sippet (n)
A small bit; fragment.
First thought this morning
Get ready to stock up
A large number of brokerages appear to be investing substantial
resources in assessing the political scenario in the country. Many of them are
apparently conducting surveys to assess and forecast the election outcome. They
have also tried to relate their assessment of the likely political scenario
post 2019 general elections with the likely trends in benchmark indices.
I find it encouraging, to the extent that analysts are taking
time to move away from their desks & spreadsheets, and spending sometime on
the ground. This surely would help in expanding their horizon. Insofar as the
political analysis and forecast is concerned, I may not necessarily agree with
most of them.
I had chance to read 20 odd election related research reports in
past one month or so. Most of these reports have tried to draw a direct
correlation of economy and markets with the political outcome. None of these
have however presented any credible evidence to suggest that the form (single
party or coalition), constitution (minority or majority) or inclination
(center, right or left) of the incumbent political dispensation have any direct
bearing on the performance of the economy or financial markets for that matter.
Though not mentioned in these reports, there is certainly a
feeling of discomfort amongst market participants, concerning the outcome of
2019 general elections. Many investors are worried if a coalition government
(unanimously assumed to be instable) results post the elections, Indian markets
may suffer.
I have been insisting that in past 35years, since I started
watching Indian financial markets, there has never been any instance of any
political establishment purposely acting in a manner that is prejudicial to the
Indian economy or financial markets. Incidentally in this period we have seen
all sorts of political combinations and permutations. We have seen governments
where communists and socialists were key parts or supporters of the government.
We have seen brute majority of Rajiv Gandhi and abysmal minority of Devegowada.
We have seen helpless Manmohan Singh and AB Vajpayee, and we have also seen
assertive Vajpayee and Narendra Modi.
If we take the performance of stock markets as a benchmark, the
minority governments have been mostly good for the stock market. Any worry on
this count is totally unwarranted. If BJP does lose in 2019 and market does
fall in May 2019, that will be a good opportunity to stock up!
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