Hello Everyone, this post is a continuation to the last week. In the last week, I had written and explained about the movement of the NIFTY during the General Elections 2014 and compared them to the present scenario. Nothing has changed when it comes to the political decisions are concerned in the last week, but the mood of the market has entirely changed. Last Tuesday NIFTY closed at 10987 and today it closed at 11301 which is 2.85% up move. The only big event that has happened in last one week is the release of election dates for Elections 2019.
Election Commission has decided the dates for the Lok Sabha Elections 2019 on Saturday. Seven phase election is scheduled to begin on the 11th of April and conclude on the 19th of May. Counting is scheduled to be held on May 23rd which is a week later than the last two General Elections. This week has begun on a very different note with NIFTY going up by 1.2% and 1.19% on both the days. This kind of move is only possible when there is a lot of buying in the Delivery channel. Delivery buying is the type of buying where the stocks are bought for investment purpose. Usually, delivery buying is for a minimum of 2 weeks to 3 months.
But should there be a rally before the elections and the important results?
Simply because markets are the leading indicators for the Indian economy. Leading indicator here means something which has the hint of future and tries to jump into the future for a better valuation. Markets everywhere read the future and they trade accordingly.
Who is this Mr/Ms Market?
Obviously, it is the Public. The market is we the people of the country. This includes the High net-worth individuals, individual investors, foreign investors, mutual funds etc. So it is basically the people’s opinion. Keeping it simple, we can call the investors as Domestic and Foreign. Right now we can say that 70% of contribution comes from Foreign investors and 30% comes from Domestic investors. That makes it more clear that the Foreign investors believe that there is positive news coming from the elections. The positive news here at the moment is the re-election of NDA to power.
That proves that it’s the people who take the market forward and these people include all kinds.
How long will this rally Sustain?
Going by the past rally during the General Elections 2014, it was seen that NIFTY was at 6000 at the beginning of February month and on the day of results NIFTY was trading at 7142. This is an astonishing growth of 19% in just 3 and a half months. Going by this simple equation, NIFTY has gone from 10600 in the middle of February to 11320 in the middle of March, which is again a 6.75% growth in just 1 month. With the results being pushed a week we can conservatively expect the Markets to hit 12,000 minimum on the results day. This will mean the Markets will move another 6% up from tomorrow. I repeat 6% is minimum growth it has got all legs to hit 10-12% as well. All this is on the narrative that BJP will come back to the Power in 2019 Elections.
What’s in the store for Investors?
Returns, High Returns!! Yes, in the last post also I have discussed how the stocks have made big money from March 2014 to May 2014. The average returns of the portfolio of the 10 stocks from NIFTY gave 31.38% in only 80 days. The same portfolio when calculated this year from Feb 28th till date i.e. 12th March has given 6.7% average returns. By going with the past trends it’s clear that you can make a minimum of 20% returns. Don’t wait and invest in the markets. Especially in the large-cap NIFTY stocks for safe returns. My feeling is obviously to invest and make ‘BIG’ money by the time counting day comes. #NiftyNeedsNamo
Okay! That’s about the Markets and Elections. If this is how interesting the Elections are turning out to be, how can one miss the action? I wouldn’t want to and I hope there are more like me. So, for the next 10 weeks leading to the counting day of Lok Sabha elections 2019, I will be writing posts relating to Elections 2019 for two times in a week. Once on a Tuesday and the other one on Friday. In these posts, I will be writing about the situations, opinions polls, who’s ahead and who’s losing, what each leader are saying and doing, and analyse the mood of the nation leading up to next 72 days!