Elections and Sensex- it’s complicated. Not!
Come elections, and the whole investing fraternity gets busy predicting the effect they might have on the stock market and how will they make the Sensex dwindle. The upcoming General Elections 2019 are not untouched by the speculation either, especially in the aftermath of the state elections when a lot of predictions went haywire.
Having said the above, what is it really that causes the scepticism? Allow us to break it down for you. The two significant factors concerning the equity market are- Government stability and Government policies.
Markets tend to cheer on a stable government that might have a clear majority or is a part of a stronger coalition. This is because it implies that the policy related decisions will be unencumbered and will be seen in action quicker. Vice versa for a weak coalition since those many extra decision makers get injected into the process.
Each Government comes with its own set of policies which might be mainly favouring some particular sectors, and hence the markets tend to swiftly incline towards those sectors. Investors then tend to take a step back and rethink their investing decisions.
Well, we have news for you!
If you are a long-term investor, the best thing to do would be to turn a deaf ear towards the noise surrounding the market speculations. Historically, elections’ data proves that apart from the initial knee-jerk reactions, past polls have not made the markets as volatile as predicted. Want more proofs? Consider this-
What it means for you
Be it a weak coalition or a strong one, or even an absolute majority; the Governments will only carry forward the reforms process and apart from that no minor policy-change can potentially turn-around the markets forever. What matters is, the extent of growth in corporate earnings.
At UTI, we believe in a simplistic approach towards investments. Be patient and disciplined. UTI with its in-depth research and data-based approach shall aim to remain unperturbed by the ever-changing market conditions.
Our advice to you- The short-term returns might seem volatile but, it is only wise to stay invested and let time weave its magic into your wealth creation journey.
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The information contained should not be construed as forecast or promise. Any investment decision taken based on the information provided in the content above shall be at sole risks, cost and consequences of the user.