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Modi Bets High on Stock Market!
In a latest interview to NDTV, PM Modi gave clue for investors that after June 4, stock market will break records. He sees stock market making new records and setting some new highs after June 4 as this is the result date of Lok Sabha polls. HM Amit Shah also reiterated the same thing a few days back and because of this, last few sessions of stock market are on the rise.Â
Well, this is a very interesting time in stock market for investors as the Indian stock market showing high volatility in short period of time nowadays may be because of election week.Â
Is Data Showing the Same About Modi's Prediction on Stock Market?
So, at this point of time SENSEX and NIFTY both are barely few point away from touching their new high. Also, the market capitalisation of Indian stock market is about to break $5 Trillion mark. If you remember, last year in November, Indian stock market crossed the $4 Trillion mark in terms of market capitalisation. But what does it mean when we say market capitalisation of Indian stock market?
Look, market capitalisation of Indian stock market simply means the addition of worths of all the listed companies on Indian stock exchange like BSE or NSE.Â
Since NIFTY being less than 300 points away from touching a fresh new high and the Indian stock market being on the verge of breaching $5 Trillion mark , PM Modi believes a post-election rally in the market can take it to such high levels that participants will get tired.
“You will see that within one week after June 4, the day election results are to be declared, market participant will get tired”, said PM Modi.Â
Further in the interview, he said when NDA came to power in 2014, “we started our journey from (SENSEX) 25000 and today it has reached to 75000. This increases our pride in the world. As more ordinary people come to the market, the economy will gain a lot of strengths. I want the risk taking capabilities of citizens to increase,” PM Modi said.Â
PM MODI Hails PSUs Stocks
In the interview, PM Modi was seen praising PSUs stocks. While giving the example of rally in PSU stocks, he said look at HAL which is on a “Stellar Run” as its stock has reached a record high on massive profits. HAL has posted a record profit of Rs 4000 crore in Q4 results.
Now coming to the boiling question, What happens after Lok Sabha polls historically? Well, the data shows market do welcomes election outcomes as it ease the political uncertainty and help market participants focus more on stock fundamentals.Â
For example, in 2019 Lok Sabha Polls, the results were declared on May 23. SENSEX fell 0.76% on this day but it surged 1.63% the very next day i.e May 24; it climbed 0.63% on May 27 and added another 0.17% on May 28. In total, the BSE barometer climbed 3.75% in four of five sessions post election results on May 23,2019. The same type of positive outlook of market was seen in 2014.Â
Conclusion
Let’s see what experts have to say on this whole election effect.
As the election outcome is largely discounted and factored in the market price, the possibility of positive surprises is less and any downside surprise is higher. Hence, we would not try to time the election outcomes and rather focus on stock picking while reducing risk in the portfolio to navigate the volatility due to election results, says Vijay Gandhi, CEO SAMCO Mutual Fund.
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