November 19, 2019
“Even the intelligent investor is likely to need considerable willpower to keep from following the CROWD” – Benjamin Graham
Elections have just concluded in 5 states. They were being touted as semifinals for Lok Sabha’s general assembly elections due May next year. Till now extinct opposition registered a strong comeback and secured decent wins in these states. Do this signals change at the helm of affairs at the center. Economy on the other hand did reasonably well and seems to be getting back on track having absorbed the Demo & GST jerks. Between these two – Politics and Economy, market linked investments seems confused at the moment. Should investor really worry?? Lets delve upon these subjects and try to find an answer.
Politics will always be uncertain. The world is very dynamic and with change in generation – the philosophy, needs of the life and its style changes for sure. Their requirements and preferences would differ for sure from the previous generation. And the generation also changes very fast. Every 8-10 years you find a new breed of generation dominating the society. Business, media, entertainment industry etc. tries to exploit their whims and fancies. And so does the politics.
When we were ruled by kingdoms, every new king would have his own philosophy and rules of governance to regulate the lives and businesses of people living within his kingdom. Even in democracies whosoever party captures the imagination of the voters comes to power. But do you ever wonder why do anybody – individual, a family or a party wants to rule the country. Because with this comes power to control the affairs of the society
Last year had been highly volatile for stock markets due to various economic & geo-political concerns spreading across globe. Towards last quarter of 2018 macroeconomic data showed good improvement but political uncertainty prevailed.
With inflation under control, crude oil price down, rupee strengthening against dollar and other currencies & fiscal deficit seemingly much under control – Indian economy is positioned well to take advantage emanating from global disorder. Improving capacity utilisation, interest rates expected to come down, RBI infusing liquidity into system, increasing corporate profitability are expected to augur well for the stock markets.
General elections due in April/May and dwindling fortunes of major political parties will keep the uncertainty alive till then. And post general elections especially in second half we expect markets to do much better than 2018.