As things were not so cheap in 2014 & stocks could be expensive in 2019 elections. comparison to previous elections experts said
Lok Sabha elections are on its way and the action in the equity market has already begun. Trading in sectors such as banks, autos and capital goods has become very evident lately.
The Nifty Bank yesterday reclaimed 28,000 in intraday trade while Nifty50 rallied over 11,100 to hit 2019 high.
analysis the statistics of past 3 general elections reveals that volatility sharply rises before Lok Sabha elections. Historically, capital goods, banks & auto Sector perform well during an election year.
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Lok Sabha elections will begin on 11 April & polling will be held till 19 May, followed by counting of all votes on 23 May, the Election Commission announced the dates over the weekend.
The rally in the market is nothing short of a surprise after the Nifty hit an intraday low of 10,585 on 19 February. Since then, the index has rallied by over 500 pts, or nearly 5 %, which suggests that the bulls are here to stay.
If compare the post-election market scenario of 2004 and 2009, these elections happened at around market lows. Metals were at the bottom of the global cycle and banks were undervalued.
Sector In Highlight
Capital Goods: We have heard about the capital cycle turnaround for a long time. With a new government and a reformist touch, this sector may finally get a boost.
Autos: Autos continue to remain a solid consumer play and rural demand is up if the latest auto and FMCG numbers are to be believed. The correction also makes stocks attractive.
Banks: Banks and financials remain the staple diet for investors with a weight of more than 35 % in the Nifty. Markets are betting on a turnaround in credit offtake.
Energy: This sector could be the dark horse in the coming years. While the vagaries of crude prices will continue, a new oil policy could make a big difference to the oil and gas producers. Extraction could be back in the reckoning in the coming years.
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