Buy infra, fertilizers if poll outcome +ve: R Balakrishnan

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The benchmark indices ended lower, after seeing extreme volatility throughout the session, ahead of the exit polls in the evening and election results on May 16, 2009. The 30-share BSE Sensex shut shop at 12,019.65, down 1.14% or 138.38 points, after seeing a swing of 322 points between an intraday high of 12,256.43 and low of 11,934.44. The 50-share NSE Nifty closed 1.25% or 45.85 points lower at 3,635.25; it swung 99.4 points between day's high/low of 3709.60 and 3610.20, respectively.

Also read: Mkts end lower ahead of exit polls; banks, metals dip

'Liquidate positions'

Investment Analyst R Balakrishnan said one would see extreme bouts of volatility ahead. "The key is not who forms the next government but will it be clear as to who forms it. Coalitions are not new to the market and every party has been in some kind of power or the other over the last eight-nine years. During the time lag between the results, government formation and the subsequent cabinet formation, the market will be extremely sharp and volatile," he said, adding that the best thing to do now was to liquidate most positions and stay in cash.

Post results outcome

Balakrishnan said that the election results could provide either of the two opportunities: "If it is very good news for the market and the market rallies sharply, I think that would be a great selling opportunity," he said. "If it has very negative impact on the market in terms of sentiment, it might provide good buying opportunities."

On real estate stocks

"I actually like this sector, which may sound surprising to a lot of people," Balakrishnan said. "If you are banking on a recovery and consumer spend, and if these companies are going to realign themselves to markets where there is more demand at the lower end - considering the fact that their landbanks are at extremely low prices - it is a matter of time before they start making money," he said. "Right now, debt is their biggest burden. They seem to be correcting that. Promoters don't mind selling off their stakes and diluting it to reduce the debt. That is a very positive sign."

"You should not look at either governance or accountancy, but I think you should keep playing these leaders because when the recovery happens these will be very good stocks."

Sectors to watch

Balakrishnan said in case of a positive outcome, the sectors that may rally typically are infrastructure, fertilizers, and housing stocks.