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Last Updated : Apr 13, 2019 11:06 AM IST | Source: Moneycontrol.com

'Election year may bring enhanced volatility for equity markets'

Corporate earnings, especially of domestic oriented companies are showing an improving trend. We don’t expect any immediate significant earnings pick up atleast for next two quarters.

Moneycontrol Contributor @moneycontrolcom

In view of the recent correction from historic highs, valuations are not cheap. However, they are in the reasonable zone, Devang Kakkad, Head of Research with Equirus Wealth, said in an interview with Moneycontrol's Sunil Matkar.

Should investors wait for the election verdict or should they start buying now?

Election year is normally perceived to be a year which brings enhanced volatility for equity markets. As a section of investors awaits clarity of election results, it is interesting to note that in the majority of the last six elections, the market did not show any significant divergence from the trend seen pre-elections despite election surprises.

Will FY20 earnings strong and far better than last 2-3 years?

Indian economy is poised at a pivotal stage. Irrespective of the election outcome, several structural reforms implemented in the last couple of years are likely to accrue benefits from 2019 and beyond. Increasingly, there is convergence on various economic policies across political parties and structural factors should ensure a sustained growth in the economy and capital markets over a medium-term horizon.

Do you expect broader markets to outperform in the second half of 2019?

In view of the recent correction from historic highs, valuations are not cheap. However, they are in a reasonable zone. BSE Sensex is trading at forward P/E of approximately 18 and BSE Midcap is now trading at forward P/E of 19. Corporate earnings, especially of domestic-oriented companies are showing an improving trend. We don't expect any immediate significant earnings pick up at least for the next two quarters.

We suggest retail investors to adopt a staggered approach (say spread over the next 6 months) towards increasing their equity exposure. With reference to pockets of opportunity, given the risk profile and the steep correction in mid and small cap, investors with a long-term view could also evaluate quality Mid-Cap and Small-Cap Funds as well.

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Apr 13, 2019 11:06 am
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